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Blockchain technology has a large number of attributes. Still, its main characteristic is the security it offers its users, where storing information in blocks and the almost impossible possibility of modifying any data in the chain attract many.

Blockchain Oracles Definition

Blockchain oracles are lines of symbols that interconnect data or information from the real world with the contracts and agreements a particular blockchain has; they are the intermediaries in processing information inside and outside the chain.

Through this interrelation, smart contracts start processing information, executing the processing of external information outside the blockchain, guaranteeing the security of the data and that third parties have not manipulated it. A such platform like is one of the trusted cryptocurrency exchange platforms where you can buy and sell cryptos for profit.  

Differences between decentralized and centralized Oracles

There will always be divergences when it comes to financing, as happens with the traditional financial market and the crypto assets market, where conventional financial entities and exchange platforms are divided where they can operate in a decentralized or centralized way; the same happens with the oracles.

In the case of decentralized oracles, they are usually much safer because they automatically collect data and information from different nodes, as opposed to a single source of information, which limits and can make the system more vulnerable, which leads to making data manipulation nearly impossible.

This aspect could be compared to the possibility of consulting a particular asset’s price being limited to a single source of information; this would make the processing of transactions much slower since millions of users would be consulting the same element.

It would lead to only the information being in the hands of a single node, making data handling insecure and disproportionate, potentially harming both the buyer and the seller of crypto assets.

The centralized oracles maintain the data feed from a single source; that is where the importance of the decentralization of the digital financial market lies; there is no manipulation of information other than the results of the supply and demand of users.

How to identify blockchain oracles?

The traditional way to identify the type of oracles in a blockchain is basically in the source of information.

There is a set of elements to consider to distinguish the type of oracles, and these are the following:

  • Where the information (source) comes from, this aspect directly references where the blockchain obtains the data; it is known that they are primarily digital. Still, physical information can also be obtained, which comes from software-based oracles or hardware.
  • Where the information goes is linked to whether the blockchain is receiving or sending data, these oracles are considered input or output systems.
  • Trust is the most critical element because it is there where it is recognized if the oracle is centralized or decentralized; however, centralized systems may be limited; many users prefer to operate through them.

Importance of blockchain oracles

The market capitalization of cryptocurrencies demonstrates the number of operations executed in the digital financial market, which represents an excessive amount and is estimated to continue to increase, exceeding one trillion dollars.

It demonstrates the importance of blockchain oracles as a bridge between centralized and decentralized systems. Expanding the traditional financial system depends exclusively on the possibility of decentralizing the platforms, making the data more secure, and the impossibility of modifying it.

Types of blockchain oracles

There are many types of oracles, but the best known are listed below:

Software-like oracles

They are in charge of collecting and organizing information online, such as weather data and product prices, to send the data to a Smart Contract later. Then, it executes the corresponding actions for which it was created.

Hardware Oracles

This type of oracle is responsible for tracking objects or elements of reality, such as the arrival or departure of a flight, ship, or public transport, offering users the possibility of monitoring a chain of services through the use of the blockchain.

Incoming or Outgoing Oracles

Companies use them to automate processes where the introduction of information is essential.


Based on these elements, confidence rests regarding cryptocurrencies and decentralized finance possibilities.

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