May 14, 2020

Blockchain Oracles Basic Guide – Providing Quality Data to Blockchain Networks

As blockchain networks continue to expand in the market, users start using new terminology that in many cases can create confusion. One of these terms includes Blockchain Oracles.

In this guide, we will explain what are blockchain oracles, how they work and how they can help blockchain networks to have better information. Of course, there are different kinds of oracles that would offer different services and solutions.  

What are Blockchain Oracles?

Blockchain oracles are services that can be used by blockchain networks to receive information from external sources. This is certainly important for a large number of blockchain networks that require accurate and valuable information to run and execute smart contracts. 

For those that do not know, smart contracts allow blockchain networks to perform credible and verified transactions. Moreover, they provide great resources to enforce the negotiation or improve the performance of specific contracts in distributed ledger technology networks. 

Blockchain oracles are very important in order for blockchain networks to have data from outside information providers. These sources of information can be very different and diverse oracles will be gathering this data and sending it to the blockchain that requires them to run smart contracts. 

The data that they collect can be the price fluctuation of a specific trading pair, unique market conditions and indicators, among other things. This data will be collected from off-chain resources to which the blockchain network cannot have access to. 

Different Kinds of Blockchain Oracles

There are different blockchain oracles that would be used in different situations by blockchain networks

  • Hardware Oracles

Hardware Oracles work with information related to devices that operate in the physical world. We can be talking about data provided by speed cameras, car engines or even thermometers that measure temperature. 

This can be used by blockchain networks that need this data in order to execute different smart contracts. For example, if a speed camera captures a car going above the speed limit, this can provide clear data to a blockchain-based system to insert this information in a database. If the camera is already more advanced and it can detect the car’s plate, it may be possible for the blockchain network to send already a bill to the owner of the car once it surpassed the speed limit. 

  • Software Oracles

As there are hardware oracles, software oracles provide information but from sources that can be located online, including websites, data providers, trading platforms and more. This can be great for many blockchain-based companies that are operating 100% online and that are searching for data from trusted sources online. 

  • Oracles Based on Community Consensus

These kinds of blockchain oracles are related to systems that require the consensus of a community to execute smart contracts. There are different blockchain networks that are currently working with these oracles. 

These networks use the information provided by these companies and run the smart contracts they need. 

  • Outbound Oracles

All the oracles that we have mentioned before are considered to be inbound oracles because they provide information to blockchain networks from the outside world. However, blockchain networks can also provide valuable information to external sources.

For example, it is possible to inform the number of transactions in a specific network, among other things. 

Controversy Related to the Source

There are different controversies related to these oracles. Indeed, users that rely on smart contracts connected to these oracles should trust the information they provide. In many cases, it can happen that there are some complications with the data provided and this could cause certain problems. 

If for any reason, a software oracle that gathered data from a specific website is now reporting misguided information from that website, this could execute several smart contracts based on wrong information. The same can happen with other oracles, including hardware ones. 

This problem would not create many issues in government-based networks considering that many of these mistakes may never be reported to the public. Meanwhile, decentralized communities could complain about wrong data provided by these oracles and change network. 


As we have shared in this guide, blockchain oracles are very important to run healthy and innovative blockchain networks. We have covered the different kinds of blockchain oracles that provide information and how they could be accepted or not by the communities that require information from them. 

Finally, trust is going to be a very important factor that would determine whether a specific source is trustworthy or not. 

AltSignals Team

Proficient authors guiding you with transparency, integrity and education through the finance international markets

The AltSignals writing team consists of experts dedicated to the world of finance and technology, with a particular focus on cryptocurrencies and forex. Our writers bring a broad range of knowledge and experience, cultivated through years of arduous and direct involvement in financial markets, as well as intense technological collaboration.

Editorial approach

At AltSignals, we believe that transparency and education are the key to empowering our readers. Therefore, our content is meticulously researched to ensure its accuracy and thoroughness. Each of our articles is created with the aim of providing educational insights and in-depth analysis, helping both beginners and experienced traders.

Commitment to quality

Integrity is certainly the foundation of our editorial process. The team follows rigorous journalistic standards with careful review, all to ensure that each publication is meticulously researched and exceeds our readers’ expectations.

Our mission is to provide analysis that informs as well as guides users and enthusiasts through the complexities of the cryptocurrency and forex markets. In line with our motto of “quality over quantity”, we guarantee that only the highest quality trading signals are published.

In addition to our commitment, which extends beyond the simple transmission of useful information, our in-depth analysis focuses on profitability and effectiveness squarely, avoiding the common industry habit of prioritizing profit over accuracy. Our traders are strategic experts who offer personalized help to those seeking worthwhile portfolio management tactics.

Diverse knowledge

Our authors are proficient in a variety of topics across the financial spectrum, from emerging trends in blockchain to the nuances of forex trading. This diverse range of knowledge allows the team to cover several topics, ensuring our content is always comprehensive and deeply specialized.

Interactivity and support

We understand that the world of trading can be complex for many. Therefore, alongside producing informative articles, our team is also committed to interacting with the community. Through comment sections, forums and direct support, we encourage our readers to seek clarification and sharpen their understanding, promoting an environment of continuous learning.

Future vision

Looking to the future, the AltSignals writing team is imbued with a vision that transcends regular publishing, and continues to dedicate itself to discovering and reporting on the latest innovations and trends available in the market. We are constantly seeking to improve our skills and expand our knowledge, with the ultimate goal of being a reliable and respected source in digital financial journalism.

There is great commitment to discovering and reporting not only the latest news and trends in the market, but also to equipping our readers with the tools they need to navigate volatile markets with confidence. We firmly believe that, with the support of an appropriate platform coupled with accurate guidance, our readers and traders can turn market volatility into a competitive advantage.

Join us

Follow AltSignals to stay up to date with the latest developments in the world of finance and technology, and explore how our insights can help improve your trading strategies. The AltSignals team is here to guide you through the exciting, dynamic and challenging world of financial markets.

Latest posts author AltSignals Team

Latest posts from the category Cryptocurrency