What is the purpose of Oracle networks?

Oracle networks serve the crucial function of bridging the gap between blockchain environments, which are inherently closed systems, and external data sources. These networks enable smart contracts on blockchains to interact with off-chain data, which is essential for their execution but not natively accessible within the blockchain.

Key Purposes of Oracle Networks:

1. Data Bridging: They provide a secure and reliable way for blockchains to access external data, such as real-world events, prices of assets, or any other information that isn’t generated within the blockchain itself.
2. Decentralization and Security: By using decentralized oracle networks instead of a single source of data, they preserve the decentralized nature of blockchains, ensuring that the contract behaviors are not dependent on a single point of failure.
3. Extending Blockchain Capabilities: They enable the creation of more complex and responsive smart contracts that can interact with the real world, making blockchains more useful for a broader range of applications.
4. Flexibility: Oracle networks are designed to be highly flexible, allowing them to collect and process a vast range of data types required by different smart contracts across various industries.

These networks are essential for the advancement of blockchain technology, allowing it to have real-world impact and utility by connecting with external systems in a reliable and secure manner 1 2.