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The Biggest Problems Being Addressed By Blockchain Oracles

Jun 13, 2019 AltcoinsBitcoinBlockchainCanadian CompaniesMining 0

Simply put, an oracle is a bridge that connects information obtained in the real, physical world with a blockchain. Blockchains have a host of advantages including transparency, security, and immutability. However, without a way to reliably bring data on-chain, blockchains can only leverage these benefits with the information that occurs within its network, not information or events that take place outside of it. This creates a huge information gap between what kind of data is generated in the real world, versus what a blockchain can record and keep track of. So although blockchains have a host of impactful applications, if they cannot retrieve information from the real world, then the utility brought by these systems is marginal. Thus oracles are the service that connects this real-world information to the blockchain. Without oracles, blockchains can only perform their original use case, which is being a medium of exchange that allows participants to send value to one another. The classic example of this is sending bitcoin. Since Bitcoin exists natively on the Bitcoin blockchain no oracles are needed for this. However, if you wanted to use a decentralized betting platform to make a wager on the NBA finals, you could not do that without an oracle because the outcome of the event is based off something in the real world, not on-chain.

It is hard to understand the importance of a solution, without first understanding the severity of the underlying problem. So, instead of diving into the various Oracle solutions, let’s look at the most significant problems Blockchains face concerning the retrieval of data and how decentralized oracles like KrawlCat can be a solution to these roadblocks.

Data Corruption Caused by Bad Actors:

Blockchains most note-worthy feature is arguably the idea of consensus. The concept that, for a transaction to be processed on the blockchain, 51% of all nodes need to agree on the decision at hand. This “majority moves on” philosophy eliminate the chance of a few people being able to compromise the network. Blockchains are immutable, and once something is on the ledger, it cannot be removed. So it is imperative that the data used by decentralized applications is accurate. Thus one of the most significant risks to blockchain’s quality-control are oracles that fail to use a consensus protocol and/or fail to vet the data suppliers, because these entities now pose the threat of retrieving or submitting inaccurate data. If an oracle doesn’t rely on consensus from multiple participants, then bad actors pose several vulnerabilities to the blockchain including people making fake websites, purposely misrepresenting the data, or malicious entities engaging in bribery to get these actors to misrepresent their findings.

Data Corruption Caused by a Lack of Variety:

Sometimes, the issue with the data supplied to a blockchain is not caused by an unethical node or network participant but actually occurs outside of the chain. If you are providing inaccurate data to the blockchain, then it doesn’t matter whether your network nodes are bad actors or not, because the data was already incorrect before it went on-chain. Anything that happens thereafter will also be adversely impacted. Without using a variety of data suppliers, the chance of deploying inaccurate data is significantly higher. This lack of data variety is one of the biggest problems affecting data accuracy. Now binary events (True or False) don’t require much data variety, but more complex events such as “what is Apple’s stock price” require much more variety. Since Apple’s stock price differs on each exchange, only getting the information from one source hinders the accuracy of the data. When dealing with non-binary events & information, it’s essential to pool the data from as many sources as possible and reach a consensus. This prevents any data-outlier from making its way onto the blockchain. If your relevant data is pooled from multiple sources, then the chances of retrieving the most accurate result are much more likely then if getting the results from one API.

Does KrawlCat Solve these Issues?

For any Oracle to scale and meet the demand decentralized applications are expected to garner, solving the problems of data variety and bad actors are critical. KrawlCat, the industry’s first hardware oracle solution does just that. KrawlCat is a network of hardware devices. Each device scrapes HTTPS-enabled websites for data to send on-chain. KrawlCat has studied its competitors to understand their shortcomings, so they have also been able to implement some new features that solve these aforementioned issues. To solve the problem of bad actors comprising the network, KrawlCat has implemented a consensus protocol, so one person cannot compromise the network at large. All data-submissions made by KrawlCat users will be organized based on their collective accuracy. Any submissions that differ from the rest of the submission pool by more than 1% will be considered outliers, while all submissions within this 1% variance level will be considered accurate. Thus, the results that are within this acceptable range are the results that the network reached consensus on, while results outside of this range can be considered bad actors.

KrawlCat also goes on to solve the issues regarding data variety by simply offering as much variety as possible, our minimum threshold for any data request is 6 API’s. Whether it is stock prices, aviation information, or financial forecasts, the KrawlCat network will always aggregate statistics from multiple resources to eliminate any chance of taking inaccurate information or relying too heavily on any one resource.

There are many approaches to oracle system design. However, the one commonality across all successful projects is to eliminate the chance of bad actors compromising the network, while maximizing the variety of data that blockchain projects have access to in order to eliminate the chance of using inaccurate information.


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Jacques Y

Jacques is a founding partner and CEO of CryptoCanucks.com with a background in marketing and finance. He has a well-rounded foundation of knowledge in Investing, trading, blockchain and researching both Forex and the Cryptocurrency markets.

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