Ethereum's Missing Link: Oracles Provide Off-Blockchain Data for Smart Contracts
Fran Strajnar, CEO of BraveNewCoin, about the development of oracles as Ethereum’s missing link to make smart contracts truly useful to the regular business world.
Bridging the gap
Ethereum promises a host of smart contract applications from gambling to ridesharing. The technology still is, however, very much in development, and much of its current use remains either speculative or hypothetical, with few day-to-day operations of regular businesses relying on smart contracts. This is because Ethereum smart contracts only have access to information on their own Blockchain, and need a way to communicate with the outside world to be truly effective.
To bridge this gap in Ethereum’s capabilities, middleware “oracles” can be employed to communicate data from the world outside of the Blockchain, permitting smart contracts to be truly useful. For example, a smart contract for recurring payment or salary in cryptocurrency would employ a price oracle to determine the exact amount to be distributed while adjusting for market fluctuations.
Cointelegraph spoke to Fran Strajnar about the development of oracles as Ethereum’s missing link to make smart contracts truly useful to the regular business world.
Cointelegraph: There seems to be a relative lack of applications using Ethereum in a real-world use cases. Why do you think that is?
Fran Strajnar: The main reason there is a lack of commercial use for smart-contracts, is because of the lack of interoperability. Smart-Contracts need to communicate with the real-world to be useful. To achieve this, infrastructure, standards and protocols first need to be developed. Companies like Oracilze, Smartcontract.com and others building what is effectively middleware solutions, are going to play a key role in helping commercialize Blockchain applications by helping make smart-contracts useful in the real world.
CT: Would it be fair to say, then, that at this current stage Ethereum is over-hyped?
FS: I wouldn't say it's overhyped. It's relative. I personally think we should see 10x more research and development being dedicated to exploring tangible use of various Blockchain designs. At the same time, Ethereum is just one innovation and is taking up the lion's share of attention.
CT: You mentioned middleware being a crucial component to effective smart contract use. Does Ethereum need solutions like these in order to be useful?
FS: Absolutely. Without further tools to bridge machine to machine communications between legacy systems and a Blockchain, the functionality of a Blockchain will remain limited.
CT: In that sense, Ethereum as it now operates can be viewed as "unfinished"?
FS: Ethereum is still in beta mode to a large degree yes
CT: What would a hypothetical example be of a middleware solution for Ethereum? What kinds of information from the real world would need to be communicated?
FS: Middleware is simply a trusted Oracle which takes in data from external sources and makes it available to a smart contract. This is what we built with the Pricing Oracles.
It doesn't matter what application you are building, it will likely need some real world information.
Could be a financial application requiring interests rates. Or something non-financial like a content rights management platform, tracking the usage of creative content on various websites. Middleware comes in many different flavours.
CT: By and large, is the Ethereum community aware of this need, and taking steps to see that it is fulfilled? Or is this still a minority viewpoint?
FS: I think in general the realization that networks always end up demanding interoperability, is substantially growing among the ethereum community over the past couple of months. I also see many ethereum project open to collaboration with other Blockchains and enterprise users.
CT: How long until oracle use is completely mainstream by Ethereum projects?
FS: That will be measured project by project.