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Smart contracts cannot make http requests directly due to the decentralized nature of blockchains. If http requests are made via chaincode, the data may differ per request. This issue is resolved by using an oracle to ensure that the data returned is consistent across all nodes for each transaction.
Some advantages of using an oracle for smart contracts include:
- Ensuring consistency of data across all nodes in the network
- Allowing the smart contract to interact with off-chain data sources
- Providing greater flexibility in the types of data that can be used in smart contracts
- Enabling the smart contract to respond to real-world events in a timely manner
Some of the use-cases include:
- 1.Supply Chain Management: Oracles can fetch real-time data about the location, condition, or authenticity of goods in transit from external sensors or tracking systems. This can be useful for verifying compliance with shipping terms or environmental conditions.
- 2.Financial Products & Derivatives: Smart contracts can use oracles to obtain real-world financial data, like stock prices or foreign exchange rates, to execute functions such as settling a contract upon reaching a particular stock price.
- 3.Insurance Claims: In the event of natural disasters like floods or hurricanes, oracles can pull data from weather agencies to automatically trigger insurance payouts for smart contract-based insurance policies.
- 4.Real Estate: Oracles can fetch data about property prices, tax rates, or rental income, allowing for the creation of decentralized property marketplaces or rental agreements.
- 5.Agriculture: Smart contracts can use oracles to get data from weather stations, which could decide, for instance, the payout amount for crop insurance if there’s a drought or heavy rainfall.
- 6.Decentralized Identity Verification: Oracles can fetch and verify identity-related data from trusted external sources, facilitating decentralized identity verification processes.
- 7.Electricity Trading: In decentralized energy grids, oracles can fetch real-time data on electricity production (e.g., from solar panels) and consumption, enabling automated, peer-to-peer energy trading.
- 8.Internet of Things (IoT): Oracles can relay data from IoT devices to the blockchain. For instance, data from a smart lock can confirm receipt of a delivery, triggering payment in a blockchain-based supply chain solution.