It is essential for traditional businesses to participate in the decentralized ecosystem to bring more security and legitimacy to the industry.
Blockchain technology is revolutionizing the way we interact, transact and share information. Many experts predict this will be the most disruptive technology in the next decade. Following minor structural innovations since the 19th and 20th centuries, decentralization brought industries such as finance, media and technology closer to transparency, freedom from intermediaries, and increased efficiency.
Traditional businesses rely on a central closed door structure. In contrast, decentralized finance projects are built on the premise that management should be decentralized and democratic. Switching the community to decentralized platforms can make many services safer, more accessible, and more transparent than ever before. The growing interest in space points to a collective desire to have more control over critical elements of our lives, especially our finances.
While helping to solve problems such as decentralization, transparency and efficiency, the absence of a reliable central authority means that decentralized applications or DApps must rely on third parties to carry out application functions such as processing transactions or obtaining loans. Access to secure, reliable information such as price information, real-world events, and identification, among others, supports the reliability, power and efficiency of a decentralized application.
The security of this data protection comes from the oracle solution that can securely and effectively connect real-world and off-chain information with decentralized applications and smart contracts in a verifiable, manipulation-resistant manner. With over 1 million regular DApps users worldwide, there is a huge demand for reliable data in the blockchain space as it supports the security of DeFi applications and the billions of people currently locked in the space.
Following hacks, attacks, and data manipulation, the challenge blockchain technology faces is building trust and creating secure systems in the absence of established businesses or government regulations. This is where new technologies such as data oracles are required to create a secure link between traditional companies with reliable price streams and the decentralized ecosystem.
Combining the old with the new
Data oracles act as a bridge between decentralized blockchain applications by collecting real-world data and connecting it to smart contracts. These decentralized applications then use self-powered smart contracts when certain criteria are met, such as a liquidation security that requires a price oracle. In the absence of a central authority, data oracles are required to connect blockchain-based applications with the information required to run these smart contracts.
Usage scenarios for smart contracts and oracle technology are extensive and encompass insurance, real estate, healthcare, and most importantly, the DeFi domain where a security breach could endanger millions.
There are many examples of hacking in DeFi. Data oracles are the input of the logic of smart contracts and therefore determine their output behavior. If the data oracle input is wrong, this leads to unwanted behavior from the smart contract and can result in loss of funds or other undesirable consequences as seen with even the most powerful DeFi projects. These structural problems require the widespread adoption of data oracles.
There is a desperate and critical need to connect Web 2.0 to Web 3.0 to create a more flexible, efficient, censorship-resistant internet. Traditional companies built on Web 2.0 are not yet ready to structurally transition to DeFi due to the required learning curve, knowledge and organizational flexibility. These traditional organizations will need smooth recruiting processes with a high level of flexibility and customizability to act as a bridge to Web 3.0.
This is where the new oracle technology will come in for businesses to leap into Web 3.0 without having to grapple with the process.
While DeFi has undeniably boomed last year, it is this accessibility that will create a truly robust DeFi ecosystem, so the field still needs to be embraced more widely by the majority without coding expertise.
Traditional organizations will greatly benefit from this transition as their data is a valuable resource for decentralized applications and an innovative new revenue stream matured for market capture as the industry continues to rise.
Why should we encourage traditional businesses to blockchain?
Most decentralized apps require real-time information such as price indicators, sports results, weather and news updates. Traditional processing capable of providing reliable real-world data
Means should take advantage of this growing demand by connecting with decentralized applications and commercializing that data through a trusted data oracle. For example, technology and media giants like Google and Bloomberg will greatly benefit from the use of a data oracle.
This is an exciting step for the industry as it adds extra security and legitimacy to the field when big companies land on DeFi. In turn, this transition will create an additional source of income for these established businesses in a new and emerging industry. As the world continues to adopt DeFi, DApps, and smart contracts, traditional businesses have no choice but to enter or risk falling behind.