Blockchains cannot access data outside their network on their own. An oracle – also known as data feed – is a third party service designed for use in smart contracts on the blockchain. They provide external data when needed and push it onto the blockchain.

Such conditions could be any data like weather temperature, successful payment, price fluctuations, etc. Smart contracts contain value and only unlock that value, if certain pre-defined conditions are met. When a particular value is reached, the smart contract changes its state and executes the programmatically predefined algorithms, automatically triggering an event on the blockchain. The primary task of oracles is to provide these values to the smart contract in a secure and trusted manner.

An oracle, in the context of blockchains and smart contracts, is an agent that finds and verifies real world occurrences and submits this information to a blockchain to be used by smart contracts.

There are four different types of oracles based on the type of use. We differentiate between software oracles, hardware oracles, consensus oracles and inbound and outbound oracles.

Source: Blockchain Oracles – BlockchainHub