Developer and CEO Ambisafe Andrew Sumowski, recently joined blockchain startup InChain, wrote in a blog on Medium material, explaining the work of oracles in Ethereum, as well as the process of using them for insured events occurring outside of the blockchain.
As explained Sumowski, the key problem of using smart contracts to process events from the real world is that contracts do not have ways of obtaining information from external sources. According to him, such a limitation caused by including security requirements, to avoid using a lot of computing power to implement, for example, DDoS attacks.
"Because all nodes execute each line of each smart contract, and anyone can add to your smart contract, the entire blockchain network can easily become a weapon for DDoS attacks. This will happen as soon as possible interaction smart contract with external resources," wrote Zamovsky.
This feature of smart contracts entail corresponding limitations on their use. In particular, the example of insurance cases, Sumowski talks about using oracles to solve this problem.
The Oracle is a smart contract, which contains information about the state of external reality or events outside of the blockchain. There are two methods of populating Oracle information:
1.use a team approach to gather information, when any member of the chain may add data to your contract and get rewarded for it (on the principle of prediction markets);
2.to associate the Oracle with a trusted party, delegating this side private keys.
Of course, the first approach is more decentralized and, therefore, will be much better accepted in the community. However, prediction markets are still at an early stage of testing because it is a comprehensive and rather complex system. The second approach has much in common with the principle of the SSL certificates and, according to Sasovskogo, today may work quite well.
"As soon as the author announced your public key, anyone can confirm the accuracy of the appended data. For example, if he wants to run Oracle, which will tell us about earthquakes, it needs to assign a couple keys to http://earthquake.usgs.gov/, ask the USGS to publish their public key (ethereum address) on its website, to run a special module on the backend, which will add every new unit of data in a smart contract," he described Sumowski the second method of obtaining Oracle information.
The second filling method of the oracles of information you plan to use InChain.
Recall that InChain is a decentralized blockchain-a platform for risk insurance and investment in insurance bonds. The project will be developed on the basis of Ethereum. The team plans not only to implement the mechanisms of insurance, but maintenance and insurance of the bonds by using smart contracts.