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Blockchains and Oracles: Similarities, Differences, and Synergies

Blockchains and oracles are both critical network infrastructure to developing decentralized applications (dApps) and use similar security approaches like cryptography, decentralized consensus, and cryptoeconomic incentives. However, they also differ in network architecture, service offerings, node composition, and their overall purpose. These differences are synergistic and combine to form hybrid smart contracts—smart contracts that retain the security assumptions of blockchains while achieving extensive feature richness via oracles.

Blockchains introduce new backend infrastructure for running tamper-proof computation and storing data on immutable ledgers. Although initially used to create and manage decentralized forms of money, blockchains have evolved to now power smart contracts—deterministic programs with conditional logic (if/when x event happens, trigger y action). 

Like the Internet’s value to computers, oracles opened up the full potential of smart contracts by allowing them to execute using data and computation from outside the blockchain (off-chain). These hybrid smart contracts provide an advanced framework for supporting decentralized applications (dApps) where the similarities between blockchains and oracles ensure end-to-end decentralization while their combined differences make enhanced connectivity, scalability, privacy, and fairness possible without sacrificing the underlying security model. 

Hybrid smart contracts combine on-chain and off-chain infrastructure for advanced decentralized applications.

The following article will offer a deeper, more nuanced examination of the purpose and architecture of blockchains and oracles, along with the similarities, differences, and synergies between them.

Comparing the Purpose and Architecture of Blockchains and Oracles

Before diving into the similarities and differences, let’s define the purpose and generalized architecture of both blockchains and oracles in terms of the ro...

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