Blockchain technology is no longer for upstarts. Now the big fish are jumping into the pond, and one of the most interesting solutions for businesses seems to be Oracle. (Note: blockchain oracles are not to be confused — and are in no way affiliated — with Oracle, the company.)

Smart Contracts’ Little Helpers

An oracle is typically a smart contract that makes external data (i.e. off-chain, real-world, or cross-chain) deterministically available on the blockchain. It provides a single source of truth for off-chain states, and hence allows blockchain nodes to reach consensus.

The traditional oracle is highly centralized and goes against the spirit of the decentralized blockchain. A delivery service oracle that provides delivery status of packages might be established by FedEx, for example. A weather oracle might be established by a weather station. In order to use those oracles, blockchain users and decentralized apps (‘DApps’) must trust the entities behind those oracles.

A second approach for oracles is to create a community-based cryptoeconomic game for members of the community to compete and provide the truth in a smart contract. Examples of such oracles include the BTC Relay to provide information about the Bitcoin blockchain, and the Ethereum Alarm Clock to provide time.

Oracles, in the blockchain sense, also can be a link between the physical universe and the virtual reality of blockchain platforms — an essential part of the promise of smart contracts. Essential, in the sense, for the realization of the blockchain-based sharing economy.

Org chart, Oracle-style

Trust Machine

The whole idea of a blockchain, versus a conventional database, is trust. While a database can be easily hacked — and changed — that’s not the case with a (sufficiently decentralized) blockchain. It’s the genius of a blockchain: no single point of failure. Plus, the database is accessible for everyone. If you’re not familiar with LVMH, I’m sure you’re familiar with some of their by-products and brands: Belvedere, Bulgari, Christian Dior, Dom Pérignon, Fendi, Louis Vuitton, Sephora. Chances are if you (or yours) owns a designer purse or a uses high-end perfumes and cosmetics, you are a target consumer. But the real question is, Can you verify if the luxury goods on hand are real?

The amount of counterfeit items is innumerable, meaning no one has ever been able to eliminate the counterfeit issue…yet. In fact, when I dig deeper, counterfeit designer goods are big business. We’re talking billions of dollars. Let’s take a closer look at why and how blockchain technology has a solution to counterfeit across multiple industries.

Continuing with LVMH as an example, it turns out the luxury goods conglomerate is an active investor, too, particularly in technology startups. Just last spring, LVMH led a $60 million funding round for Lyst, a luxury e-commerce platform in search of a killer app. Which begs the question, What’s the perfect crypto killer app? Lots of projects think they’ve got it nailed down but let’s face it: Crypto’s killer app still is missing in action. As the search continues, however, blockchain technology can help solve a lot of the ongoing problems today. Benefits that can be applied to consumer confidence and brand protection are tantalizing. If you’re a luxury goods maker like LVMH, your brands and the authenticity of your products are the most crucial elements of your business. As mentioned, they lose significant revenue from counterfeit goods.