SCALING/ORACLES
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Written by APEXE3HQ
Updated over a week ago


Scaling

One of the main problems with many blockchain networks is their scalability. Scaling problems are an issue when the amount of data passing through the blockchain hits a limitation due to the insufficient capacities of the blockchain. Scaling solutions are designed to increase the speed and efficiency of blockchains. Take a look at their different forms and how they work in this guide.


Oracles


An oracle is a trusted third party that provides smart contracts - a digital contract where the terms of agreement between the parties is set in software code - with authenticated external sources of data and information (such as FX rates and pricing) from the real world through an API.


Oracles connect smart contracts with external events, and act as a bridge between the blockchain and the real world.

They can be entrusted with the triggering of smart contracts based on the outside events they are connected too.

Example: Farmers sometimes purchase agricultural derivatives, which provide insurance in case drought wipes out their crops. If the weather doesn't go the farmer’s way one season, the derivative will pay them a lump sum to make up for the losses.

Source: https://coinmarketcap.com/alexandria/article/what-are-cryptocurrency-layer-2-scaling-solutions

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