Harry Hamburg – Exponential Investor (United Kingdom) –
In all the old stories, particularly the Greek ones, oracles know the fate of the world.
Heroes and villains alike routinely consult oracles before setting out on any big endeavour. They were thought to be the mouthpieces of gods on Earth.
In the Iliad, for instance, Odysseus is told by an oracle that if he goes to war to rescue his mate Menelaus’ wife, Helen, he will face a terrible fate. And he will not return home for many years.
Spoiler alert: the prophesy comes true. As I’m sure you’re aware, that’s where the Odyssey comes from – it’s the story of Odysseus’ long and arduous return home.
In the same story, Achilles is told by an oracle that if he also goes to war, he will die. This is why he is so mardy for most of the Iliad. He only decides to fight in the end because someone kills his cousin.
The main villain in the Iliad (aside from some of the Gods) is Paris. He is the one who abducts (or runs away with, depending on the interpretation) Helen.
Paris’ fate was also prophesied by an oracle.
His mum was told, while pregnant, that he would cause a great war and be the reason Troy would fall. She decides to leave baby Paris on a mountainside to die. This doesn’t work and the prophesy comes to pass.
The reason I’m talking about oracles is they are making a comeback. They are going to have a massive impact on your life, whether you realise it or not.
Consulting with the oracle
Ancient oracles told people what was yet to happen. Modern-day oracles tell people what has already come to pass.
Why would you need to know what has already take place? So you can prove it.
Modern oracles are essentially knowledge centres. You can ask them questions and get instant answers. They are computer programs running on the internet.
Let’s take an example of how this is useful.
Say you go on holiday and take out insurance. Your flight is delayed by ten hours and you are due compensation.
How can your insurance company find out if your flight was delayed or not? They ask an oracle.
The oracle instantly relays that flight BA5602 scheduled to take off from London at 8am on 2 March was delayed by ten hours.
Your insurance then pays you your delayed flight entitlement.
Where this gets interesting, is when we bring in the old crypto staple, smart contracts.
Smart contracts and oracles
By having an oracle, smart contracts can be programmed to automatically pay out as soon as a certain condition is met.
So, in this example, as soon as your flight was delayed, your insurance would pay you.
This wouldn’t even need any human intervention, and would happen instantly. No more arguing on the phone with your insurance provider. No more waiting weeks for a cheque. It would all happen in the blink of an eye, with zero effort on your part.
As I’m sure you can imagine, this oracle-smart contract setup has huge possibilities. And not just for insurance. Two other major ones are prediction markets and sports betting. But really, the possibilities are endless.
So, what’s stopping it from all being implemented? Actually, nothing.
One of the major DAG cryptos, ByteBall, already has this feature. You could go buy some ByteBall right now, download its wallet and start using it.
I’m not saying you should. I’m just using this example to show you this is a real-world application that’s online and working right now. It’s not some “would be nice” concept.
However, it’s worth noting that oracles don’t come without their issues.
The dark side of oracles
The problem with oracles is, how do you know they aren’t lying to you?
For instance, say you bet on Alberto Contador winning the Tour de France. What if when he wins, the oracle says that he actually lost to Chris Froome?
Even though you bet on the correct outcome, you’d never get your money.
Or what if the oracle says your flight wasn’t delayed and you never get your insurance payout?
These scenarios could easily happen if the oracle was compromised, either by hackers, or just by bad actors.
As the use of smart contracts grows, oracles will be responsible for millions, if not billions of pounds of transactions.
Both Microsoft and IBM are currently working on this problem, and both are heavily involved in the oracle space.
The current best solution is not relying on a single oracle, but on multiple oracles, and only deploying the smart contract when there is a consensus.
That way, one or two compromised oracles won’t cause any issues.
As smart contracts evolve, the oracles they rely on will have to evolve with them. In fact, there are a number of cryptos built with the aim of creating more decentralised and trustworthy oracles.
Right now, very few people can see the potential in smart contacts and oracles. That’s the case with most of the things cryptos are capable of.
When most people hear about cryptos they think purely about the “currency” aspect. But their uses are far, far bigger than just “magical internet money”.
It’s not just the world of finance that cryptos are disrupting, it’s almost every industry on Earth. They may not be doing it in a way that’s obvious to 99% of people. But that doesn’t matter.
The tiny percentage of people who do “get it” and who see the potential will make a lot of money in the coming years.
It’s certainly not too late to get involved in this space just yet.
Until next time,
Editor, Exponential Investor