Paul Brody: Enterprises Need Third Parties For Oracles to Work

Paul Brody is a Principal and Global Blockchain Leader at EY.Oracles, an often overlooked feature of blockchain technology, are having a moment.

For much of the blockchain era, especially in the era of cryptocurrencies, oracles have not had a significant role to play.

In the future, they are going to have an important role in enterprise blockchain usage, enabling business and financial operations in both the "Real world" as well on the blockchain.

From financial services to product purchase agreements, at least some information from exchange rates to interest rates to proof of shipment delivery is needed from outside the blockchain.

In short, you need the blockchain-equivalent of an audit, but not something that is only updated once a year with an annual report.

These third-party assessments are, it turns out, a staple of the audit business and they come in two main flavors: attestation reports and systems of controls reports.

On learning about SOC reporting and attestation reports, many people say it's contrary to the vision of a trustless blockchain environment.

Having a third party perform an attestation or issue a SOC report aligns incentive and minimizes conflict of interest.

In a genuinely decentralized blockchain environment, there is no absolute requirement to use one of these third-party services.

Oracles are of immense importance to the future of blockchain commerce ecosystems.