**1. Smart Contracts:**
Smart contracts are self-executing contracts with the terms directly written into code. They run on blockchain platforms, like Ethereum, and automatically execute actions when predefined conditions are met.
**2. Oracle:**
Oracles act as bridges between the blockchain (where smart contracts operate) and external data sources. Smart contracts, by design, cannot fetch data from outside their blockchain environment. Oracles provide a secure way to bring real-world data onto the blockchain, enabling smart contracts to make decisions based on that data.
**3. Data Feeds:**
Data feeds are continuous streams of real-time information. They could include market prices, weather updates, sports scores, or any other relevant data. Oracles use data feeds to update the information in smart contracts.
**Example Scenario:**
Imagine a weather insurance smart contract. This contract could automatically release funds to an insured party if an external oracle reports that the weather conditions meet specific criteria, like heavy rainfall or extreme temperatures.
**Detailed Explanation:**
- **Smart Contract Code:**
```solidity
contract WeatherInsurance {
address public oracle;
uint256 public triggerTemperature;
bool public claimable;
constructor(address _oracle, uint256 _triggerTemperature) {
oracle = _oracle;
triggerTemperature = _triggerTemperature;
}
function checkWeather() external {
// Call external oracle to get real-time temperature
uint256 currentTemperature = Oracle(oracle).getTemperature();
// Update contract state based on real-time data
if (currentTemperature >= triggerTemperature) {
claimable = true;
}
}
