Cryptoasset Anti-Financial Crime Specialist (CCAS) Certification Practice Test

What are trusted third-party providers of off-chain data to smart contracts called?

1. Resource compilers

2. Oracles

3. Data pools

4. Consensus algorithms

The correct answer is: Oracles

Trusted third-party providers of off-chain data to smart contracts are known as oracles. Oracles serve as intermediaries that enable smart contracts to interact with external data sources, facilitating the flow of information that triggers contract execution. This is crucial because smart contracts operate within a blockchain and do not have direct access to data beyond their network. Oracles bridge this gap by providing real-time data, such as price feeds, weather conditions, or any other external information necessary for the smart contracts to function correctly. Utilizing oracles allows smart contracts to respond to real-world events, thereby enhancing their usability and functionality within decentralized applications. This reliance on oracles is vital in various sectors, including finance, insurance, and gaming, where accurate and timely data is essential for automated decision-making processes. The other choices do not fulfill this specific role; for instance, resource compilers and data pools do not directly provide the necessary data feeds to smart contracts. Consensus algorithms refer to the mechanisms that validate and agree on transactions in a blockchain, which are not related to supplying off-chain data.