Trust but Verify: The Oracle Paradox of Blockchain Smart Contracts

Although research shows that blockchain provides fairly immutable virtual provenance workflows, proof that the blockchain accurately represents physical events lacks truly independent verification. This dilemma, the Oracle Paradox, challenges blockchain architecture and is perhaps one reason why businesses have hesitated to adopt smart contracts. Blockchain proponents claim that people can serve as trusted Oracles in a smart contract. However, auditing research shows that people are the weak link in almost every internal control application, including those pertaining to blockchain. People are susceptible to collusion, bribery, error, and fraud and these tendencies are not entirely mitigated by blockchain technologies (Balagurusamy et al. 2019; Nakamoto 2008). This research proposes a framework to mitigate the paradox of the Oracle: A Business Process Management ( BPM) model of a Blockchain Smart Contract-enabled supply chain with IoT as the sole ``third-party'' Oracle participant, utilizing design science research.