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>The “if….” component of the smart contract relies on data from outside of the blockchain provided by an “oracle” – which could be a database or a person – providing confirmation that the precondition has been fulfilled. A smart contract is reactive, and only as smart
as the self-executing code on which it is based and the factual accuracy of the data input by the oracle. Where data is automatically obtained and input from
a reliable source, its accuracy may be relied upon. For example a smart insurance contract might have as its oracle a database of meteorological statistics. If the database records a storm or drought (as defined
in the insurance contract) occurring, then insurance pay-outs are automatically triggered. Where the oracle is a person inputting data manually there is obviously a
risk of human error. In the event of error in the coding, the result may be wrong regardless of the accuracy of the oracle.

https://www2.deloitte.com/content/dam/Deloitte/be/Documents/legal/Blockchain%20Booklet%20March2018.pdf