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Oracles play a crucial role in blockchain technology, acting as a bridge between the blockchain and the real world. They provide external data to smart contracts, enabling them to execute based on real-world events. Without oracles, blockchain applications would be limited to the data already stored on the blockchain. By integrating oracles, developers can build more dynamic and responsive decentralized applications. This connection is essential for the practical application of blockchain in various industries, from finance to supply chain management.