A Bidirectional Oracle is a tool that connects blockchain networks to external data sources. It enables two-way communication, allowing information to flow in and out of the blockchain securely. These oracles are crucial for smart contracts that require real-time data to execute correctly.

For instance, they can pull prices from exchanges or other data from outside the blockchain when needed. Conversely, they can also send data back to external systems, which can trigger actions outside the blockchain based on conditions met within it.

This two-way interaction enhances the functionality of decentralized applications (dApps) by bridging the gap between on-chain and off-chain information. As a result, Bidirectional Oracles help create more dynamic and responsive smart contracts, improving overall efficiency and enabling new use cases in decentralized finance, gaming, and other sectors.