A blockchain can validate signatures, execute rules, and record transactions with mathematical precision.
But there's one thing it can't do on its own: know whether a piece of real-world data is true.
That's where the so-called Oracle Problem comes in.
A smart contract can be programmed to act when something specific happens: for example, when $BTC reaches a certain price, when collateral is liquidated, or when a condition in a DeFi protocol is triggered.
The problem is simple: the blockchain can't go out onto the internet and check for itself what's happening in the outside world.