What Is On-Chain?
In the context of blockchain technology, “on-chain” refers to transactions and activities that occur directly on the blockchain itself.
A blockchain is a decentralized network that maintains a distributed ledger, serving as a shared database.
On-chain transactions are recorded on the blockchain and are visible to all participants in the network.
Validating and Appending Transactions
When a new transaction takes place, it must be added to a block and appended to the blockchain.
This process typically involves following consensus protocols to validate and verify the transaction’s authenticity.
On-chain transactions are considered valid and authenticated by miners or validators within the blockchain network.
These transactions result in updates to the distributed ledger, reflecting the changes made by the transaction.
Confirmations and Processing Times
For an on-chain transaction to be considered complete, miners typically require a certain number of confirmations.
The time it takes for an on-chain transaction to complete can vary based on network congestion.
If there is a high volume of transactions awaiting confirmation, there may be delays in processing times.
Off-Chain Transactions
In contrast, off-chain transactions are a different variation of transactions.
Off-chain transactions occur outside of the blockchain and rely on protocols similar to those used in traditional payment platforms like PayPal.
Parties involved in an off-chain transaction can establish agreements outside of the blockchain, and the transaction may involve a third party to confirm its completion and ensure compliance with the agreed terms.
Both on-chain and off-chain transactions serve different purposes and have unique characteristics, with on-chain transactions providing transparency and immutability through their direct execution on the blockchain network.