/The Difference Between On-Chain & Off-Chainβ π§΅
#Crypto #Blockchain #Web3
/On Chain
On Chain transactions refer to crypto transactions that are recorded & verified on the blockchain.
On-chain transactions are considered valid when the blockchain has been updated & reflects the transactions on the public ledger.
On-chain transactions offer transparency/security since they can't be modified once they've been verified/recorded on the network.
/On-Chain Transactions Time
In thesis on-chain transactions are meant to occur in real-time for blockchain security, verifiability, transparency etc..
However, this is not the case the majority of the time. On-chain transactions can take a long time to become verified & confirm the transaction.
High transaction volume/congestion on the network can cause delayed validations by miners.
If this is the case then the participant must wait for a settlement.
There is also an option in some instances to pay an extra/added transaction fee to speed along the transaction.
/The Cost
Miners require a fee for their offering of computational power to validate/authenticate a transaction, and these fees can be very high.
Fees can differ depending upon congestion on the network.
/On-Chain Advantages
- Offers security, as miners are needed to validate/authenticate a transaction.
- Transparency; all transactions are public.
/Off-Chain
Off-chain transactions refer to transactions that occur outside of the blockchain.
Off-chain transactions can be a transfer agreement between parties.
Another example is two parties exchanging their private keys involving a specific amount of crypto coins.
In this instance, coins never leave the wallet, but the crypto has a new owner off-chain.
/Advantages
- Can be performed instantly.
- Usually don't incur a transaction fee, as nothing occurs on blockchain; no miners involved to be rewarded.
- Offers a different sense of security compared to on-chain as the parties involved are not publicly broadcasted.
/Conclusion
It depends on your goal.
If the importance is low transaction fees & speed then off-chain transactions are your best bet.
Whilst, if a validated transaction, security is important then on-chain transactions are better suited.
#Crypto #Blockchain #Web3
π RaverDave π
@WILLDCRYPTO
Collector / Builder in Web3 πΌ π¨ I like to create banners & write threads; NFTs/Crypto/DeFi/Blockchain π§΅β¬οΈ