On-chain are all activities and transactions that occur on the blockchain network.
Meanwhile, off-chain is all activities that occur outside the blockchain network.
Then what is the importance of the crypto ecosystem?
Hey, back at INDODAX Academy with Fay!
I want to discuss on-chain and off-chain in the crypto ecosystem this time!
As a user or developer, it is important for you to understand the differences and implications of on-chain and off-chain in the crypto ecosystem.
But before discussing it, remember to like and subscribe to the INDODAX channel to get all the interesting information!
What is On-chain and Off-chain
Off-chain and on-chain are important in the crypto ecosystem as they relate to how transactions and information are stored and processed in the blockchain network.
On-chain occurs when users carry out crypto transactions, such as sending or receiving crypto assets, which are then sent directly on the blockchain network and stored in blocks.
Then, the miner will verify this block, and only after that is the transaction considered valid.
Well, this is why on-chain is important.
Because all crypto transactions must go through a strict verification process.
Off-chain in the crypto context includes transactions on crypto market exchanges and can also be interpreted as transactions carried out through other protocols that are not dependent on the blockchain.
An example is the Lightning network, which allows transactions to be cheap and fast between users without having to go through verification by the main blockchain network.
Difference Between On-chain and Off-chain
The main difference between on-chain and off-chain lies in how transactions are processed and stored.
On-chain requires verification from miners, so on-chain takes longer and costs more.
Meanwhile, off-chain does not require verification from miners, so the time is faster and cheaper.
Even so, both off-chain and on-chain play an important role in blockchain applications and projects.
On-chain applications like apps use the blockchain to run code and smart contracts.
Meanwhile, off-chain applications such as Oracles use information access outside the blockchain to be used in smart contracts.
So, that was an explanation about on-chain and off-chain.
Both play an important role in blockchain networks’ scalability, performance, and decentralization.
Hopefully, this explanation helps you to understand more about blockchain and crypto assets.