Off Chain - what is it?

Off Chain is a technology where all processes occur outside the blockchain network.

Every trader who starts working in the cryptocurrency market and uses the services of various exchanges has to become familiar with what Off Chain is. This term refers to off-chain processes, that is, those situations when the blockchain is not involved.

On-chain and Off Chain - the difference in concepts

Unlike Off Chain, On-chain just means data processing within the blockchain. Simply put, this term defines all records, including transactions, that are immediately written into the code. As a result, their ability to falsify data becomes much more difficult. With the Off Chain algorithm, the transaction is not immediately entered into the source code of the cryptocurrency system. First, it is recorded in the internal database of the service provider.

The alternative option is used mainly on cryptocurrency exchanges because many transactions are carried out here every second. In ecosystems, due to the certain complexity of the transaction validation process, there are also problems with scalability. To speed up payment processes, under the Off Chain system, payments are processed only in the intermediary’s internal database, outside the chain. They are then written en masse into the chain to prevent system overload.