Block Chain, Off-Chain and On-Chain — The mass market buzzwords.
By: Priyanka Gehlot
Tags: Blockchain, Technology, Cryptocurrency, Ethereum Blockchain, Bitcoin

What are these most popular buzzwords?

“BLOCK CHAIN, Off-Chain and On-Chain”

The fact is that nowadays all these buzzwords are oversaturating in the digital mass market.

So, Are we ready to dive into this valuable digital marketplace??

Here we go!!!

BLOCKCHAIN is a system controlled by the different entity having an openly distributed transaction ledger.

A block is consisting of:

-The cryptographic hash of the previous block,

- Data of the transaction and

- Timestamp.

And the block is a record of every new transaction made.

Every new block is adding to the chain of blocks and creating a blockchain.

Now we will tend towards various ways of Blockchain Transactions.

One is Bitcoin (and now Ethereum too going popular), but there are still some drawbacks to the system.

And that’s why people starting rid-off from this technique and choosing the solution as in the Off-chain transaction. Still, most transactions are mainly On-chain, slowly Off-chain too is getting popular.

Which one is profitable between Off-Chain and On-Chain?

Let’s have Off-Chain vs On-Chain

1)Off-chain transactions genuinely take the value outside of the blockchain system.

But, On-chain transactions depends on the blockchain. Also responsible for modification in the blockchain to validate the transaction to get ensure that it won’t be reversed.

2)Off-chain transactions validate the transaction through multiple methods of getting records of the immediate transaction. And immediately ensuring that it won’t be reversed.

On-chain validates the transaction by modifying the blockchain. And that’s why it has to wait for confirmation by each node on the block.

But, Off-chain transactions reduces the time to wait for confirmations.

3)There’s a term Cross-chain transaction which means if you want to place a transfer from Bitcoin to Ethereum, you will need to convert the Bitcoin into Ethereum. But it is cost effecting and time- consuming like an On-chain transaction.

The solution of cross-chain transactions without going via a costly and time-consuming path is an Off-chain transaction. Because Off-chain providing you easy access and enable Cross-chain transfers, regardless of Which blockchain system you are using.

Payouts in Off-chain & On-chain Blockchain System

Payout, the most crucial aspect before adopting any technique.

The Off-chain transaction allows every user to make an instant payout because there is no need to wait for confirmation from each node.

But On-chain transaction delay in making instant payouts because it requires more time to wait for confirmations from third parties.

Privacy in Off-chain & On-chain Blockchain System

Mostly all the On-chain transactions are recorded publicly over the blockchain so it is very easy to reach out to the transaction data, linking addresses and the details to identify the user.

But the Off-chain transactions has the privacy because it is not recorded publicly.

Now,

Let me ask you about the answer to this question-

Which transaction is faster than another one and facilitate to attract more users to make instant payouts?

And the answer with the above elaborated valid reasons is- The “OFFLINE TRANSACTION.” Atlast, a pro-tip on how to gain security in Blockchain system?

By using some Cryptographic techniques such as Chaum Tokens, the user can make it impossible to get identified himself and another participant in this transaction from the third party and even from the operator of the system.