An off-chain transaction is a value exchange that occurs outside of a blockchain network, offering speed and efficiency without the need for direct blockchain confirmation.

Understanding Off-Chain Transactions

An off-chain transaction signifies a value exchange that doesn’t occur on the blockchain itself. Instead, these transactions happen outside the blockchain network. They offer a swift and efficient alternative to the slower on-chain transactions that require blockchain confirmation.

How Off-Chain Transactions Work

Off-chain transactions are confirmed through mutual agreement between parties. They may also involve a third-party guarantor, such as a layer-2 solution, to ensure the transaction’s legitimacy. Later, these transactions can be batched and integrated into the blockchain.

Comparing On-Chain and Off-Chain Transactions

Advantages of Off-Chain Transactions