More Examples

“SEGWIT is an off-chain transactions scalability solution.”

“Many layer 2 technologies focus on processing off-chain transactions.”

Off-chain systems can potentially handle near-unlimited transactions per second.”

Definition(s) from the Web

  1. An off-chain transaction is the movement of value outside of the block chain. While an on-chain transaction – usually referred to as simply ‘a transaction’ – modifies the blockchain and depends on the blockchain to determine its validity an off-chain transaction relies on other methods to record and validate the transaction. Like on-chain transactions all parties must agree to accept the particular method by which the transaction occurs, the question then being, how can those parties be convinced that the movement of value has actually happened, will not be reversed, and can be exchanged in the future for something of value? With an on-chain transaction those questions are answered by the parties faith in the Bitcoin system as a whole. For instance a transaction (after some number of confirmations) can only be reversed if a majority of hashing power agrees to reverse the transaction. The parties to the transaction are trusting that the majority of hashing power in existence is controlled by “honest” parties who will not attempt to reverse the transaction. Source
  2. A new block is added to the chain at random intervals averaging, by design, ten minutes (proof-of-work causes this delay). Together with the limit on block-size, this limits the number of transactions that can be processed in a given time. Some sites work around this problem using “off-chain payments” conducting transactions without writing them to the blockchain, which involves various trade offs regarding trust and transaction finality. Source

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