On-Chain

Jun 3, 2023 | Updated Jun 3, 2023

On-chain transactions are transactions that are recorded on the blockchain’s distributed ledger and are publicly accessible to anyone who has a copy of the blockchain’s ledger.

What Are On-Chain Transactions?

As the name implies, on-chain transactions occur on a blockchain network and are validated and authenticated by the network miners. These transactions are validated by a consensus protocol agreed upon by the network miners. After verification, they are recorded on the blockchain’s public ledger.

On-chain Transactions Versus Off-Chain Transactions

Off-chain transactions take place outside the blockchain network using a second layer solution or alternate mechanisms. Some blockchain networks integrate off-chain transactions to improve the network’s transaction speed, efficiency, and scalability. However, off-chain transactions also have trade-offs such as a degree of centralization and reliance on intermediaries.

All on-chain transactions must be validated and confirmed by a significant number of network miners before they are recorded on the blockchain. This may take time, because miners have to solve complicated mathematical equations and reach a consensus to approve a transaction. These transactions require more time to be confirmed and network congestion but add more security to the network.

As the transaction volume increases, the network gets congested. Because these transactions take place on the blockchain and don’t involve any third parties, they support transparency within the network.