In the world of cryptocurrencies, “onchain” describes actions and transactions that happen right on the blockchain itself. Basically, the blockchain is a decentralized and shared ledger that keeps track of all transactions across a network of computers. When we talk about onchain activities, we’re referring to actions and data that get permanently logged on this blockchain.
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A key role of blockchain technology is to enable direct transactions between users without needing middlemen like banks. When transactions happen on-chain, cryptocurrencies are exchanged straight between the parties involved, and all of this is logged publicly on the blockchain. The network checks each transaction using a consensus method, like Proof of Work (PoW) or Proof of Stake (PoS), which helps maintain the security and reliability of the blockchain.
To wrap it up, for an on-chain transaction to be considered finished, miners need to agree on a certain number of confirmations. The time it takes for this to happen can vary based on how busy the network is. If there’s a lot of activity, transactions might get held up while waiting for confirmation.
Now, if we look at offchain transactions, they represent a different approach. These transactions take place outside the blockchain, and the way they’re handled is a lot like how payment platforms operate, with PayPal being one of the most well-known examples.
Conclusion
Onchain activities include things like transactions, smart contracts, and tokenization that are all logged right on the blockchain. This setup offers transparency, security, and a permanent record. Understanding how on-chain differs from offchain activities is key for people and businesses to navigate the blockchain world effectively. Plus, these concepts play a big role in scaling solutions, where off-chain options are often the go-to choice.