On-Chain Versus Off-Chain Transactions

On-Chain Versus Off-Chain Transactions

Share

While blockchain transactions like Bitcoin exchanges continue to gain traction and popularity, there are still some complaints with the system. One of them is high transaction fees. Yet for every problem that blockchain technology has encountered, this one has a potential solution in the name of off-chain transactions.

Off-chain transactions generally mean the transfer of value outside of the Blockchain ecosystem. Although most transactions are mainly on-chain, off-chain transactions are becoming popular for various reasons.

Join Our Telegram Channel To Stay Updated About QuickX Protocol.

The Benefits of Off-Chain Transactions

Bitcoin users currently pay up to 10% of the total value of their transaction as fees. If these high fees are not addressed, Bitcoin and other blockchain solutions could face a major hurdle in the near future. Off-chain transactions could significantly reduce these transactions fees. Reduced fees will, in turn, mean that more people and businesses can justify the cost of blockchain technology and blockchain will be ready for widespread adoption.

Another one of the more prominent problems with on-chain transactions is that they are significantly slower. This is because every transaction on the block must be confirmed by each node before the transaction is complete. Off-chain transactions eliminate the need to wait for these confirmations thereby increasing the number of transactions that can be carried out at a given time. The result is a wider adoption of blockchain solutions that could enable blockchain to become more widespread and easily acceptable.

The blockchain system as currently designed makes it very difficult to accomplish cross-chain transactions. If you wanted to transfer Bitcoin to Ethereum, you’d first have to convert the Bitcoin to Ethereum, a time consuming and costly process. An off-chain solution will eliminate the need to do that, enabling users to transact regardless of the blockchain system they use. This easy access to cross-chain transfers will open up blockchain transactions to more people, increasing the technology’s influence and reach.

Because an on-chain transaction has to be confirmed before it is complete, the result has often been delayed payments. Off-chain transactions, therefore, can facilitate instant payouts, a direct consequence of faster transactions. Instant payouts will attract more players into the industry, further increasing Blockchain’s appeal.

How to Complete Off-Chain Transactions

Since every transaction on a blockchain network has to be recorded on the block, it can be very hard to accomplish an off-chain transaction without the help of a third-party solution. It also takes quite a long time, up to a few hours for a user to transfer cryptocurrency to another user since they have to wait for blockchain to confirm the transaction.

This problem can be overcome by using a platform like QuickX that enables almost instantaneous off-chain transactions. QuickX eliminates the need for confirmation and thereby significantly reduces the time it takes for a transaction to be completed.

Join Our Telegram Channel To Stay Updated About QuickX Protocol.