Just as we have learned, cryptocurrency has many problems surrounding it. To avoid the trap of those problems, learning about on-chain and off-chain in the blockchain is also important. Just as fatal as the storage system, this transfer system can also be fatal for cryptocurrency traders
Blockchain is a network that connects blocks with blocks. Of course, it will take a long time to record and verify all transactions that occurred in each block. This is why cryptocurrency such as Bitcoin and Etherium are pointed out for speed problems.
On-chain refers to any network activity recorded in a block. Shortly, recording on a blockchain is an on-chain.
Off-chain, on the other hand, is not a method of recording directly in the blockchain. It records particular transactions outside of the blockchain. Therefore, the agreement process or verification is not necessary, so it can be done quickly. This is why off-chain is popular, as it solves the speed problem of blockchain
The on-chain and off-chain mix
The latest on-off-chain mix method is to record large-scale transactions in off-chain and the final details of transactions in on-chain. It is to secure speed by processing large amounts of data off-chain while recording processed data on-chain to secure transparency.
Although the combination of blockchain and non-blockchain seems to have solved everything, problems also arise here.
When information recorded in off-chain is transferred to an on-chain (blockchain), there is no certainty that the information is reliable. Because off-chain is not blockchain, there is a possibility of hacking and there is a possibility of false information or fake IDs.
For example, A is selling his car and he found a smart contract where it automatically transfers tokens to C if the condition fits. If A had an accident history before and the data is on the blockchain, but it disappeared or mutated for some reason. It would be a false information entry and an “oracle problem” occurred. This is because the A traded the data of the car in the blockchain in a different state from the facts.