What is the difference between on-chain and off-chain transactions?

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On-chain transactions refer to cryptocurrency transactions, which take place on the blockchain. 

An on-chain transaction occurs when the blockchain is modified to reflect the transaction on the public ledger.

It involves the transaction being validated and authenticated by a suitable number of trusted nodes, recording the details of the transaction on the suitable block, and broadcasting the necessary information to the whole blockchain network, which makes it irreversible. 


Off-chain transactions refer to transactions on a cryptocurrency network, which moves the value outside of the blockchain.

Off-chain transactions take the value outside of the blockchain and can be executed using multiple methods. In most cases, off-chain transactions utilise a third-party guarantor who guarantees to honour the transactions, for example, services such as a crypto exchange (not all of them) or PayPal.