We’ve seen the initial launch of blockchain technology, and we’ve witnessed the flurry of ICO sales (and some flops) over the last year, but what’s coming up next for blockchain technology will transform the industry for good: off-chain transactions.
The blockchain itself is the foundation and off-chain transactions lie over the top of this foundation like a 2nd tiered layer or a net. To understand how this works, let’s compare it to the internet. In the 90s, the web launched, and for the first few years, the only people using it were super-intellectual professors and researchers. All the first movers. At that time, we had only the Transmission Control and Internet protocols (TCP/IP). Think of this as the foundation in the blockchain network - the part that must exist for any other systems to build up on top of it.
Then, Tim Berners-Lee introduced the Hypertext Transfer Protocol (HTTP), which allowed everyone to use the internet with off-net transactions that ultimately hooked up to the web. This is the second layer of the net, which we can compare to the advent of off-chain transactions in the blockchain space. Companies like CERES (and others) are building technologies that live within the realm of the blockchain but are not entirely dependant on it. These “off chain” companies allow transactions to happen outside of the blockchain while still being verified by the computers within the company.
The ability to complete transactions “off-chain” opens up incredible possibilities in functionality, scalability, and overall operationality. Arguably, this tech is still being sorted out, but it’s very likely that these off-chain transactions are going to open up blockchain technology to the public in the same way that HTTP made the internet accessible to the masses.
Off-chain transactions are easier and faster to process since they don’t require multi-party computations. They also alleviate stress on the blockchain and save the mining fees of traditional blockchain transactions. They are still safe and secure since they are verified by the one or two computers hooked up to the 2nd tier entity. These authenticated transactions are then added back into the chain, like adding a new blog page (written “off the web”) to an uploaded website (on the blockchain). Once these transactions are added back to the blockchain, they’re confirmed by on-chain algorithms.
While HTTP was universally accepted at its inception, off-chain technology this time around is likely to be a bit messier. There is significant competition in the space and the “everyman” is still apprehensive to get involved. Whoever wins the race will likely take business away from banks, credit card companies, and other financial institutions and completely reshape the way we think of currency and transactions from here forward.
How will this affect the underlying blockchain and the ability of miners to verify transactions? Who will come out on top? Right now, it’s hard to tell, but the fact remains that this is the next practical step in the blockchain story, It was worth it to fight for HTTP technology to bring the internet to the world, and it’s worth fighting for what 2nd layer technologies can do for the future of the blockchain and society as a whole.
To learn more about “off chain” technology and learn how CERES Coin is disrupting the crypto industry, email us at firstname.lastname@example.org.