imagine you deposit funds into coinbase or BTC-E. instead of withdrawing to someone (an actual bitcoin transaction) you use the exchanges 'balance' transfer features which is just a database representation of holdings to swap balances with another user of that exchange. where coinbase or btc-e do not move actual bitcoins. just a balance change on their users database.
each service calls them something different. such as BTC-E which calls them btc-e codes for instance.
Topic: Can Someone Explain "Off-Blockchain Transactions" ? - page 2. (Read 3638 times)
Put some Bitcoins in a wallet, extract the secret key and write it on a piece of paper (tip: fold the paper to keep the key secret). You now have the ability to make an off-blockchain transaction with that piece of paper.
I am aware of this method, but the case in question revolves around merchants accepting payments from their customers and keeping these transactions off-blockchain. That's where my thinking goes into void.
AFAIK any actual transactions would have to be related to nodes and miners in order for the transaction to be accepted and included in a block. Hence all transactions must and are publicly visible. I might be interpreting this differently from your question - do you have a link to the article?
http://www.coindesk.com/block-chain-transactions-bad-bitcoin/
Transactions made by a website or brokerage house internally, through an exchange for example, are considered 'off-chain transactions'
No miners fee, no transaction fee, no public record, and no accountability.
Yes, they are becoming popular, and not just for bitcoin. Even the alt-coins are being shuffled around this way.
The problem arises when large amounts of off-blockchain transactions are made. Miners get paid by block generation plus transaction fees. Higher fees, greater incentive.
Take the fees away and it's just block generation, which won't last forever.
No miners fee, no transaction fee, no public record, and no accountability.
Yes, they are becoming popular, and not just for bitcoin. Even the alt-coins are being shuffled around this way.
The problem arises when large amounts of off-blockchain transactions are made. Miners get paid by block generation plus transaction fees. Higher fees, greater incentive.
Take the fees away and it's just block generation, which won't last forever.
AFAIK any actual transactions would have to be related to nodes and miners in order for the transaction to be accepted and included in a block. Hence all transactions must and are publicly visible. I might be interpreting this differently from your question - do you have a link to the article?
Put some Bitcoins in a wallet, extract the secret key and write it on a piece of paper (tip: fold the paper to keep the key secret). You now have the ability to make an off-blockchain transaction with that piece of paper.
I recently read in an article that "Off-Blockchain Transactions" are being popular for Bitcoin; in the sense that these transactions are not visible on public Blockchain ledger.
Can someone explain how these transaction are carried out and what implications they have on Bitcoin's decentralised nature?
Can someone explain how these transaction are carried out and what implications they have on Bitcoin's decentralised nature?
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