Off-Chain
Transactions or data handled outside the blockchain, then sometimes settled on it later in batches.
Off-chain activity happens away from the main ledger. The Lightning Network moves Bitcoin payments off-chain, settling only the opening and closing balances on the blockchain. Centralized exchanges do something similar: trades between users update an internal database, not the chain.
Keeping work off-chain cuts cost and boosts speed, but you give up some of the blockchain's guarantees. Funds on an exchange sit under that company's control. The classic warning, 'not your keys, not your coins,' applies to most off-chain custody.
Related terms
Data or activity recorded directly on a blockchain, visible to anyone and validated by the network.
Lightning NetworkA Bitcoin payment layer that moves small transfers off-chain through bidirectional channels, settling on-chain only at close.
State ChannelsA scaling technique where participants transact off-chain through signed messages, posting only the opening and final balances on-chain.