What are off-chain transactions

Question

I thought all the transactions with Blockchain applications happen on-chain. But I was reading a blog and so that there was something mentioned as "off-chain transaction". What is this? I thought all transactions were made on-chain.

Answer 1

An off-chain transaction is the movement of value outside of the blockchain. Off-chain transactions usually happen between two trusted parties because there is not much security for data. Some method used for off-chain transactions are:

• Payment chains
• Credit-based solutions
• Trusted 3rd parties