The off-chain economy refers to economic activities and transactions that occur outside of a primary blockchain ledger but may still interact with or be supported by blockchain technology. This includes activities conducted on layer-two scaling solutions, payment channels, or other sidechains. It aims to increase transaction speed and reduce costs by processing many operations away from the main chain.
Context
Developments in the off-chain economy are critical for the practical adoption and scalability of blockchain technology. News often covers the expansion of layer-two solutions, the integration of payment protocols, or the emergence of new decentralized applications that leverage off-chain computation. Understanding the off-chain economy is essential for grasping how blockchains can support a high volume of transactions and facilitate real-world economic interactions.
Despite Bitcoin's elevated price, network activity has significantly decreased, indicating a shift to off-chain transactions and dominance by large players.
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