Definition ∞ Offchain Payments are transactions that occur outside the main blockchain network, settling instead on secondary layers or parallel systems. These payments are typically recorded on a separate ledger and only periodically or finally reconciled with the primary blockchain. The approach aims to significantly increase transaction speed and reduce network congestion and fees.
Context ∞ The state of Offchain Payments is crucial for the scalability of many blockchain applications, especially those requiring high transaction throughput like retail commerce. This situation involves the ongoing development and adoption of layer-2 solutions such as Lightning Network and optimistic rollups. A critical future development is the seamless integration of these offchain solutions with mainstream financial systems, enabling widespread digital currency use for everyday transactions.
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