But blockchain transactions may include high fees and slow processing times, depending on the network’s verification method. For example, on the Bitcoin network, it can take anywhere from a few minutes to a couple of days to confirm a bitcoin (BTC) payment.

Off-chain transactions are confirmed outside of the main blockchain network, often resulting in a cheaper and faster process for the user.

Here are the differences between on-chain and off-chain transactions and when they're both used.

On-chain transactions refer to a transaction that is carried out on a blockchain network from start to finish. Once verified, the transaction is recorded on a blockchain network’s public ledger.

Here’s how it works: When two parties want to trade cryptocurrency, information about the transaction is packaged and time-stamped on a digital collection of data called a block. That block is sent to an associated blockchain network where it waits to be validated by computers in the network called nodes and added to the blockchain.

There are different consensus mechanisms used to verify transactions and add new blocks to a blockchain. Bitcoin, for example, uses a method called proof-of-work, which rewards miners for competing against each other using specialized computer software to solve extremely difficult computational puzzles to guess or match the “hash” and win the block reward. Newer methods like proof-of-stake don’t require mining computations but require participants to lock up a set amount of the native crypto token – their “stake” – to have a chance to be the validator for a block of transactions.

Either process provides a high level of security and transparency because transaction data is public and constantly reviewed and updated by the network of miners or validators. However, the intricacy of the process means that it takes some time to process each transaction and add it to the blockchain.

Benefits of on-chain transactions include:

• **Security: **Data stored on a blockchain is encrypted end to end and cannot be altered once recorded.

• **Decentralization: **Blockchains are not subject to a central authority for governance, which means there’s virtually no risk of an intermediary breaching trust or manipulating data flow.

• Transparency: The use of a distributed ledger means transactions are simultaneously recorded and validated in multiple locations. Using a blockchain explorer, anyone can trace a transaction back to a unique wallet address and view its activity, allowing independent verification of claims and transactions.

Disadvantages of on-chain transactions include:

• Slow transactions: The speed of a blockchain transaction can vary depending on the volume of transactions in the queue to be processed, which can lead to network congestion.

• High transaction fees: When the volume of transactions is high, network fees also rise. During times of high demand, the network can become extremely expensive to use.

• Power usage: Specific to proof-of-work consensus mechanisms, the mining process uses a large amount of computational power and energy.

What are off-chain transactions?

In contrast, off-chain transactions transfer some of the work from a blockchain ecosystem, which can later be integrated back into a blockchain. On an off-chain network, the users agree that a third party will handle validating and authenticating transactions.

Off-chain systems tackle a blockchain network's scalability issues by facilitating faster and cheaper transactions. One off-chain transaction method is to employ a layer 2, which is a second blockchain built on top of the main blockchain (mainnet) to help the mainnet scale in speed and cost. This takes transactions off the main chain to another chain, but for the purposes of this explainer, we’ll focus on other off-chain methods.

Off-chain transactions can be confirmed via:

• A transfer agreement between two parties

• Using a third party known as a guarantor to oversee the transaction, like PayPal (PYPL)

• Sending another party the private keys to a wallet, which keeps the value of the cryptocurrency inside the wallet while transferring ownership over the wallet to someone else

Benefits of off-chain systems:

• Faster transaction speeds: Off-chain transactions don’t have to wait for the main blockchain network to confirm a transaction, making it faster or even instantaneous to process.

• Lower cost: Transactions confirmed off-chain require little-to-no fees because the process of validation through mining or staking isn’t needed. This feature is especially useful in handling large sums of cryptocurrency.

• Greater anonymity: Off-chain transactions offer more privacy because the data is not being publicly broadcast to the network.

Disadvantages of off-chain methods vary by method but can include:

• Less transparency: Transactions that occur off-chain do not follow the same protocol as a blockchain, opening up more potential for disputes.

• No consensus method: Without a consensus among all the users on the network, validation and authentication may be left to an intermediary. This means trust needs to be given to this third party instead of allowing all the network participants to agree as a collective.

• Can be less secure: Blocks added to a blockchain cannot be altered, so operating outside of the blockchain makes a network more vulnerable to fraudulent activity.

Final thoughts

Blockchain networks provide security, transparency and ease of use when conducting a transaction. Still, some blockchain networks such as Bitcoin or Ethereum remain limited in their scalability and sometimes require high fees to process transactions. Off-chain systems address these issues and promote faster processing speeds, lower fees and greater discretion.

This article was originally published on Aug 30, 2022 at 4:38 a.m.

While established names often dominate NYFW and set the season’s trends, this year’s event embraced new players who showcased not only physical designs, but also digital expressions of creativity played out across mediums.

At NYFW’s Nolcha Shows, blockchain gaming ecosystem Chain Guardians took up space next to traditional designers, displaying their “phygital” (physical and digital) take on classic designs. In their collection, a colorful, anime-style bodysuit included an NFC chip that, when scanned, linked to a non-fungible token (NFT) that is wearable in the Chain Guardians metaverse.

Trying on one of their garments meant not only physically putting it on my body, but also interacting with it inside the brand’s virtual storefront using a virtual reality (VR) headset. Picking up a pair of digital Chain Guardian shoes with the handheld VR controllers, the patent leather was shiny, just as it would be in real life.

After taking off the headset and looking out over the Manhattan skyline from the 69th floor of the towering 3 World Trade Center building, I noticed a large sticker on one of the windows that read “Web3 Looks Good on You.”

So, what exactly does Web3 look like?

To fashion and beyond

Megan Kaspar, managing director of Web3 venture capital firm Firstlight and founding member of digital fashion house Red DAO, has been a pioneer in blockchain-based digital wearables Web3 styling. In October 2021 she “wore” three pieces from DRESSX – a multi-brand retailer of digital-only clothing, NFT fashion items and augmented reality (AR) looks – on a Yahoo! Finance news segment using AR filters. In January, she had nine digital Fendi pieces tailored and transposed onto a photo of herself for the cover of a Haute Living issue.

“As we move to a reality where device disruption keeps occurring in the near term…that will come with the use of more digital fashion,” Kaspar told CoinDesk.

She defines digital fashion as having five major use cases at present.

First, there are digital-only garments sold as NFTs that are meant to be worn in the metaverse. This form of digital fashion was embraced by Tommy Hilfiger, Dolce & Gabbana, Forever 21 and dozens more designers who released full collections on metaverse platform Decentraland during the first-ever Metaverse Fashion Week in March.

The next is AR photo filters, which Kaspar used in her appearance on Yahoo! Finance. These filters are often used to create overlays on social media platforms like Snapchat, Instagram and TikTok, and can easily be integrated into live videos or photos. The third example is digital tailoring, meaning that after a real-life photo is taken, digital garments can be fixed onto a user’s photo, which is how Kaspar flexed Fendi on her Haute Living magazine cover.

Lastly, Kaspar notes that people can also view digital fashion as investable assets – whether that means purchasing NFT garments as speculative assets, such as a pair of NFT sneakers to resell for a profit. Alternatively, investors who purchase a rare digital designer handbag can prove their ownership over the asset on the blockchain.

Kaspar says that while many people view digital fashion as speculative investments for now, she believes that a “pretty viable solution” for mass adoption of these technologies will be created within five years.

Beyond utility

In addition to the many use cases digital fashion currently serves, a handful of emerging brands are turning to the technology to help solve many of the problems plaguing the fashion industry.

Sustainability

One issue the fashion industry faces is the production of fast fashion, which has nearly doubled within the last two decades. Current fashion consumption trends result in large amounts of textile waste, much of which is sent to landfills, burned or sent to developing countries. In addition, it was estimated in 2019 textile production creates more than 1.2 billion tons of greenhouse gasses per year, larger than all international flights and maritime shipping combined.

ethereum://0xabEFBc9fD2F806065b4f3C237d4b59D9A97Bcac7/4.959472767496467e+105

While there are still concerns about emerging technologies like NFTs and their environmental impact due to energy consumption, some up-and-coming designers have found ways to use NFTs to tackle issues of overproduction and overconsumption of clothing. Notably, the Merge, Ethereum’s transition from proof-of-work to proof-of-stake consensus mechanisms earlier this month, is expected to reduce the network’s energy use by over 99% and make most NFT transactions more efficient.

KRWN Studio, a digitally-native, small-batch fashion brand that sells virtual streetwear as NFTs, aims to make fashion greener by manufacturing garments on the blockchain.

“My experience in the fashion world and what I was exposed to is extremely unsustainable and very corrupt,” KRWN CEO Amina Mehti told CoinDesk. “[KRWN Studio] is not using fabrics, we’re not using textiles…what we as creators can do is offset [emissions].”

Digitally native brands that adopt a phygital model take on some of the environmental responsibility related to manufacturing, including the physical production of garments alongside minting digital replicas as NFTs. However, many recognize how they can scale operations and mindfully release products in small batches to avoid mass production.

Footwear manufacturer Shoes 53045 seeks to offset its environmental load by releasing two pairs of metaverse-ready NFT sneakers for every physical pair they produce. Co-founder and CEO Aurelia Ammour told CoinDesk that sustainability is an important part of the company’s mission, and it stays true to this mission by utilizing limited-edition drops, 3D printing in its manufacturing and minting NFTs on proof-of-stake blockchains like Ethereum to limit mining-associated carbon emissions.

“We make shoes that last and that are collectible, so [sustainability] is very important to us,” Ammour told CoinDesk.

Self-expression and accessibility

Digital wearables provide users with tools for self-expression and are often used to adorn an avatar or another manifestation of a digital identity. Metaverse Fashion Week, for example, was fueled by a desire for self-expression and individuality online.

Tokyo White, a luxury fashion house focused on NFTs, aims to be a vehicle for digital identity. From clothing for metaverse avatars fit for a variety of occasions to AR filters that allow users to try on items, founder Toyko White told CoinDesk that digital design allows for greater freedom and creativity.

“You can be whatever you want to be depending on the metaverse that you go into…I think it’s just an extension of what our minds are able to do in fashion,” White told CoinDesk.

Tokyo White-The Genesis Collection Metaverse Party

Digital fashion also makes the industry more accessible for producers and consumers alike. NFTs make it easier for a designer to get their pieces out to the public and provide a broader range of prices for consumers.

Web3 wearables marketplace The Dematerialised (DMAT) prides itself on using blockchain technology to fix the mistakes of other retail giants. Co-founder Karinna Nobbs told CoinDesk that DMAT prioritizes accessibility and hopes to set a standard for future digital fashion houses.

“Whether crypto native or non-crypto native, people should be able to access digital fashion and NFTs. For us to have a luxury and an aspirational aesthetic, but to be able to have accessibility at different economic points, is really important,” Nobbs told CoinDesk.

The supply chain, on-chain

Digital wearables created on the blockchain give buyers many advantages that physical goods can’t. From the moment an NFT is minted, its entire lifespan can be publicly traced.

For the fashion industry, this solves many of the hurdles involved in creating garments. Zino Haro, CEO of Web3 wearable collective Uni-ke, told CoinDesk that minting garments on a public blockchain ledger fosters better trust in the brand and creates a better customer experience.

“What we ultimately want to do in the supply chain is have transparency of where everything is coming from, which would be good for the end consumer.”

Blockchain transparency also benefits secondary market resale, specifically for luxury goods.

Second-hand designer retailer The Real Real has strict guidelines for identifying counterfeit items before listing them to the public, a process that could likely be automated by blockchain technology.

Vivien Zhang, the founder of Web3 fashion marketplace The Spot Room, supports phygital brands in minting their items on-chain. Through implanting chips in physical items that are redeemable as an NFT, all of the data linked to the asset exists on-chain, making verification easier.

“We can take out the middleman. If you sell something to me and I want to verify it as authentic, I can just look at it, scan to chip, verify the NFT and the transaction completed,” Zhang told CoinDesk.

The runway to mass adoption

For designers and creators in digital spaces, the boundaries of what fashion is and who is invited to club continue to grow. Beyond blocky 8-bit creations, the digital fashion landscape is vast and spans platforms and mediums.

In order for digital fashion to permeate throughout the crypto space and beyond, Kaspar aims to onboard as many people as possible by highlighting the many forms and faces of digital fashion.

She told CoinDesk that the majority of investors are looking past this when it comes to digital fashion. “[They’re] not yet seeing the power of ownership, identity and data inside of this new ‘to-earn’ economy that’s gonna spur out of digital fashion because they don’t quite yet see how it’s used.”

“You need more investment, more designers, more people participating in building around the technology so it can really get out there,” added Kaspar.

The reason for that is the developers of any project don’t get creative when writing a contract for the project. That is why you see most of the projects out there were built with the standard ERC-721 contract.

The main purpose of a contract is to verify the ownership of an NFT within a collection. But you can program a contract that does anything you want for your collection. This is what the Chiru Lab team did in their project.

The Chiru Lab team, the founder of the Azuki collection, tried to create a new NFT contract with better performance. Their developers succeeded in building the ERC-721A contract, which is much better than the standard one in terms of gas cost.

Furthermore, this new contract became the best marketing strategy to promote the Azuki collection. The team just needed to write a blog post about this new contract and let the word-of-mouth marketing do the rest.

Therefore, it is a good strategy to focus on building a contract that markets itself. It also makes people hyped for your project.

Here are four different ways you can create a great smart contract for your project.

1. Write the contract by yourself

It is obvious that if you know how to write a contract on Ethereum or Solana network, then you don’t need to finish reading. Unless you don’t have time to write it by yourself.

But what if you know other programming languages like Python or C++? In this case, you can switch to Solidity (Ethereum programming language) very easily.

There is a famous course called Crypto Zombies which can teach you all the basics you need to write your first smart contract.

Also, all NFT projects out there have their contracts public on Ether Scan. You can read the contract of any project you want and learn from it.

2. Hire a freelancer to make the contract

Of course, money saves you time and effort. So, if you don’t know how to code or don’t have much time to do it, it is better to hire someone to do the job for you.

It is more professional, but highly expensive. A good freelancer may charge a thousand dollars at least for one contract, and this number gets bigger as you ask for a more complex contract.

If you don’t want to spend too much money before launching your collection, you can search for a developer who can be part of your team and take a percentage of the profit.

Just make sure you find someone who believes in your project and can be trusted. Because the developer can easily steal from you or even pull the entire fund of your project if he wants to.

3. Get software to do it for you

You don’t want to make the contract by yourself, and also can not hire an expensive freelancer to do it. Here is the middle option, you can get a software to write the smart contract for you at a cheaper price. Because bots are always much cheaper than freelancers.

NFT Generator is a great one for this task. It can write a contract for your project. All you need to do is provide some information about your collection, like the name, total supply, and mint price. And the great thing is that the developers of this software are consistently improving it to be more customizable.

Another advantage of the software is you buy it once and use it forever. You will be able to create as many contracts as you want.

Legend has it that there was once a princess of Troy named Cassandra, the daughter of King Priam and Queen Hecuba, sister to Hector, the prince of Troy who famously fought Achilles (of heel-related fame). The god Apollo fell in love with her and in an attempt to woo her, he gave her the gift of being able to see the future. Unimpressed, she rejected his love. A god could not take back a divine gift once it had been given, so in his anger Apollo could only give her something more – this time a curse. Cassandra was fated always to see the truth of the future, but never to be believed by anyone who she told her vision to.

The frustration that this must have left Cassadra suffering is a sensation rather familiar to most Bitcoiners. All of us who understand our monetary system, realize how bad it is. Shockingly, this is not because any of us have been taught about it. It’s not taught in grade school or anywhere else in the modern curriculum, even though half of every transaction involves money and, for much of the world, dollars. On a scale of 1 to 10 with 10 being about as bad and unfair as possible, our financial system is a 9.5 heading steadily toward 10. There isn’t an adjective for bad or unfair that will convey the idea fully.

How many more months, years or decades will it take for the masses to discover this reality? Will they ever? Who knows.

What we do know is that most Bitcoiners have seen it and even many in the altcoin universe have seen it too – and we can’t unsee it. We also tend to sound like nutjobs when we attempt to explain it to family and friends. And so, many of us have given up trying, or we’ve been told in no uncertain terms “can we not talk about it for tonight?”

Take, for example, the recent monetary woes of the United Kingdom. With the national currency losing tremendous value in an incredibly short period, it should be apparent that there needs to be a monetary alternative. Some may see it, as told in this article about the Isle of Man. But for many people – not just the British – currency collapse is a spectator sport, not something that they feel they have the power of changing.

One problem for Bitcoiners is, once we have seen the injustices of the fiat system, most of us feel some kind of evangelizing drive – or at least some degree of moral responsibility to try to show what we have seen to the people we care about – and to help them extricate themselves to a greater or lesser degree from the inevitable consequences of the current unfair system by buying Bitcoin.

And then we have Bitcoin itself. Almost no one understands it. This tech-addled boomer has been studying it intensely for thousands of hours and still doesn’t fully grasp all the advantages it offers to the average citizen on this planet, particularly the most vulnerable and poorest among us in the Global South. Bitcoin is about as brilliant an idea as the mind can possibly conceive of a digital monetary system. There isn’t an adjective for brilliant that will convey how wonderful an alternative it is to the U.S. dollar.

Juxtapose these two systems together and what do you get? Cognitive dissonance. A gap wider than the oceans. Cassandra’s curse. The delta is wide. It’s an ignorance gap larger than the distance to the sun.

There is no cure for Cassandra’s curse other than time and patience.

Source: BitcoinMagazine.com By Mark Maraia