Because I Say So

Creative Commons License
This work is distributed under a
CC BY-NC-SA 4.0 License.

Comic Transcript

A: So I guess the transactions that are done by these I Swear They’re Not Banks, Really companies are all “off-chain” transactions?

B: That’s right! These Companies That Are Totally Not Banks do the bulk of their bitcoin transactions outside of the blockchain.

A: If blockchain is the final source of authority for what is a legitimate transaction, then how are off-chain transactions even a thing?

B: Because you can write all kinds of information to a blockchain, not just transactions. You can add metadata.

B: The Companies That Are 100% Not Banks add metadata to the blockchain that essentially says “a cryptocurrency thing happened, see us for more information” and then everyone can contact that company to verify what happened.

A: So instead of blockchain showing the entire transaction process, it instead shows a marker saying “ask this Company That Is Not A Bank, I Promise It’s Not, to describe the entire transaction process.”

B: Correct! And then the Company That Is The Furthest Thing Possible From A Bank looks up its own records and says “according to our own records, this transaction happened.”

A: And how does the cryptocurrency community know that everything the Company That Is Completely Unlike A Bank says happened actually happened?

B: Beg pardon?

A: I thought the point of blockchain was to make sure that bad actors couldn’t game cryptocurrency transactions by making everything a matter of public record. So how are the off-chain transactions these companies are doing verified?

B: It’s a complicated process called “everybody agrees to check later.”


Leave a Reply

Your email address will not be published.