On-chain transactions: Transactions occur directly on the blockchain — they are public, transparent, and immutable.
Exchange transactions (especially on centralized exchanges): Transactions occur in the platform’s internal database, off-chain, and are not recorded on the blockchain.
An on-chain transaction refers to a transaction completed directly through a blockchain network, such as sending ETH or SOL from your wallet to another address. These are “real” records written permanently into the blockchain.
✅ Public and transparent: Every transaction is recorded on-chain and viewable by anyone (e.g. via Etherscan, Solscan)
✅ Immutable: Once confirmed, a transaction is permanently stored on the blockchain
✅ Requires confirmation and gas fees: Transactions must be validated by miners or validators and require gas fees
✅ You hold the private key: Assets are under your control, providing a high level of decentralization
Swapping tokens on DEXs like Uniswap or Jupiter using your wallet
Sending USDC, ETH, or SOL to a friend’s wallet address
Buying NFTs on-chain
Using DeFi applications for staking or lending
Exchange transactions refer to trades made on centralized exchanges (CEXs) such as Binance or OKX. Although the interface appears as if you’re trading crypto, these transactions actually happen within the exchange’s internal database and are not recorded on-chain.
❌ Not transparent: Transaction records are not publicly verifiable; only the platform sees the actual data
❌ You don’t control the private key: The platform holds custody of your assets, creating custodial risk
✅ No gas fees: Unless you deposit or withdraw, there’s no blockchain fee incurred
✅ Fast and efficient: Ideal for high-frequency trades and instant matching mechanisms
Buying and selling BTC/USDT on Binance
Placing a buy order for ETH, which is matched and executed by the system
Holding your crypto in an exchange wallet without transferring it on-chain
|
Item |
On-chain Transaction |
Exchange Transaction (Off-chain) |
|---|---|---|
|
Transaction location |
Blockchain network |
Platform’s internal database |
|
Transparency |
Yes, viewable via blockchain explorers |
No, only visible within the platform |
|
Decentralization |
Yes, user controls the asset |
No, assets are custodially held |
|
Private key required |
Yes, managed via personal wallet |
No, managed by the platform |
|
Gas fees |
Yes, depends on the network |
No (except for deposits/withdrawals) |
|
Confirmation speed |
Slower, requires on-chain confirmation |
Fast, instant order matching |
|
Security |
High, self-managed |
Moderate, depends on platform security |
Use exchange platforms to buy crypto: better prices and faster trades
Withdraw to a blockchain wallet: ensures security and asset sovereignty
Join DeFi or NFT projects on-chain: to truly utilize blockchain potential
Terms like “on-chain data analysis,” “smart money movements,” and “whale transfers” all refer to actual on-chain transactions. This data is publicly accessible and often used to detect market trends and investment signals.