Metadata in blockchain transactions, explained
Additional data or information that can be appended to a crypto transaction on a blockchain is referred to as metadata in blockchain transactions.
Although the main function of a blockchain is to document and authenticate the transfer of digital assets, including cryptocurrencies like Ether (ETH) or Bitcoin (BTC), metadata enables users to add additional information or context to their transactions.
Metadata is data about data. In the context of blockchain transactions, it includes information that is not directly related to the transfer of cryptocurrency but can provide additional functionality to the transaction.
There are two main types of metadata in blockchain transactions:
On-chain metadata
Since this metadata is immediately stored on the blockchain, it is part of the transaction data that is stored there. Anyone with access to the blockchain can see it. Information such as transaction labels, notes or references to external contracts or documents can all be found in on-chain metadata.
Off-chain metadata
This data is referenced in the transaction but is not kept on the blockchain directly. Links to other content, such as files, documents or web URLs that provide further details about the transaction, can be included in off-chain metadata. Off-chain metadata is a tool that users can utilize to reduce clutter on the blockchain.
How on-chain and off-chain metadata are stored
On-chain metadata, such as transaction details, smart contract code and token properties, is integral to the blockchain’s data structure, being permanently stored and replicated across network nodes. In contrast, off-chain metadata is stored externally, using cryptographic references, enhancing blockchain efficiency and flexibility.
The blockchain’s data structure contains on-chain metadata natively. This information is permanently saved and replicated across all network nodes, and it forms a component of the blockchain’s ledger. The majority of on-chain metadata is kept within the actual transactions. On the blockchain, every transaction has a payload with pertinent metadata. For instance, the sender, receiver, amount and transaction date are recorded as on-chain metadata when sending cryptocurrency between addresses.
When it comes to smart contracts, the contract’s code and accompanying data…
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