The distinction decides what a claim is worth: 'we sent you the tokens' is a statement; a transaction id is proof anyone can verify on an explorer. On-chain data has the chain's properties — immutable, timestamped, expensive per byte — which is why large payloads live off-chain with only their hash anchored on it.
For business use the honest split matters: the proof, the ownership record and the settlement belong on-chain; the image, the document and the personal data do not. Putting customer data on an immutable public ledger is a GDPR answer nobody wants to give.
Related terms
Smart contract
A program deployed to a blockchain that runs exactly as written, that anyone can call, and that usually cannot be changed afterwards.
Solana
A high-throughput, low-fee blockchain — thousands of transactions a second at fractions of a cent — built for applications that need speed.
Merkle proof
A compact cryptographic proof that one item belongs to a big set — verify a leaf against the root hash without holding the whole tree.
