- 1 Metadata is the summarized information of the data which makes it easier to find and reuse particular instances of data.
- 2 It is the data that is attached to cryptocurrency transactions recorded on the blockchain.
Metadata is the basic information that is linked with cryptocurrency transactions. Although the primary function of the blockchain is to record and verify the transfer of digital assets, the transactions have added information or context.
The information associated with cryptocurrency is not directly related to the transaction, but it may enhance its functionality. Some examples of extra information includes date created, author, date modified and file size. It is the comprised form of data.
Metadata is important because it gives information that is required while transacting cryptocurrencies. It consists of the transaction details, the gas fees, smart contract data, timestamps, etc.
Types of Metadata and how are they stored
There are two types of Metadata:
On-chain Metadata: This type of data is added to the blockchain in real-time. This type of data includes transaction labels, annotations, and references to external contracts or documents. Anyone with access to the blockchain can view this data.
They are permanently stored and duplicated across all the network nodes and they form a component of blockchain ledger. They are kept with the transactions. While transacting cryptocurrencies to various addresses, the transaction ID, the sender’s name, the amount, and the transaction date are recorded or saved.
For smart contracts, the metadata like the contract code is also stored. Each block on the blockchain has a header that provides the information or the metadata for verification like timespan, transaction ID, and the block number.
Off-Chain Metadata: This data is not stored on the blockchain but is included in transactions. It may include supplementary materials such as web URLs, files, and documents, that make the transactions more comprehensive. The congestion on the blockchain is reduced by using this off-chain metadata.
They are stored off the blockchain. It is stored in a variety of places including off-chain scaling solutions like the lightning network and decentralized systems like the interplanetary file system.
Blockchain uses hashes or pointers to refer to the off-chain data. In this way, the space is freed for more important storage. Hence, the free space results in less congestion and provides flexibility to applications.
Examples of Metadata in blockchains
There are different types of Metadata available in the blockchains. Some of them are discussed below:
Transaction details: The transaction amount, the sender’s details, and the transaction IDs.
Gas fees: Blockchains like Ethereum, stores the gas fees associated with transactions. This information is essential for miners and validators to prioritize the transactions.
Smart contract data: Information like the code is stored in smart contracts. This includes the parameters and input data required for contract operation.
Digital signature: To demonstrate the ownership and to show that the transaction is legitimate digital signatures are used.
Inter-Planetary File System List: Links to IPFs can be found in blockchain metadata. Users can find the details by clicking on the hash. The IPFs are big files that include images, videos, and documents like NFTs. These files can be stored using this method.
Oracles: Oracles are external services that provide smart contract access to real-world data. This information may be included in blockchain metadata to cause smart contract activities.
Non-Fungible Token Metadata: NFTs contain metadata such as descriptions and details about it and the creator.
How to incorporate metadata into a blockchain?
To include the metadata in blockchain transactions, there is a simple, well defined procedure for utilizing the smart contract. It is autonomous, based on predefined terms.
Hence to add the metadata, creation of smart contracts is necessary. The guidelines for the storage of metadata and the location are incorporated in the contractual agreement. The metadata may be stored in a string that is a defined variable.
Interacting with Smart Contract
For including the metadata in blockchain transactions, it is necessary to interact with smart contracts. Applications like web3.js or ether.js may be utilized for this purpose.
Use Cases of Blockchain Metadata
The metadata technology of blockchain transactions is used in many sectors like health care, NFTs, smart contracts, and digital identity and authentication.
In healthcare, data integrity is ensured and secured. This way records of the patient are secured and the records retain medical histories, patient consent forms, and data access logs, without directly revealing the information.
Smart contracts are an additional field in which blockchain is indispensable. These self-executing contracts determine when and how to perform specific conditions.
Digital identity and authentication is also one of the metadata utilizations in which the user authenticates that the transaction is legitimate and it also shows the ownership of it.
Limitations of Using Blockchain Metadata
There are specific challenges in using the blockchain metadata which includes
Scalability and storage costs: The efficiency of the blockchain decreases as the data storage increases the network traffic hence the storage costs increase.
Data privacy and security: To handle the private information with care is risky as the blockchain favors transparency hence the private information or the metadata may be breached by malicious attempts. For this diversified approach is required.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.