Internal Transaction
An internal transaction, also known as a "message," is a byproduct of an EOA interaction with a contract address that results in Ether being transferred.
What Is an Internal Transaction?
An internal transaction is the consequence of smart contract logic that is triggered by an external transaction - the transaction transmitted from the EOA to the smart contract.
Smart contracts are one of the most important aspects of the
Ethereum blockchain. They are
self-executing digital contracts that are business-automated in which the contract's provisions are encoded and no legal or central authority is involved.
Ethereum smart contracts, in a sense, are computer programs that have been installed on the blockchain and are used to manage Ether balance, as well as a state between code invocations, and to perform transactions. Like everything else on the blockchain, smart contracts are open to the public.
Smart contract transactions are normally both irreversible and traceable, and they are sent through externally owned accounts, also known as EOAs, which are often private and held by individuals. Smart contract interactions like this are fascinating because they trigger certain predefined procedures and produce side effects or byproducts that are called “internal transactions”. A single smart contract engagement can result in tens or even hundreds of internal transactions. These are value transfers that occur when a smart contract or a token transfer is executed.
Certain Ether and token transactions necessitate the execution of a smart contract. These appear as internal transactions in the main ETH transaction history and are not visible.
Transactions are changes to the state of the Ethereum chain, i.e. they write data to the chain rather than reading it.
On Ethereum, there are a few different state changes that can happen, but transactions are the ones that users worry about the most. Developers can employ address activity notifications, which track transfers, to tell users about their transactions, for example, exchange of value between two Ethereum accounts.
Internal transactions, unlike regular transactions, lack a cryptographic signature and are typically stored off-chain, meaning they are not a part of the blockchain itself. Some are stored on-chain, although this necessitates the use of additional gas, therefore it isn't being used very often. Internal transactions like this always transfer Ether exclusively, affecting address balances.
When internal transactions happen, there isn't a lot of information on them. As a result, consumers are frequently unaware when their address, wallet, or contract is involved.
Tracing transactions can take a long time. This operation, which is CPU-intensive, takes a toll on the nodes. If the node isn't powerful enough, it can break while tracing, causing problems for the rest of the data on that node.
Furthermore, traced results for internal transactions can be massive, making storage and retrieval problematic. Another issue is that the nodes typically limit the tracing operation to a specific number of blocks - usually roughly 30 minutes worth of blocks back. As a result, the time period following a smart contract interaction is critical for taking action if you want to be able to collect information on any potential occurrence. As a result, the time period following a smart contract interaction is critical for taking steps if you wish to be able to collect information on any potential internal transactions.
To summarize, one must have the time, node capacity, and processing power in order to track internal transactions. This is not possible for every blockchain user and crypto enthusiast, even though it should be a simple and readily available operation.