One of the biggest concerns voiced in the Cryptocurrency community is scalability. How fast can we send transactions using these Digital Currencies? Is it possible to pay for simple items like a cup of coffee with Bitcoin or Ethereum in seconds? Raiden Network aims to fix this scalability problem. Right now, it’s just a research project with some active code on GitHub. As a matter of fact, most of these Blockchain protocols are research projects that one day may actually become real live working systems. Given the excitement of this new space, I have seen countless ICO’s launch (Initial Coin Offerings) promising to change the internet world forever. But will it really happen? If it does happen, who will be the first to implement the technology they put on these extensively long and complicated Whitepapers with even longer roadmaps.
“The Raiden Network is an off-chain scaling solution for performing ERC20-compliant token transfers on the Ethereum blockchain. It is Ethereum’s version of Bitcoin’s Lightning Network, enabling near-instant, low-fee, scalable, and privacy-preserving payments.”
- Retail Payments – particularly in developing countries
- P2P Cash – I personally believe the next generation will rely on Internet Money
- Micropayments – Particularly with IoT (Internet of Things) related devices/infrastructure
- Decentralized Exchanges – Currently most exchanges are centralized
The Technology Behind It
Raiden Network uses “Balance Proof” meaning it creates a binding agreement enforced by the Ethereum Blockchain. It is a private transaction, and only those who are participants may have access. Raiden states that this network does not require fees to operate on, however intermediary services may want to charge small fees, however given the population of users, I can imagine these fees would be extremely competitive. It is not clear to me what these intermediary networks are currently. Raiden is making the claim that whether the transaction is large or small, it will essentially be treated the same. The person who is transacting on the Raiden network will instantly receive the value sent to them as opposed to the OnChain transaction which will require Block time and a Miner to confirm this transaction. They even compare it to the speed of sending a text message. Raiden aims to create unlimited scalability by having a large user base. Currently, the limit is capped on most Blockchains. Behind all of this is a Cryptographic Hash lock, which prevents the balance to be credited to the end user until the other party confirms they received this payment. I do like this projects concept, and I think it’s worth paying attention to it’s development.