As put forth countless times before I, there are indeed an untold number of abysmal projects and cash-grabs currently in the cryptocurrency sector (see: Are ICOs a Scam). These serve the purpose of lining the investors’ and team’s pockets. However, Raiden does not fit this mold, rather the Raiden Network shapes one of its own: it has the potential to become one of the most ambitious projects in the next decade as blockchain scaling becomes a tenuous issue.
Currently the amount of transactions on the Ethereum network has been increasing exponentially. This is a strong harbinger for the crypto community as people and institutions view the Ethereum network as the best way to conduct their transactions. But as was demonstrated with the advent of CryptoKitties, a more pressing issue is that the network does not have sufficient throughput to enable near-immediate and cheap transactions at scale: the gas for a kitty costs around $2. So how does Raiden help alleviate this issue?
If they succeed, Raiden could provide up to a million transactions per second on the Ethereum network, all the while boasting incredibly modest fees. In a nutshell, Raiden aims to discover the fastest and shortest way to conduct transactions without relying on the blockchain, called off-chain for this reason, except for creating the chain and closing the payment channel. If William wants to send a transfer to Sally, he simply opens a payment channel with a smart contract, secures it with a deposit of his tokens held in escrow — keeping the transfers trustworthy — and then Sally can close the smart contract when she is satisfied. The tokens are then removed from escrow and sent to Sally.
In an applied sense, Raiden could be vital to the rise of micropayments on the Ethereum network as on-chain transaction costs are almost invariant with the amount sent. Therefore, microtransactions would be better accomplished over Raiden’s network instead of paying large fees consistently. Micro Raiden — uRaiden — was crafted for this purpose. Internet technologies like Web APIs and data processing are all priced as a function of use unlike the current Ethereum network. Yet, Micro Raiden allows for an elastic pricing model so different types of customers can pay for exactly what they need. An exciting feature is the immediate confirmation of payment one receives from Raiden’s off-chain quality: the wait for confirmations and furiously checking to see if the transaction has succeeded is a great friction for widespread adoption.
Our world is tending toward a future where micropayments will be ubiquitous: developments within the internet of things (IoT) sector are making headway and our devices will harness micropayments when they interact with one another. One can easily picture a self-driving car topping up its battery by purchasing kilowatts of electricity on Ethereum’s blockchain; the Raiden network could make this a reality sooner than we think. Consensys’ Grid Plus is aiming to utilize Raiden to do just that by connecting consumers who want to buy and sell solar power with near-zero fees.
If 2018 is remotely similar to 2017, the desire and usage of cryptocurrency is only the beginning. Indeed, at the current rate of adoption, Ethereum desperately requires a scaling solution. Raiden vis-à-vis their past development of uRaiden and their roadmap, stands at the precipice of kick-starting Ethereum’s prowess into the next decade.
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