Raiden Network, found online at Raiden.network, is a high speed asset transfer network for Ethereum. Find out how it works today in our Raiden Network review.
What Is Raiden Network?
Raiden Network is a payment channel network for Ethereum. The network uses off-chain state networks to extend Ethereum’s asset transfer capabilities.
It’s similar to the proposed Lightning Network for bitcoin.
The basic idea behind Raiden is simple: Raiden uses a network of P2P payment channels and Ethereum deposits to preserve the guarantees expected from a blockchain system. The basic idea is to switch from a model where all transactions hit the shared ledger on the blockchain (the blockchain is the bottleneck) to a model where users can privately exchange messages which sign the transfer of value.
Raiden is actively in development. When released, it will help Ethereum become a preferred blockchain for microtransactions – a key point on the path to widespread consumer adoption. Raiden could be released before or after bitcoin’s Lightning Network proposal. Whichever proposal is introduced first could have a major impact on the future of each blockchain’s widespread adoption.
Raiden Network Features
Raiden emphasizes all of the following features and advantages over traditional Ethereum network transfers:
- Scalable: Raiden scales linearly with the number of participants. It’s possible that the network will facilitate 1 million or more transfers per second.
- Fast: Transfers are confirmed and final within a fraction of a second.
- Confidential: Single transfers don’t show up in the global shared ledger.
- Interoperable: It works with any token that follows Ethereum’s standardized token API.
- Low Fees: Transaction fees can be 7 orders of magnitude lower than on the blockchain.
- Micro-payments: Low transaction fees allow for the efficient transfer of tiny values.
Ultimately, these features make Raiden an ideal solution to one of the central problems of blockchain technology: blockchains like bitcoin and Ethereum are ideal for large, cryptographically-secured payment transfers. However, they’re not ideal for smaller purchases – like your daily cup of coffee. A small transaction like that doesn’t need to be recorded in the blockchain every time. Raiden, like the Lightning Network for bitcoin, plans to solve this problem.
How Does Raiden Work?
Raiden is implemented as an extension to Ethereum. A Raiden node runs alongside an Ethereum node and communicates with other Raiden nodes to facilitate transfers and, with the help of the Ethereum blockchain, to manage deposits. The platform comes with a simple API that makes it easy to use Raiden in DApps.
The technology is built on a network of P2P payment channels and Ethereum deposits. These Ethereum deposits preserve the guarantees expected from a blockchain system.
The basic idea is to move away from a model where all transactions are recorded on the blockchain to a model where users can privately exchange messages which sign the transfer of value without necessarily recording every individual transaction onto the blockchain.
Like with other blockchain technologies, the Ethereum blockchain is the bottleneck, and Raiden seeks to get past that bottleneck.
Uses For Raiden
Raiden can be used for a wide variety of applications and purposes, including all of the following:
Micropayments For Content Distribution:
This is an alternative to paywalls, advertisements, and subscriptions. Micropayments are one of the biggest buzzwords in the content creation world today – if we had an easy way to give 5 or 10 cents to our favorite authors online, would we do it? Micropayments – whether for online games or journalism – are much more accessible on the Ethereum network with the help of Raiden.
Decentralized M2M Markets:
Raiden is also being proposed as a way for machines to communicate (M2M communication). We’ve seen similar solutions like IOTA, where tiny chunks of bandwidth, storage, CPU time, energy, sensor data, and more can be traded. Raiden could change M2M communication and alter the way IoT works.
The machine-to-machine economy will revolve around API access. Accessing and monetizing APIs on a per-use basis is at the core of the upcoming M2M economy.
Fast Decentralized Exchanges:
Raiden facilitates a faster, cheaper exchange of value – something every exchange and individual can benefit from.
Raiden Network is also designed to be complementary to Ethereum. It doesn’t seek to replace or disrupt Ethereum. The Raiden Network official website shares a quote by Ethereum creator Vitalik Buterin:
“State channels are an important technology that has the potential to greatly improve the scalability and privacy of many categories of blockchain applications; in conjunction with sharding and other privacy-preserving cryptographic technologies, they are an important ingredient in helping decentralized systems to achieve the properties that mainstream individual and institutional users expect and deserve.”
Raiden Network Conclusion
Raiden could be one of the biggest improvements to the Ethereum network since it was launched. Right now, Raiden is competing with the Lightning Network, a proposal for bitcoin, to see which major blockchain technology will be the first to facilitate cheap and easy microtransactions.
Raiden is currently in development. Stay tuned for more information as the project moves forward. Or, visit Raiden.network for more information about how Raiden plans to improve the Ethereum network.