Raiden Network, part of the upcoming Ethereum upgrade, will provide a serious edge to Ethereum’s performance and value for users. This technology uses Off-chain Networks to offer users an improved performance at lower costs. This article will cover what the advantages are and how this is possible. Of course we will also cover how this might impact the future Ethereum price performance.
Before diving in the technical, just a quick reminder that our Site Ethereumprice.today is mostly focused on the price action of Ethereum. While most investors might not care about the technical or the technological aspect of Ethereum (the technology) we still believe there is value in covering this aspect as well. The main events at a minimum. Here is why:
To survive the ups and downs of trading or an investing in Cryptocurrencies, one needs to stay informed about advancements and threats to the underlying technology, be it the Blockchain technology in general or the specifics of the cryptocurrency you are invested in. That is the only way to be able to understand if a sharp price movement is really a retrace or a crash. As sharp as it might be, a retrace is normal and healthy especially following a sharp increase in price, and it remains a pullback as long as there is Intrinsic value that will guarantee continuous or future demand for Ethereum and Ether. A crash will happen when there is no more value in the cryptocurrency, and given the nature of this investment, the likely cause will be a failing technology.
An enhanced performance based on a continuously advancing technology will drive value and interest in the Cryptocurrency. Raiden Network is one of these enhancements that could make a difference in terms of demand and use for the following reasons.
Ethereum Raiden Network Advantages
One of the upcoming upgrades within Ethereum’s Metropolis is Raiden Network. Once the Raiden Network is successfully rolled out, this will be a huge win for Ethereum because of the following advantages
- Allows Micro-payments thanks to lower fees (7 times lower than current Blockchain transaction fees)
- Fast and scalable therefore able to handle the high volume from the micro-transactions
- Works with variable tokens as long as they follow Ethereum’s Standard Token API
- Confidential because the single transfers are recorded in a smart contract stored off the public ledger (Off-chain).
For more information on this, this is the link to the official Raiden Network webpage.
How is this possible? Through the use of Off-Chain State Networks
According to Stephan Tual, Founder and COO of Slock.it and previous CCO for the Ethereum project:
Off-Chain State Networks are two ways discussion channels allowing for messages to take the form of transactions.These transactions take place entirely off the blockchain and exclusively between the participants, meaning they are cheap and very fast to execute compared to on-chain payments…State Channels can be closed at any predetermined point (exp a fundraiser objective is achieved) The total amount is then settled, for example by a blockchain-based smart contract. If the transaction chain is contested, the evidence can be sent to a blockchain smart contract ‘judge’ which will be able to automatically validate whether or not the signature of the transactions are valid.
How will the integration of Raiden Network Impact Ethereum Price?
It’s pretty clear that if the deployment is successful, the Raiden Network will create even more value for existing Ethereum users and most likely attract new ones. Off-chain transactions will make it possible to transfer micro-amounts frequently and a small fee and between different tokens. That’s more usage with a straight forward impact on the value of Ether and Ethereum.
This should happen (projected) around the same time as the Ether supply in circulation will be reduced (less blocks issued for mining, see our article covering Ethereum Metropolis upgrade).
But what could be a really bullish scenario is if we see the market react to Raiden network integration for Ethereum similar to the way Litecoin’s value increased drastically after the successful Lightning Network integration. That literally was the event that took Litecoin from trading in the single digit to a double digit value. And Ethereum with Raiden has the potential to be even more powerful. This article is a great read to grasp how this integration can take Ethereum’s performance and value to another level.
To keep our readers informed about the upcoming Ethereum Upgrades, our research team published the following series of articles:
- Enhanced Anonymity for Ethereum Coming, Bullish for Ethereum Price
- Ethereum Price and the Upcoming Metropolis Upgrade
- Raiden Network, Ethereum’s Powerful Version of the Lightning Network