Ethereum’s ‘Lightning Network’ Raiden to strike IoT and micropayments
State channels are a hot topic in the blockchain world. The Lightning Network will reframe the Bitcoin blockchain to minimise the amount of data broadcasted to everyone by having a final netting of many thousands or even millions of transactions into a single on-blockchain transaction.
Such a step-change puts cryptocurrency on an even footing with the likes of Visa, and by allowing micro-transactions without fees, also opens up possibilities for internet of things (IoT) or micro-payments for web-based content.
Ethereum’s version of Lightning, called Raiden, just finished its first proof of concept which involved sending tokens from a Raiden client in Copenhagen to one in Mumbai mediated by a node in Florianopolis. The opening, closing, and settlement of channels took place on the Ethereum testnet, while the actual transfers happened off-chain.
Heiko Hees, CEO of brainbot technologies and creator of Raiden, contests that Ethereum is better suited to Lightning-like payment channels than Bitcoin.
He told IBTimes UK: “In Bitcoin the scripting language is rather limited so it’s way more complicated to set it up. Setting this up on Ethereum is straightforward; any developer can easily understand the smart contract involved. The other difference is that until Bitcoin implements Segregated Witness to fix the transaction malleability issue, they cannot do Lightning.”
This post was published at International Business Times on August 10, 2016.