Bitcoin should be careful, Ethereum's micropayment function is about to be launched

Bitcoin has always been the most frequently used cryptocurrency for micropayments. However, Ethereum is about to open up similar functions. This decentralized blockchain network has recently attracted much attention in the cryptocurrency field.

Market observers once predicted that the micropayment industry would be lucrative. According to financial services company Wedbush Securities, by 2025, the amount of small bitcoin payments will reach 9250亿美金.

The first to develop micropayments capabilities on the Ethereum platform was Raiden Network, a German smart contract and blockchain technology consulting firm led by developer Heiko Hees, founder and CEO of Brainbot.

Hees believes that the Ethereum network will be the best platform for small payments, as transactions on the Ethereum network are cheaper and faster than those on the Bitcoin blockchain. A common annoyance for Bitcoin users is that a block can take up to 10 minutes to process, and transactions on the blockchain usually require six confirmations.

Ethereum plans to shorten transaction processing time to 12秒(the current block processing time is about 15 seconds).

Hees' focus, however, is not on people. He plans to enable machine-to-machine (mechanical or remotely controlled) asset transfers.

Hees calls this capability building blocks for the Internet of Things. Based on pre-set instructions, a machine can easily purchase resources.

Bitcoin startup 21 Inc, which has been working on machine-to-machine payments, recently launched Sensor21, a platform for buying and selling weather-related data.

If successful, this will usher in a new economic era in which machines will be able to complete far more transactions than humans.

Scaling

Raiden Network will help increase the overall capacity of Ethereum. With Raiden's technology, the number of transactions on the Ethereum network can be increased from 25 per second to每秒100万个. Raiden Network is also committed to improving the practicality of other Ethereum functions, including smart contracts.

However, blockchain cannot currently support millions of transactions per second. The Bitcoin network can support 7 transactions per second, while the Ethereum network can support 25 transactions per second, but Visa can process 45,000 transactions per second. This gap has led to a dispute over Bitcoin block expansion.

Every transaction generated by the Bitcoin and Ethereum networks is stored in nodes to verify new transactions. That is to say, the more transactions there are, the slower the nodes run.

The Bitcoin field has now released the Lightning Network to fix this problem. The Lightning Network white paper was released in February last year, and its authors are Joseph Poon and Thaddeus Dryja.

The technology makes decentralized currency transactions faster while retaining the decentralized nature that distinguishes Bitcoin and Ethereum transactions from other digital payment methods.

Most transactions will not be conducted on the blockchain (off-chain) to reduce its pressure.

This technology works because the parties to a transaction can transfer the transaction to the blockchain at any time and from any location. (This technology has not yet been officially implemented, and everyone speculates that it tends to be centralized.)

Of course, Ethereum is completely different from Bitcoin. Ethereum is known as the world computer and is committed to achieving total decentralization of the Internet. The Ethereum system is flexible and supports smart contracts and various decentralized applications.

Despite the differences between the two technologies, Ethereum’s network still has limitations in terms of scalability.

Ethereum’s attempt to switch from proof-of-work to proof-of-stake could help the network scale, but some developers have questioned its security.

Ethereum founder Vitalik Buterin has published a white paper and several blog posts on this issue, introducing a number of solutions, such as hypercubes.

Advantages of Ethereum

Hees said that Raiden’s support for Ethereum borrows a lot of Lightning Network technology, which is conducive to the better operation of the Ethereum network.

Bitcoin encryption language has its limitations, and it is very complicated to successfully implement Lightning Network technology on the Bitcoin network.

The Raiden network will use双向小额支付通道, where users can update transaction amounts on either side.

This means that users do not need to establish direct contact with the payee, but can pay the currency directly to the middleman in the network, and the middleman will then transfer the money to the payee.

The Hashed TimeLock Contracts in the Lightning Network white paper clearly stipulate that middlemen cannot steal coins privately.

Hees explained:

Assume that Alice transfers money to Charlie through Bob. Alice can lock the transfer amount to Bob, which means that Bob does not know the specific amount before Charlie receives the transfer.

In order to ensure the smooth operation of this service, any participant in the transaction chain can receive a small handling fee before the recipient successfully receives the money.

This off-chain network has other potential advantages.

Hees emphasized that Raiden’s technology is always consistent with the needs of developers and can effectively protect the privacy of the blockchain industry.

Hees plans to launch the Raiden Network in未来3个月.