The Raiden Network Token (RDN) is a very different kind of cryptocurrency. Brainbot labs; the creators of the ERC20 (Ethereum-based) RDN, actually tried to limit its value by using a strategy called a Dutch auction.
In a Dutch auction, the Coin Price starts high but falls over time. A Dutch auction was used for Raiden’s October 18-November 1, 2017 initial cryptocurrency offering (NYSE:ICO) to keep the process slow and methodical. The Raiden price started at 2 ETH and fell to 0.0021906 ETH.
The ICO involved 50 million RDN which were valued at 109,532 ETH. This gave the RDN a Coin Price of $4.12 (0.0056355 ETH) and a Market Capitalization of $206.429 million (279,006 ETH) on 29 December 2017. There was a circulating supply of 50.149 million RDN on December 29, 2017.
This makes RDN a pretty interesting low-cost investment with limited risk because there will be a Total Supply 100 million of Raiden Network Tokens. A Total Supply is an artificial limit on the amount of a cryptocurrency that can be created. The purpose of such a limit is to prevent inflation.
Fast, cheap, scalable token transfer for Ethereum
The Raiden Network is an attempt to add another layer of technology to Ethereum. The goal is to make low-cost, near instant payments available in Ethereum, and build a system that can grow fast.
Blockchains like Ethereum cannot grow very fast because every change to the network has to be approved by every user. The Raiden Network is an attempt to add a sidechain which will move the payments around outside the blockchain at a very high speed.
The Raiden Network will be composed of off-blockchain payment channels, which will be created when users agree to exchange payments. The payment channels will serve as an alternative to the Ethereum blockchain. A big advantage of that is no Ethereum Gas is spent to make the payments.
Payment channels will be based on a smart-contract and secured by a deposit. Networks of payment channels can be built to enable to multi-transfers or payments to large numbers of people.
If it works as advertised the Raiden Network would be able to make Ethereum or ERC-20 transfers in just a second. The Raiden Network would grow to match the numbers of users participating in it.
The Raiden Network is designed to be Bigger and Faster than Visa
Raiden is designed to solve the biggest problem with the existing Ethereum network. The current Ethereum network can only process around 10 payments a second; the Brainbot team hopes to build a network that can complete around 100,000 transfers a second.
The long-term goal at brainbot is to build a network that will become a “global scale payment infrastructure” similar to that operated by Visa (NYSE: V). If that goal was achieved the Raiden Network would be even bigger than Visa’s. The current VisaNet can handle 24,000 a transactions a second, or 150 million transactions a day.
Visa is certainly lucrative it reported $6.669 billion (505.941 million ETH) in net income at the end of third quarter 2017. The thinking behind Raiden is that a network larger and more extensive than Visa’s would generate a similar level of revenue.
Is the Raiden Network a Value Investment in cryptocurrency?
All this might make RDN a value investment in cryptocurrency because it is based on infrastructure. Value investors like Warren Buffett have long proved that he or she who owns the infrastructure makes the money.
Raiden has some value characteristics including a decent Coin Price of $4.12 (0.0056355 ETH) on 29 December 2017. That gave it a Market Capitalization of $206.429 million (279,006 ETH) and a Market Volume of $9.188 million (12,419 ETH) on the same day.
If you are looking for a way to cash in on the ever-growing ERC20 boom and the growing popularity of cryptocurrency-based debit cards and digital wallets, the RDN might be it. All the new blockchain-based businesses will need a fast-payment transmission solution and RDN might be it.
More importantly, it is the creation of an organization; brainbot labs, that is more interested in building up a network than cashing in fast. Such responsible behavior is refreshing in the world of ICOs; hopefully it will start a trend. If you are seeking a different kind of ICO research the Raiden Network, because it might be the future of Ethereum and digital payment.
So what does Raiden Mean anyway?
For those of you who did not waste their youth playing video games, Raiden is the Japanese god of thunder and lightning, sort of Thor’s Japanese cousin. The name is also used by one of the main characters in the seemingly immortal video game franchise Mortal Combat.
The name is taken to indicate that the Raiden Network will be as fast as lightning. It is also a play on the Lightning Network, a similar effort to build a super-fast sidechain payment solution for Bitcoin.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.