Hello guys, here we meet again in another article about ARAW. Like what I've said in my previous article, ARAW is a blockchain powered e-commerce channel. One feature that catches my eye is the ability to handle off-chain transactions. ARAW will become something like a hub to connect users and crypto exchange via off-chain and on-chain transactions.
What does this mean? Will this become beneficial for consumers? You'll find the answers below.
Off-chain & On-chain Transactions
The first thing that you should understand to answer will ARAW feature brings benefits or not is to understand about on-chain & off-chain transactions. Basically, on-chain transactions are transactions that occur and made public on the blockchain, and that's why they need to be confirmed by miners and users must pay fees to make his/her transactions got confirmed.
On-chain transactions can become slow, especially if there's a network congestion. Late 2017 have shown us how Bitcoin transactions can be annoying because in order to send $25 you have to pay $10 which is a large amount. The same thing happens to Ethereum blockchain right now, where you have to send up to $1 sometime because the network is congested.
A quick glance at how off-chain transactions can work. Source: Coinaccord
And here is where off-chain comes in actions. An off-chain transaction is a transaction that occurs "off" the blockchain, or outside the blockchain. Users will use a payment channel where he can transact directly to other parties after having agreement on the blockchain first (it needed on-chain transactions). Theoretically, off-chain transactions will be fast, doesn't requires a fee (if both parties allow it) and can solve the problem of slow & congested of a particular blockchain network.
In the whitepaper, ARAW aims to use Raiden Network or Ethereum Casper as the backbone for handling off-chain transactions. Both of them are still under development and there is yet an implementation of them, unlike Bitcoin Lightning Network. However, just like we see with LN, it is guaranteed that using off-chain transactions will really speed up transactions and make it cost-effective.
Off-chain Transaction to Handle Payment & Users Interaction
Based on the whitepaper and one-pager, I get a glimpse that ARAW will utilize off-chain transactions to handle payment or liquidity activities. Probably ARAW will become a payment hub, that will have a channel to each users wallet. In this way, users will be able to utilize off-chain transactions with ease. They don't have to set up their payment channel by themselves, which is quite good especially if they don't have the technical knowledge to do that.
How ARAW Pay works, using off-chain & on-chain transactions.
However, transactions to crypto-exchange are done via on-chain transactions. Unless those external exchanges agree to open up a channel to connect ARAW users, then I guess it will stay that way. However, it is not a problem because most of the time, transactions between buyers and sellers can be handled using ARAW off-chain transactions.
Bottom Line
Off-chain transactions will definitely become a handy feature for the e-commerce platform. It's a breakthrough that ARAW will use it. This way, they'll be able to make crypto transactions easy and fun to do for new users that use their platform. What do you think about it?
Note: This article is not a financial recommendation. The author, ARAW and other parties mentioned in this article is a separate entity. The author writes this article based on his own understanding of ARAW, readers should read the original document of ARAW by themselves. The author shouldn't be responsible for any actions taken by the readers, including but not limited to: joining ARAW bounty program, participate in ARAW token sale, and etc.
Important links that you should check:
ARAW Website: https://arawtoken.io
ARAW Whitepaper: https://arawtoken.io/assets/araw_whitepaper.pdf?v1.7
ARAW One-Pager: https://arawtoken.io/assets/araw_onepager.pdf?v1.0