Up until now, making small payments as well as small transfers with Crypto hasn’t actually been cheap or viable on a large scale. Blockchain endeavors like Stellar have been looking to solve this problem, but up to this point, they haven’t been able to justify eliminating transaction fees.
One major argument for this lack of justification is that there would be no incentive at all, to keep them running. One of the prime examples in support of this, that is usually mentioned is that no transaction fees means no miners. Another major argument in support of this is that without transaction fees, the security of a Blockchain network suffers.
According to an article from Coin Desk that came out on Monday, a South African Blockchain company called Wala has found the answer that Stellar and more popular Cryptocurrencies have not.
Using a technological framework that is defined as Microraiden, Wala is apparently able to avoid having high transaction fees as well as any major latency like the Ethereum network frequently experiences.
If you’re not exactly clear on what Microraiden is, it is essentially a simplified version of the Raiden network, which is a Blockchain that’s built on top of the Ethereum network, in order to cut the costs of all transactions on the network that involve its native currency as well as ERC20 tokens.
Apparently, with the Raiden network, it was too difficult for decentralized app developers to create simple, recurring payment channels for their customers.
Overall, the purpose of the creation of the Microraiden network was to make what are called micro-transactions, worthwhile.
For example, in the case of Wala, one of the biggest use cases is facilitating micropayments related to an average citizen’s cell phone bill, in Africa.
Coin Desk claimed that Wala’s actual, current usage numbers were revealed exclusively to them.
From the beginning of this year up to now, Wala seems to have reached an average of 6,300 transactions each day as well as 57,000 user accounts, or user wallets. According to the same report, most of these daily transactions are for under $1, which is again, what the Microraiden network was designed to facilitate.
As is also suggested by Coin Desk, these usage numbers do show that the Blockchain can help people who are living in developing countries. What is not quite accurate is that the report claims that this one example proves that Cryptocurrencies work better for people in developing countries.
In this case, the jury is still out. What could prove this to be true is Wala being adopted at a larger scale or Wala inspiring an existing, more powerful network like Stellar to work towards attracting a very large number of users, for the same use case.
In addition to all of this, Wala isn’t currently using the existing technologies of local banks to bring about industry partnerships, through which its services could be connected to customer bank accounts.
Their explanation for this is that because the local banks insisted on charging high fees when they tried such partnerships, Wala determined that this particular path wasn’t feasible.
The CEO of Wala added that their aim has always been to enable zero-fee transactions, but because of this failure with local banks, it doesn’t seem to have been possible, up to now.
To make matters even more confusing, Wala advertises being a zero-fee network, on their main website.
At this time, Wala is succeeding because it has a large user base that trusts their services, but their major roadblock will be how to scale further. Can they find a way to reach their zero fee dream model without the support of local banks? Only time will tell.
By: BGN Editorial Staff