The Litecoin Foundation, led by Charlie Lee and the team behind Litecoin have made a very exciting announcement recently, one that promises to bolster the use and reputation of Litecoin for sometime to come. As many of you will already know, Litecoin looks to improve on many of Bitcoin’s problems. Litecoin promises a faster network with cheaper transaction fees. The latest update promises to improve on this, making Litecoin cheaper and quicker than ever before.
Last week, Litecoin.com took to Medium to discuss the full details of this announcement:
“The upcoming release of Litecoin Core 0.17 is about to lower network fees by a factor of 10. The average transaction fee as it stands on the network is Ł0.001 per KB or ~$0.05. With the announced changes that will soon become Ł0.0001 per KB or ~ $0.005, half a cent and back at 2015 levels. The move taken by the core developers comes in the wake of the 2017 run up in the price of Litecoin, when the tx fees regularly reached up to and over $0.10 on average per transaction and peaking at just over $1.”
The update promises to further cut the fees that are associated with Litecoin transactions. This is important in a world where the fees of Bitcoin and Ethereum (among others) only seem to be on a climb. By introducing lower fees, Litecoin is offering a more useful service to its customers. This is important because Litecoin is seen as a cryptocurrency designed for adoption. It’s an asset that people want to see used in shops, restaurants, bars and in general day to day transactions. As a result of this, transaction fees need to be as low as they can, hence the justifications for this upgrade. This is a sentiment that has been discussed by Adrian Gallagher, the lead developer at Litecoin:
“To encourage more adoption and usage of Litecoin, I think lowering the fees are good thing. We’re not even close to block limits and the block size on disk is pretty small (20GB) relative to other coins. Technically people can already adjust their fees right now to the one above because of the more relaxed min relay/dust relay fee. I also don’t think it will be too much longer before this bear market is over (3–6 months) so it will lay down the foundation for a fee rate which we can grow into proactively rather than reactively.”
In order to better understand the significance of this, we need to know exactly how transaction fees work. You might wonder why Litecoin don’t totally remove the need for a fee on their network as this would be possible. However, the use of a fee helps to secure the network. It makes carrying out attacks and spam on the network very expensive, therefore people simply don’t do it. Most importantly though, it allows a structure to exist on the network. It allows the cryptocurrency (Litecoin in this case) to become a commodity, an actual product, one that people are paying to use. How do transaction fees work?According to Litecoin.com:
“Transaction fees are based on space used in a block users pay for the space required to include their transaction. The larger the transaction data the larger the fee. It doesn’t matter how much is necessarily sent more than the number of outputs and inputs, aka the addresses on the network where coins are moving to and from that make up this transaction data. This is why someone could make a transaction for $1MM and pay $0.01 and another person sending $100 may have to pay $0.10.”
Basically, it’s complicated.The long and short of it is, cryptocurrencies need to be associated with transaction fees. However, by ensuring fair fees across a speedy network, the likes of Litecoin can progress and can one day hope to become the world’s most popular and most transacted cryptocurrency. Is Litecoin taking Bitcoins top spot?In terms of market capitalisation, no. Litecoin is way off at the moment and as a result, Bitcoin is still going to remain as the top cryptocurrency for market cap for some time. However, in terms of cryptocurrency adoption, updates such as Litecoin Core 0.17 will help to ensure that Litecoin does have a real chance of becoming the world’s most used and most popular cryptocurrency. Movements such as #PayWithLitecoin are helping to influence this drive, a drive that is of course complemented by Litecoins low fees and high speeds, whilst in the meantime, Bitcoin gets more expensive with a slowing network, the same can be said for Ethereum too.All things considered, there’s no reason that we can’t expect to see Litecoin reach the top spot one day.