One of the most known and recognized virtual currencies in the market will be receiving a very important upgrade in the near future. According to a blog post released by Litecoin.com on October 19, the virtual currency created by Charlie Lee will be lowering network fees by a factor of 10. This will happen in the upcoming release of Litecoin Core 0.17.
At the moment, the average transaction fee is Ł0.001 per KB or $0.05 dollars. With the new changes, the fee will be Ł0.0001 per KB, close to $0.005 dollars. This is equal to half a cent and something similar to the levels seen in 2015.
On the matter, Core Lead Developer, Adrian Gallagher, commented:
“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.”
Gallagher has also said that he does not think it will be too much longer before this bear market ends. Indeed, he believes that it will be over in three to six months.
The blog post explains that transaction fees are based on the space used in a block. Users pay for the space required to include that transaction. If the transaction has larger data, the fees will be bigger. This is also related to the addresses involved in the transaction, as well as other data.
Transaction fees help to prevent spam on these networks and they also create a hierarchy of demand. For example, if there are several transactions, those who pay more would likely have their transactions processed faster. At the moment, and due to the fact that blocks are not full, there is no need to pay for higher fees.
Each block that is mined gives 25 LTC coins to the miner that was able to solve it. However, fees in the network are close to $2 dollars per work, which is not clearly significant for miners. Lowering them down means that miners will not be affected.
However, as inflation will slow down in the future, it will be interesting to see how fees will evolve and work. There will be several factors influencing fees, Litecoin’s price, the demand for Litecoin and more.