The silver to Bitcoin’s gold is about to get even cheaper to send. The leading development group for Litecoin, the seventh most valuable cryptocurrency, has announced that its next release will “lower network fees by a factor of ten,” reducing the average transaction fee to around half a cent.
In a Medium post announcing the fee cut, developers said that the move was inspired by “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.”
“To encourage more adoption and usage of Litecoin, I think lowering the fees are[sic] good thing,” Litecoin Core Developer Adrian Gallagher, was quoted in the announcement. “We’re not even close to block limits and the block size on disk is pretty small (20GB) relative to other coins.”
Fees are notionally set by the market, but developers make things easier for casual users by setting a default minimum fee in the Core software, currently set at 0.001 LTC/ kB. Although this setting can be changed manually, the new release will automatically reduce default fees for everyone who upgrades.
This isn’t the first time developers had to drop fees to stay competitive. Paradoxically, last year’s bull run made Litecoin less useful as a medium of payment. Transaction fees followed the price upwards, causing Charlie Lee to announce reductions in both relay and transaction fees earlier this year.
Litecoin dev update: we are working on the next release of Litecoin Core and will reduce relay fees to 0.01 lite (0.00001 LTC). Should be released soon. The release after this one, we will reduce min fee to 0.1 lite (0.0001 LTC).
I’m also finishing up my fee signaling proposal.
— Charlie Lee [LTC⚡] (@SatoshiLite) January 18, 2018
This time, it seems, the Foundation intends to be better prepared for the next jump in prices. “I also don’t think it will be too much longer before this bear market is over (3–6 months),” Gallagher said, “so it will lay down the foundation for a fee rate which we can grow into proactively rather than reactively.”
To Stay In the Race, Charlie’s Litening His Load
The fee drop is Litecoin’s latest effort to stay relevant. Although it was originally sold as a faster, lower-fee alternative to Bitcoin, Litecoin is now being outpaced by the free or nearly-free payment ledgers offered by XRP, Nano or other newcomers to the blockchain race.
Although that competitive edge has started to go dull, Litecoin still has huge advantages in brand recognition and exchange listings. In addition to keeping the coin practical for everyday payments, the fee reduction also makes Litecoin an even more attractive bridge into the Lightning Network, a scaling solution which is still struggling to find effective access routes.
If that works, the Lightning Network might be more of a “Litening Network.”
The author is not invested in Litecoin, but owns other digital assets.