Litecoin (LTC) Transaction Fees To Fall 10x In Anticipation of Bear Market End, Full Blocks

Colin Muller

Litecoin fees will fall by up to ten times, as part of changes in the upcoming version 0.17 of Litecoin, according to a post on the official Litecoin Medium. In the future, the average network fee will be Ł0.0001 per KB, as opposed to the current average of Ł0.001 per KB - $0.005 versus $0.05 at current prices, respectively.

The post detailed a current mismatch in the Litecoin ecosystem which has drawn attention to the issue of transaction fees, namely that fees remain relatively high even as demand for blockspace for transactions is low.

Fees are calculated per KB of memory usage in the blocks, and the post explained:

[c]urrently because the blocks aren’t full there is no need to pay higher fees, which is one reason why the move is being taken

Transaction sizes are based on the amount of transaction data they contain, rather than the amount of value being transferred. Some transaction sizes are less than one KB.

Adrian Gallagher, current lead Litecoin developer and the first hire of the Litecoin Foundation, said  that the future intentions of Litecoin were to “lay down the foundation for a fee rate which we can grow into proactively rather [than] re-actively [sic]”. His remarks come in anticipation of the end of the current cryptoasset bear market, which he predicts will end in three to six months.

The post also touched on the idea of a fee market, which applies to many other cryptocurrencies as well as Litecoin. In the future, when block rewards begin to diminish, it will become necessary to incentivize mining in a different way, namely with transaction fees to transfer already-existing cryptocurrency, rather than creating or “minting” new currency.

Déjà Vu

The strange thing is, this issue is not new, nor in fact is this announcement.

The exact same “news” was announced by Litecoin creator Charlie Lee way back on January 17 - when litecoin’s daily price closed at $187. Lee, also back in January, discussed the incorporation of a fee market into the Litecoin code.

On January 6, Lee outlined intentions of hard-coding in a fee market, proposing that fee rates be stored in Litecoin block headers. If this were the case,, "[m]iners [would be able to] choose to not mine low fee transactions to signal to the market to increase the fees. This should help create a fee market" Adding "I'm convinced this will work". This sounds a lot like Gallagher’s proactive-not-reactive aims.

Whatever the case, it would seem that this Litecoin upgrade has been in the works for some time.

Charlie Lee famously sold all of his Litecoin and later regretted it - although he added that “[he] didn’t actually have that many Litecoins” to begin with.

Litecoin’s Price Surges Past $100 Mark as Its Halving Event Approaches

The price of litecoin (LTC), a cryptocurrency created back in 2011 that’s often seen as the silver to bitcoin’s gold, has been outperforming most other cryptocurrencies so far this year, as its halving vent is fast approaching.

According to CryptoCompare data , LTC is currently trading at $103 after rising 4.1% in the last 24-hour period, and over 42% over the last 30 days. The cryptocurrency has even been outperforming BTC, which has been facing resistance at the $8,000 mark.

At press time, most other cryptocurrencies are up by less than 1%, with EOS, ETH, and Binance’s BNB being up by 1.09%, 1.6%, and 2.8% respectively. BNB’s price has been moving up after the exchange teased the rollout of margin trading .

What’s behind litecoin’s strong performance isn’t yet clear, although some analysts speculate its halving event is behind it. On LTC’s network the halving event occurs every 840,000 blocks and this one is set to bee block rewards drop from 25 LTC to 12.5 LTC.

These events essentially decrease inflation and remind users that the supply of cryptocurrencies like litecoin is limited. As a result the cryptocurrency’s price often goes up before the event, as its scarcity increases demand.

Litecoin’s halving event is expected to occur on August 6 of this year , meaning it’ll occur in about 72 days.

It’s even possible that investors looking to gain exposure to the cryptocurrency space are just betting on litecoin because of the upcoming halving event, as these events are often preceded by bull runs. Historically, bitcoin’s price has increased before every halving event, for example.

There could be other factors involved, however. The Litecoin Foundation has been sponsoring Ultimate Fighting Championship (UFC) matches since late last year to increase cryptocurrency adoption, and it has recently partnered with leading crypto-friendly accommodation booking platform Travala to help increase adoption of cryptos for payments.

Recently, a litecoin user paid a 200 LTC transaction fee , worth over $20,000, to move less than $1,000 in a single transaction. While the move appears to have been accidental, some have speculated it could have been made by miners laundering money.