While Bitcoin fees have come down slightly and confirmation times returned to normal speeds, Litecoin has been increasing in volume due to the faster confirmation times and lower costs. The speedy cryptocurrency looks to improve on this core function by improving the estimation of transaction fees that should be used.
Solving with a Soft Fork
Charlie Lee, the founder of Litecoin, suggests that miners place the lowest fee within a mined block in the block’s header. This adjustment would ensure that miners do not include any transactions smaller than this minimum transaction fee.
Miners can manipulate the fees higher by actually not mine low fees transactions. This is something they can do today. This proposal doesn’t make this “attack” worse. A competitive decentralized miner environment will make this less of an issue.
— Charlie Lee [LTC] (@SatoshiLite) January 6, 2018
Knowing this information is essential because if senders include too low of a transaction fee, their transactions could potentially be delayed for hours, days, or even weeks, depending on the congestion of the network.
While there are solutions to resolving transactions in limbo such as resubmitting the transaction with a higher fee, what Lee suggests would hopefully make those two solutions a last resort.
Wallets could see the fee from the last 100 blocks and use that as a median fee, ensuring that transactions would be confirmed at least within the next few blocks. This average would also be compatible with SPV clients such as Electrum since the price is included in the block header.
The update would be a quick fix and would only require a soft fork for this to be implemented.
This would also create a free market, allowing for both supplies from miners and demand from users to coexist. Currently, fees are driven by need based on the number of transactions in the mempool, with users paying higher and higher fees to ensure their transactions are chosen in the next block or as soon as possible.
In combination with SegWit, the Lightning Network, as well as atomic swaps, Litecoin could quickly become the currency used for everyday transactions, and Bitcoin more as a store of value. It’s certainly a prime candidate for this position, as it’s the second oldest cryptocurrency, meaning brand recognition is already there, with merchant adoption not trailing far behind.