Or, why I think they should rebrand DigiPal
LitePal are trying to show off that Litecoin is apparently the future of payments. If you too believe this, and you’re precious about your beliefs, now is the chance for you to look away. However if you don’t mind some cold hard facts, and you are open to seeing an even brighter future, then do I have a story to tell you today about DigiByte!
So it started with a bit of a tweet from LitePal:
I don’t normally care too much for this kind of thing personally, I’ve got a lot on my own plate. However, seeing as LitePay (Different from LitePal) was such a roaring success with their credit-card, going boldly where no other crypto <-> credit card merchant has gone before. That’s all sarcasm in that last sentence in case you were wondering.
What was I supposed to do? Leave? Then they’ll keep being wrong?
How could Litecoin be the payment means of the future, when a transaction cost “only” (Haha) USD$0.40?
I mean, don’t get me wrong, it’s an impressive transaction sending that much money, USD$99 million is still a lot no matter where you’re from. However it’s only half the story, and that’s exactly why Litecoin sucks as a payment method.
Lets dive into why
I’ll try and keep the technical stuff explained relatively simply
You see Litecoin is what’s known as a “UTXO” Blockchain. UTXO means “Unspent Transaction Output”, with the TX being Transaction.
What does that mean? Well, look at it this way:
Here’s somebody taking 959,999 LTC and sending 300,000 LTC to an account. The remaining 659,999 is what’s known as the “UTXO”, it’s the “change” left over from the transaction.
So imagine you’re at the store buying some milk. You hand the cashier a $20 note for a $3 bottle of milk. What does the cashier do with the $17 in change?
They give it back to you of course, in change, but instead of you taking the money, you give that to your kid to hold on to in their wallet. This is part of the pseudo-anonymity behind Bitcoin, Litecoin and DigiByte.
So that 659,999 LTC “change” from the transaction goes in to another wallet address, even though it may still be part of that same wallet.
Now why does this matter?
Well it matters because of the fees!
You see, the 40c fee, it’s actually ridiculously high!
The fee was 0.002 LTC per kB.
What does that mean?
Well, because everything is stored on the Blockchain, and Bitcoin / Litecoin / DigiByte are all UTXO Blockchains, the fee charged is based on the size of how much space your transaction takes up on the blockchain, not by how many coins you send.
This is why you are charge per-byte (Or per thousand bytes, kB) for your transactions, and that’s why the value in dollar / crypto amount doesn’t actually matter at all.
Here’s a transaction from today that sent only 2 LTC, but it cost WAY less, because it only had 3 inputs:
You can see we take the 3x inputs and send them all to the destination, and the fee is 0.000488
If you scroll back up to the 959,999 LTC transaction though, it only cost 0.000452 LTC which was even less! Why? Because it only had the one input and the two outputs. A 959,999 LTC transaction cost less than a 2.04 LTC transaction!
So why did this 659,999 LTC transaction cost so much? Look at the inputs used to send it:
And you can see there the fee of 0.00284289 LTC to send it.
“But wait!” I hear you cry, “They could have sent it with less of a fee”.
Sure they could, but they wanted to make sure it went through immediately, so they probably paid a little more than the minimum required. On top of this, it has 5x inputs as they gather up all the LTC from their different wallet addresses to send it on to the one new address.
Now sending using 5x inputs is not all that uncommon. If you use your wallet for more than just “Keeping your crypto safe, away from an Exchange”, then you’ll know it’s more common than not. Very rarely does a transaction have one input and one output.
Super, but why does this all matter?
Well, we’ve seen it can cost more to send 2 LTC than 959,999 LTC. So the “value” of what you’re sending doesn’t actually matter. It makes no difference! What matters is the number of inputs and outputs involved in your transaction.
This is fine, spending 40c on a transaction if you’re sending $99 million. What if you’re not though?
What if you’re sending small amounts, because your hourly wage works out to be roughly USD$0.01?
“Well, Crypto isn’t for you then is it?”
Why not? Bitcoin might not be. Litecoin might not be. DigiByte sure is though!
Just because the other Blockchains are slower and have higher fees, doesn’t mean they need to lump DigiByte in with them.
You see, thanks to DigiSpeed, our block timing is 15 seconds!
Litecoin is 2.5 minutes and Bitcoin is 10 minutes. We are *way* faster!
This is also possibly why they included a slightly higher fee with the big LTC transaction, was to ensure that they’re in the very next block possible.
You see, that’s only a problem for Bitcoin and Litecoin, but it’s not going to be an issue for DigiByte. You don’t need to bump up your payment fee because we find a new block every 15 seconds, and on top of this, we can support 560TPS (Transactions per second) vs the 7 that Bitcoin supports, or 56 that Litecoin supports.
But again, why does this matter?
Well, if you live in Venezuela, you’ll be earning around USD$0.01 an hour. If you have to pay a 40c transaction fee, that’s a weeks worth of wages, and so suddenly it’s not worth you using crypto at all.
However if you were to have that same fee for a DigiByte transaction, it would cost you USD$0.00009!
That’s right, you could do 100 transactions for just 1c.
Is your mind blown yet?
Because now all of a sudden, it’s viable to use Crypto in Venezuela, thanks to DigiBytes significantly faster speed, lower transaction fees.
Roger Ver has famously said “Bitcoin should be for everyone”, but it likely never will be, even with Bitcoin Cash, because of their block timing, fees, and limited supply (21 million vs DigiBytes 21 billion).
DigiByte however is perfect for this, perfect to be used as a transactional currency, and perfect to be used in impoverished nations to save them from a Govt that has hyperinflated their currency to the point of it being near worthless. We can be what saves their economy!
Lets quickly review
- Litecoin transaction with 5 inputs cost 40c
- That’s an expensive transaction!
- DigiByte would have been able to do 100 of those transactions for 1c
- DigiByte is 10x faster than LTC, and 40x faster than BTC
- LTC has scaling issues with only 56TPS, it can’t be used worldwide as a transactional currency
- LTC have shown they have no interest to grow their blockchain, with SegWit being the only improvement / development they’ve done in 7 years (Aside from slowly playing catch-up with Bitcoin Core Wallet)
- No, LitePal and even LitePay are *not* innovations from the Litecoin blockchain / foundation / development team
- Comparatively, DigiByte has shown consistent innovation and growth in this space over the last 4 years, with DigiShield, DigiSpeed and more.
So when you review it like that, the choice seems obvious to me.
LitePal should rebrand to be DigiPal
Then use a Blockchain that’s suitable for what they want: Worldwide transactions!
I present to you: DigiByte!