Litecoin founder Charlie Lee: SegWit can make Bitcoin and Litecoin interoperable and reduce Bitcoin transaction fees

OpenBazaar is an open source online marketplace that allows buyers and sellers to create stores and sell goods directly through the platform without fees, restrictions or accounts. In order to provide lower transaction fees, OpenBazaar is looking to add multi-cryptocurrency support to its wallet. The online marketplace already allows users to pay for shopping with multiple cryptocurrencies by integrating the Shapeshift exchange.

As bitcoin fees rise, OpenBazaar design director Mike Wolf has proposed supporting multiple cryptocurrencies, but some details still need to be worked out.

Rising Bitcoin Fees

Wolf tweeted:

“Bitcoin fees are rising, should OpenBazaar support multiple cryptocurrencies?”

The tweet included a link to a YouTube video in which he laid out an idea for how to add multiple cryptocurrencies to the OpenBazaar wallet.

Wolf said in the video:

“We haven’t thought through all the features involved.”

The team is seeking feedback on whether the concept has merit. He said:

“Let us know which cryptocurrency you think would be most useful. We will definitely consider it.”

Wolf also conducted a Twitter poll asking people to vote on whether OpenBazaar should support multiple currencies. With six days left, 443 people participated, with 87% of the votes in favor of OpenBazaar accepting multiple currencies.

Wolf said:

“It’s probably not going to be realistic to be 100% dependent on Bitcoin in the near future. From an OpenBazaar perspective, we really want to keep fees as low as possible.”

Multiple cryptocurrency options

The merchant payment interface that Wolf demonstrated in the video showed a variety of currencies available for selection.

He showed a vendor called Ski Shop, which accepts Bitcoin, Litecoin, and Zcash. On the payment page, ETH, Dash, and Monero were also displayed.

Wolf also asked via Twitter if there were any Litecoin developers interested in helping him with the integration.

Litecoin offers integration

Litecoin creator and Coinbase engineering director Charlie Lee responded by saying he would assign a developer to work with OpenBazaar.

Lee noted that Litecoin’s daily trading volume has exceeded $10 million, and he believes that interoperability between different cryptocurrencies is a key to reducing transaction costs .

Lee has been advocating for SegWit to be activated on both Bitcoin and Litecoin. In a post on the SegWit website, he noted that the release candidate code for SegWit has been marked and the beta version is about to be released.

Lee said that the main benefit of SegWit is transaction malleability. In addition, Litecoin can also use the Lightning Network.

He pointed out that with a 1MB block size, Bitcoin could serve 500 million users if it uses the Lightning Network and SegWit.

How interoperability can reduce fees

Because Bitcoin transaction fees on the Lightning Network will be higher than Litecoin transaction fees, it makes economic sense for Lightning Network transactions to be transferred back to Bitcoin via Litecoin to obtain a lower transaction fee rate. The Lightning Network can achieve this because the two networks can be interoperable.

Lee said he doesn’t know if this use case is economically viable, and no one will know until the Lightning Network is live.

“I bet the convenience and lower tolls on the Litecoin Highway will convince cars to pass by this road and use Litecoin.”

Another benefit is cross-chain transactions via the Lightning Network .

Both parties can trade BTC and LTC quickly and risk-free. Efficient decentralized exchanges are now possible.

If a merchant only accepts BTC, a buyer who only holds LTC can now pay with LTC and quickly convert it through a Lightning Network exchange node and send BTC to the merchant.

Given the current block size impasse between SegWit and Bitcoin, Lee believes that Litecoin has the potential to help break the impasse.