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As Bitcoin Fees Rise, OpenBazaar Looks at Altcoin Payments

Last Updated March 4, 2021 4:55 PM
Lester Coleman
Last Updated March 4, 2021 4:55 PM

OpenBazaar, an open-source market that allows buyers and sellers of goods to directly create shops and sell goods without fees, restrictions or accounts, is looking to layer multiple cryptocurrencies into its wallet in the interest of offering lower transaction fees. The online market already allows users to pay for purchases in multiple cryptocurrencies via an integration with the ShapeShift.io exchange.

With rising bitcoin fees, Mike Wolf, design lead at OpenBazaar, has proposed supporting multiple cryptocurrencies, noting there are details to be worked out.

Rising Bitcoin Fees

“Bitcoin fees are getting high,” Wolf tweeted. “Should @OpenBazaar support multiple cryptocurrencies?” The tweet directed readers to a Youtube video  in which he presented an idea for how multiple currencies could layer into the OpenBazaar wallet.

“We have not thought about all of the functional aspects of it yet,” Wolf said in the video. The team is looking for feedback as to whether the concept has value. “Let us know what coins you think are most useful,” he said. “We’ll definitely read through them.”

Wolf also posted a survey on Twitter asking people to vote on whether OpenBazaar should support multiple currencies. With 443 votes cast and six days left, 87% wanted to see OpenBazaar accept multiple currencies.

“Relying 100% on bitcoin might not be realistic in the near future,” Wolf said. “From the Open Bazaar perspective, we really want to keep fees as low as possible.”

Multiple Crypto Options

The merchant payment screen Wolf demonstrated in the video showed multiple currencies to choose from.

He showed a vendor called Ski Shop that accepts bitcoin, Litecoin and Zcash. In the checkout screen, it also listed Ethereum, Dash and Monero.

Wolf also tweeted to ask if any Litecoin developers would be interested in helping him with the integration.

Litecoin Offers Support

Charlie Lee, the creator of Litecoin and director of engineering at Coinbase, responded that he would arrange to have a developer work with OpenBazaar on the project.

Charlie Lee

Lee, who noted that Litecoin’s volume is now over $10 million, sees interoperability of different cryptocurrencies as a key to lowering transaction costs.

Lee has advocated SegWit to activate on both bitcoin and Litecoin. He noted in an article on the SegWit website that the release candidate code is tagged and binaries are near release.

SegWit’s main benefit is transaction malleability, Lee said. Lightning Network could be built atop Litecoin.

At 1MB block size, Lightning Network and SegWit on bitcoin can service 500 million users, he noted.

How Interoperability Lowers Fees

Because the bitcoin transaction fee on Lightning Networks will be higher than the Litecoin transaction fee, it could make economic sense for a Lightning Network transaction to go via Litecoin and then back to bitcoin to get the lower transaction rate. Lightning Network makes this possible because it allows the two networks to be interoperable.

Lee said he did not know if this use case will be economical, but no one will know until both Lightning Networks are up and running.

“My bet is that the convenience and the cheaper tolls on Litecoin highway will convince cars to cross over and use Litecoin,” Lee wrote.

Another benefit is cross-chain transactions via Lightning Network. Two parties can trade BTC and LTC immediately and without risk. Efficient decentralized exchanges are now possible.

Should a merchant accept only BTC, a buyer who only has LTC can now pay LTC and exchange the currencies instantly through a Lightning Network exchange node and send BTC to the merchant.

With SegWit and bitcoin’s current block scaling deadlock, Lee sees the potential for Litecoin to help bitcoin break through this deadlock.

Featured image from Shutterstock.