Peer-to-peer cryptocurrency marketplace LocalCryptos claims that high Ethereum fees have harmed its most underserved customers, highlighting users from Venezuela, who allegedly rely on the platform to sell small amounts of cryptocurrency.
In a recent lengthy thread on Twitter, LocalCryptos, a peer-to-peer cryptocurrency trading platform similar to industry staple LocalBitcoins, noted high Ethereum network fees, stated that the company "wasn't celebrating" but instead saw this as a problem for some users:
- "High network fees hurt the underserved the most. They're a further blow to communities that are already excluded financially from the rest of the world."
As far as we know, more Venezuelans use LocalCryptos than any other #Ethereum DApp. LocalCryptos is the most popular decentralized application among Venezuelans.
LocalCryptos pointed out that Venezuelans primarily use Ethereum as an escape from devaluation of the local currency:
- "Along with the USD, Venezuelans use cryptocurencies as an escape valve to cope with the deep economic crisis that plagues the country. The 2017 crypto fever helped raise awareness of cryptocurrencies among the people. One of these cryptos was Ethereum. Crypto mining in Venezuela was highly profitable. As an Ethereum mining rig was cheaper than a Bitcoin mining hardware, it became a no-thinker for many.
- But selling the earned in a secure, P2P way was very difficult with the lack of proper platforms. Enter LocalCryptos. Most Venezuelans use LocalCryptos to safely change small amounts of ETH to bolívars and back. They use this money to pay for goods and services most of the time, so they usually exchange the exact amount they need. On the other hand, they use crypto to get paid for online work, they use ETH to avoid hyperinflation, they use ETH to send money back to their family.
- More than 70% of ETH trades on LocalCryptos by Venezuelans are under ~$40. That compares to more than ~$400 in China, ~$175 in the US, ~$440 in Russia. The median trade size in Venezuela is the bolívar equivalent of US $20. Despite gas optimizations, a LocalCryptos ETH escrow uses between 102K - 130K gas from start to finish. At low gas prices, that's 20¢. At 500 Gwei, the network fee adds up to more than $21! Yes, if a Venezuelan wants to trade $20 worth of ETH peer-to-peer, it will cost $21 in gas in these conditions."
Litecoin and Dash to solve LocalCryptos's Ethereum Fee Woes
According to LocalCryptos, which supports Bitcoin, Ethereum, and Litecoin (with Dash support on the way), both Litecoin and Dash can serve as viable alternatives for users from low-income areas:
- "Another solution is adding more cryptos. Litecoin is seeing a huge surge in trading volume lately, and we think it also has to do with its little-to-no fees, excellent for small trades. Additionally, Dash (another crypto with almost zero fees) is coming soon to LocalCryptos."
Currently, Litecoin typically processes about 42,000 daily transactions (30-day moving average), with fees well below one cent USD. The median fee did, however, reach $1.41 per transaction briefly in late 2017 due to an influx of network activity, likely a spillover from Ethereum's scaling problems. The network processed a total of about 162,000 transactions that day.
Dash currently processes a 30-day moving average of about 25,700 daily transactions, similarly with a fee well below one cent USD. The Dash network has processed as many as 3.02 million transactions in a single day during a stress test in late 2018, with a median fee still well below one cent. The highest recorded median transaction fee for Dash was $0.14 during a price run-up at the beginning of 2017.
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