Litecoin to Implement Privacy Features, May Use Mimblewimble

Colin Muller

Details have been emerging in the last few days regarding Litecoin’s (LTC) potential embrace of privacy features. Charlie Lee, founder of the crypto often thought of as the "silver to Bitcoin’s gold," has been signalling on Twitter the new directions for Litecoin.

Perhaps returning to its traditional role as a testbed for Bitcoin, Lee has enumerated a number of possibilities for increasing privacy on Litecoin transactions. He is committed to bringing so-called fungibility and Confidential Transactions to Litecoin.

In economic terms, fungibility is the ability for value (however defined) to move from host to host with maximum equality - X amount of pure gold is exactly as valuable as another X amount of pure gold.

More private transactions imply more “fungible” transactions because completely anonymous and private digital money is - unlike Bitcoin - able to move from hand to hand without any (meaningful) identifying mark in a blockchain explorer. Thus it becomes completely interchangable - fungible.

 

CT, Mimblewimble, Extension Blocks

Confidential Transactions, or CT, was originally conceived by early Bitcoin developer Gregory Maxwell, and is a specific method of obfuscating details of a transaction, including the transaction amount and receiver’s address. Monero (XMR) already implements CT, and the method’s concepts are also built into the Mimblewimble privacy protocol.

 

Mimblewimble, which Lee seems to be considering appending to Litecoin, is a fairly new (2016) blockchain protocol that achieves very high privacy at a very low cost of disk space. Mimblewimble’s first two publically released implementations, Grin and Beam, recently went live.

It seems that Lee is thinking of a “soft fork” implementation of new privacy features atop Litecoin, meaning that a contentious “hard fork” - where miners and node operators are forced to choose between two different implementations of a crypto’s protocol - will not be necessary. The key to a soft fork is that it is backwards compatible, and thus optional, for miners and node operators to run.

 

Extension Blocks are a clever, but complex way of extending the functionality of a Bitcoin-style blockchain (of which Litecoin is one), that mostly resembles a soft fork. But many, including the person who came up with extension blocks, have had qualms about implementing them correctly and with backward compatibility.

As stated above, Litecoin has served as a testbed for Bitcoin before, for example in the case of implementing SegWit. Things can more gracefully go wrong with Litecoin, as it is a far smaller (by market capitalization) crypto than Bitcoin. If privacy features can be successfully bolted onto Litecoin and shown to be stable, perhaps Bitcoin could be next in line.

(Featured image from Pixabay)

Litecoin's SegWit Usage Is Still Far Above That of Bitcoin, Data Shows

Data shows that the percentage of addresses using Segregated Witness (SegWit) on the Litecoin (LTC) network is far superior that the percentage using the technical innovation on the Bitcoin (BTC) network.

Segregated Witness essentially segregates the digital signature - which comprises 65% of the space in a transaction - from the transaction data, to allow block size limits to increase. On the Bitcoin blockchain, block sizes are estimated to be able to reach nearly 4 MB thanks to SegWit, despite the 1 MB limit on the network.

Litecoin, a cryptocurrency often seen as the silver to Bitcoin’s gold, was the first cryptocurrency to activate SegWit on its mainnet. Shortly after Bitcoin activated it as well and quickly surpassed its use, but adoption started slowing down. Blockchair data now shows SegWit usage on the Bitcoin network has been dropping since February of this year, while it has been rising on the Litecoin network.

segwit usage BTC vs LTCSource: Blockchair

SegWit adoption largely depends on cryptocurrency wallet operators and exchanges, as implementing the technical innovation by default allows users to easily transact using SegWit-enabled addresses.

Leading cryptocurrency exchanges like Binance, Coinbase, and Kraken haven’t yet implemented SegWit into their platforms, but have already pledged to do so.  In a now-deleted tweet, Binance CEO Changpeng Zhao claimed the firm was looking to add it by the end of the first quarter of this year.

SegWit adoption is seen as a plus in the cryptocurrency community, as the innovation helps better use blockspace and as a result reduce transaction fees and wait times on the Bitcoin network.

Featured image via Pixabay.