Litecoin (LTC), Bitcoin’s most famous and oldest hard fork coin, is focusing on one new feature: privacy.
The blockchain industry’s subdivision of “private money” – with embedded technology that protects identifiable information from the public view – is becoming one of the hottest spots this year. One of the largest privacy coins, Zcash (ZEC), which offers protected transaction capabilities, has nearly tripled so far since the beginning of 2020, while Monero (XMR), using one techniques called “ring signatures” to obscure the sender’s and receiver’s data have also doubled.
Litecoin founder Charlie Lee said in a recent interview with Coindesk that the project is now looking to adopt privacy-enhancing features, which he finds increasingly appealing to crypto users. . Improvements are being tested and are expected to upgrade to the mainnet next year.
If the effort succeeds, it could put a little bit of enthusiasm into a project that is lacking momentum in the cryptocurrency market. Litecoin is up 21% this year after rising 38% in 2019, less than bitcoin’s 60% annual gain and its own 94% gain last year.
“I want to make it so that users don’t have to worry about giving up their financial privacy using litecoin,” Lee said. “Even if you don’t do anything illegal, you don’t want people to know how much money you have or what your salary is.”
An innate feature of blockchain technology is that the transfer of cryptocurrencies over computer networks is often visible to anyone with Internet access, making it easy to track and monitor specific wallet addresses – and sometimes traces those addresses back to identifiable entities.
So digital asset developers have been working for years to invent new ways to preserve blockchain’s advantages – the ease and speed of money transfers without banks as intermediaries – without apparent transparency.
Such features become even more desirable as regulators and law enforcement intensify oversight of crypto trading and compliance with tax and anti-money laundering rules. .
Lee, a former software engineer at Google and Coinbase, who led Litecoin, is a closely watched entrepreneur, partly because his experience dates back to the early years of cryptocurrencies, after bitcoin came out. eyes in 2009.
Litecoin is often referred to as the silver versus the gold of bitcoin, and it has been used historically as a basis for testing technologies that would later become the backbone of larger blockchain networks, including bitcoin. The network processes new blocks of data 4 times faster than the Bitcoin system, but its smaller size makes it less secure.
New security features are designed to work in line with the increasingly stringent compliance of crypto exchanges with global regulators.
Litecoin is relying on a technology called Mimblewimble, which helps reduce the amount of data that is publicly visible on the main blockchain network, through the use of expansion blocks that hide inputs and outputs.
It remains unclear whether regulators will proceed to restrict the use of security features that can be used to conceal illegal transfers or tax evasion.
Both Zcash and Monero, including direct privacy on the protocol, have faced legal pressures. Europol, a European Union law enforcement agency, recently declared privacy technologies, including privacy-focused coins, the leading threat in criminal assessment. organized crime on the Internet.
In 2019, exchange Coinbase delisted Zcash in the UK without giving a reason, but speculation immediately focused on the digital currency’s identity protection features.
For Litecoin, this could be another opportunity to differentiate it from Bitcoin, which has already attracted the attention of many cryptocurrency traders as a hedge against inflation.
Lee told news agency CoinDesk during a video chat: “I don’t think bitcoin will follow this path of what we’re doing, as it’s a bit drastic. In other words, litecoin has a lot to prove. “