While the bear market starts its cycle, a seemingly “forgotten” cryptocurrency is making progress. Litecoin recently launched its new Mimblewimble upgrade on 19 May 2022.
Today, we run through what Mimblewimble is, and its impact on Litecoin. Let’s get a deeper look at Litecoin and how Mimblewinble can affect it.
Litecoin (LTC) is one of the earliest altcoins to emerge in the crypto space. It’s considered the “Silver to Bitcoin’s Gold” for many reasons:
- Litecoin was created in 2011, shortly after Bitcoin.
- This cryptocurrency was born from a copy of Bitcoin’s source code.
- Bitcoin and Litecoin use the Proof-of-Work consensus. However, they also have some key differences:
- Block Processing Time – Litecoin confirms transactions faster since it has a 2.5-minute block processing time. In comparison, Bitcoin’s block processing time is 10 minutes. This means that in theory, the Litecoin blockchain confirms transactions 4 times faster compared to Bitcoin.
- Proof-of-Work Algorithm – Litecoin uses the Scrypt algorithm, whereas Bitcoin uses the SHA-256 algorithm. In the early days of mining, it was harder to mine Litecoin compared to Bitcoin due to this algorithm difference.
- Maximum Supply – Litecoin has a maximum supply of 84 million coins. This is 4 times higher than Bitcoin’s maximum supply of 21 million coins.
Therefore, with its higher transaction throughput, many believe that Litecoin is a better alternative to Bitcoin for payments. Indeed, Litecoin’s founder, Charlie Lee, had hoped his creation would be a better alternative for smaller peer-to-peer payments.
However, many other developers believe that Litecoin could be further improved.
Mimblewimble for Litecoin – Achieving the Best of Both Worlds
On May 22th 2019, the MW implementation proposal was published on the Litecoin Project’s Github. The Litecoin Improvement Proposals (LIP) below detail the upgrade:
- LIP 2 – Implementation of Extension Blocks. This allows increment of block size without affecting consensus rules.
- LIP 3 – Implementation of the MW proposal. This proposal addresses the implementation of Mimblewimble on the Litecoin blockchain.
So, what exactly is Mimblewimble (MW)? Simply put, MW is a blockchain design that increases scalability and privacy. It organizes and stores transaction data differently compared to Proof-of-Work chains. This design reduces the blockchain size. In turn, this makes the chain easier to download, synchronize and verify. In other words, the implementation of MW increases the scalability of Litecoin.
MW also makes Litecoin transactions private to outsiders. Therefore, MW does this by masking on-chain addresses and data. In practice:
- There are no identifiable or re-useable addresses on an MW chain.
- There are no details for individual transactions within blocks. The data is presented as a large, single transaction. However, the MW block can still be verified on-chain.
More About Mimblewimble for Litecoin
On the other hand, only the sender and receiver involved in the transaction can view the data on-chain. Quoting an example below:
- Transaction #1: Alice sends Bob 10 LTC.
- Transaction #2: Bob then sends Charlie 5 LTC.
In this case, both Bob and Charlie can see that 5 LTC was transferred in transaction #2. But, Charlie can’t tell that Bob received 10 LTC from Alice first. Charlie is the outsider to transaction #1. Similarly, Alice won’t know that Bob sent Charlie 5 LTC, as she is the outsider to transaction #2.
So, how does Mimblewimble achieve both scalability and privacy at one go for Litecoin? Mimblewimble does this by using the cut-through feature, which reduces block size by cutting out unnecessary transaction data. In turn, this also increases the privacy of transactions on the MW-upgraded Litecoin blockchain.
Litecoin Post-Mimblewimble Upgrade
On May 19th, 2022, the Mimblewimble upgrade was officially deployed at the Litecoin block height of 2,257,920. Many were hopeful that this upgrade could bring blockchain further toward its founding vision of privacy.
Instead, multiple exchanges started delisting the LTC coin. This was in response to breaches of Anti-Money Laundering (AML) and Know-Your-Customer (KYC) laws. This is despite MW being an optional privacy upgrade for exchanges and platforms on the Litecoin blockchain.
As of the latest update, Binance has also suspended withdrawals and deposits of the LTC coin with the MW upgrade. However, as a major global exchange, this decision has dealt a blow to the adoption of privacy for the Litecoin blockchain.
— Binance (@binance) June 13, 2022
Despite facing regulatory headwinds, Litecoin developers continue to push forward with improvements. You can find out more about the latest developments on Litecoin here.