Litecoin Privacy Upgrade Proposed, Designed On The BTC Blockchain

A new Litecoin privacy upgrade was proposed last month, where Charlie Lee who is the head of the Litecoin Foundation outlined his draft plans. The Litecoin news show that the plans use techniques that were originally developed for Bitcoin (BTC).

The proposal would also allow users to access the opt-in privacy by conducting MimbleWimble (MW) transactions on the Extension Blocks (EB) style sidechain. The founder of Litecoin originally announced his plans to explore these privacy technologies earlier this year. He also noted:

“Now that the scaling debate is behind us [for Bitcoin and Litecoin], the next battleground will be on fungibility and privacy.”

As it stands, the Litecoin privacy upgrade is published as a draft named Litecoin Improvement Proposal (LIP) published earlier this year. The project is now looking to gauge community reaction before looking to write, test and audit the new code.

Both the proposed technologies to upgrade Litecoin were developed for the Bitcoin blockchain. As we reported before, the Extension Blocks (EB) were originally proposed by Johnson Lau in 2013 as a soft fork scaling solution for Bitcoin that would enable better fungibility whilst minimizing the potential impact on the existing wallet ecosystem.

The original Litecoin privacy upgrade was rejected in favour of the SegWit scalability upgrade for Bitcoin. On the other hand, the MimbleWimble (MW) transactions were proposed in July 2016 – in a white paper by an anonymous developer who used the handle “Tom Elvis Jedusor.” Ever since the appearance of this white paper, the MimbleWimble protocol has been implemented in the Grin and Beam cryptocurrencies.

However, the Litecoin privacy upgrade drafted at the end of October this year is a proposal which “introduces opt-in MimbleWimble (MW) as a new transaction format through extension blocks (EB).” The team classified it as an upgrade where the extension blocks “run alongside main chain canonical blocks at the same interval of 2.5 minutes.”

By offloading the private part of the transaction to the EB sidechain, the upgrade can be carried out with a backward-compatible soft fork upgrade. This means that there is no risk of the upgrade which could lead to a hard fork that could potentially split Litecoin in two versions.