It’s pretty much common knowledge that Litecoin (LTC) will be a privacy coin in the future. Charlie Lee, Litecoin’s founder, partnered with David Burkett, a Grin developer, to implement the MimbleWimble protocol. MimbleWimble will improve the scalability and privacy of the blockchain by using extension blocks. So, Litecoin’s creator believes MimbleWimble will be better than Bitcoin in terms of scaling, and he’s probably right.
What is Litecoin?
Litecoin is the 7th largest cryptocurrency by market cap at the time of writing. Founded by Charlie Lee in 2011, as the “silver to Bitcoin’s gold”, Litecoin was developed with a variety of different goals in mind. Lee aimed to improve on Bitcoin, which he saw as lacking a few vital features, according to eToro:
- “Faster block propagation – one block every 2.5 minutes instead of a 10-minute target on Bitcoin”
- “Improved GUI”
- “More total money supply – 84 million coins to Bitcoin’s 21 million”
- “Scrypt algorithm instead of SHA 256 – which makes it more expensive to produce ASIC miners to mine on Litecoin than on Bitcoin”
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What is MimbleWimble?
Firstly, let’s take a look at MimbleWimble. It’s built on the same input and output transaction model as Litecoin, but it’s impossible for a blockchain voyeur to garner any specifics of ownership, or the value of transactions taking place on the protocol. MimbleWimble uses a “Pedersen Commitment Scheme” which ensures that the hidden data is accurate, and the amounts can’t be changed later. This is done through multi-sig technology.
Input and output info is therefore hidden from any third parties, while ensuring that all data is reliable and accurate.
How will it be better than Bitcoin?
Any solid blockchain will be concerned about scalability. Lee argued that MW is in a far better position than Bitcoin in terms of scalability, noting that the protocol will not sacrifice scalability to provide better privacy and fungibility. Burkett shared the plan among his developer community. In his outline, he says that he hopes to restructure the core logic in Litecoin and Grin++. Litecoin is essentially going to redefine all of its models, and will eventually move its database to libmw-core, which is one of the partial redesigns of Grin++.
What benefits does it have?
Litecoin’s creator believes MimbleWimble will be better than Bitcoin in terms of scaling, but what other benefits does it have? MimbleWimble is essentially a form of privacy technology that can be used in various ways on the Litecoin network. It could be used on the main blockchain, so all Litecoin transactions would be private, or as an extension block or sidechain, giving users the chance to opt-in to private transactions.
If they really want to tackle the fungibility issue, it would probably be best to implement the protocol on the mainchain. However, this could lead regulators to pressure merchants not to engage with the cryptocurrency, and exchanges could even delist the coin (privacy coins are still controversial). In contrast, implementing the MW protocol on a sidechain or extension block will likely decrease regulatory pressure, but the network will not fully benefit from increased confidentiality.
MimbleWimble to the rescue
Litecoin’s creator believes MimbleWimble will be better than Bitcoin in terms of scaling, but is it enough to turn things around for the blockchain which saw a pretty dismal 2019? Whether MW is implemented via a sidechain/extension block or on the mainchain will also be crucial in determining the success of the protocol. Here’s hoping the right decision is made.
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