The Litecoin Foundation has unveiled two new draft Litecoin Improvement Proposals that work efficiently towards establishing a privacy feature for the entire network. The Foundation shared links on October 22 detailing the draft proposals on GitHub: LIP-0002 EB and LIP-0003 MW.
According to the Foundation, both of these proposals aim at minimizing the privacy risks associated with a transparent ledger. The transparent ledger is the place where the transaction history can be publicly followed. These new developments will protect Litecoin’s functional fungibility from the government.
David Burkett, Andrew Yang, and Charlie Lee are the proposal’s authors. They argue that transparency prevents Litecoin’s “functional fungibility in a government-regulated merchant world.”
They believe that the personal identifiable information collected from exchanges, IP addresses, or merchants will easily leak and then channel back to the owner’s addresses. Furthermore, services like chain analysis offer risk-scores based on whether or not any of the addresses that they have already blacklisted appear in its transactional history. They added:
“This results in some businesses treating these coins as ‘tainted’ and then sending them back to the owner, or worse yet, shutting down their account.”
To solve that hiccup, the Foundation is working relentlessly on the integration of the scalability and privacy-focused Mimblewimble protocol. The protocol gets its name from a fictional tongue-tying curse that featured in the popular Harry Potter novels.
Partially, Mimblewimble is a variant of the Confidential Transactions cryptographic protocol. It supports transactions to be obfuscated yet verifiable to ensure that they achieve enhanced privacy and the prevention of double-spending.
Privacy-Supporting Protocol Development
The authors wanted to implement MimbleWimble for these specific proposals as an opt-in new transaction format via “extension blocks” (EBs). Studies show that the EBs run alongside the main chain canonical blocks. They come at the same interval of 2.5 minutes on average.
These documents also highlight the functioning of the opt-in integration and the effects it exerts on transaction privacy. They also discuss how the proposals exactly tackle the interaction between the canonical blockchain and coins in the extension blocks.
The privacy-centric crypto Grin (GRIN) underwent its maiden network hard-fork this summer as reported earlier. The hard-fork aimed at introducing tweaks and enhancements to the consensus algorithm. That would, in turn, provide greater resistance to the ASIC miners.
On October 22, reports emerged about the comments made by the CEO of the crypto transaction tracking firm CipherTrace. The CEO was quoted arguing that the Financial Action Task Force’s cryptocurrency rules and regulations will take criminal activity away from Bitcoin heading towards the privacy coins.