Litecoin Becomes Anonymous, Available on Jaxx Soon
After adding compatibility with Ethereum Classic for their blockchain wallets, Jaxx recently announced their newest addition, Litecoin, to be available in October. Demands from the community and the pre-approval of a select few cryptocurrencies by Apple’s App Store development team means that Litecoin compatibility will be available across all of Jaxx’s wallets.
Jaxx also stated that another 15-20 cryptocurrencies will be added by the end of the year, which would make their wallet the most comprehensive on the market.
Litecoin has stood the test of time, remaining in the top five cryptocurrencies by market capitalization and October will also see the cryptocurrency’s fifth anniversary. As part of the celebration, Ledger has released a limited edition hardware wallet, the Ledger Nano S with a Litecoin design. The Ledger device will soon support Litecoin as well as Bitcoin.
Some advantages of Litecoin over Bitcoin are faster transaction times and almost no blockchain congestion. However, while each Litecoin transaction consists of one input and one output, the amounts of each are known to the public. Consequently, this could cause privacy issues and a loss of fungibility, a problem also present with Bitcoin. Fungibility is defined as “the property of a good or a commodity whose individual units are capable of mutual substitution”. This means that each individual litecoin should be as good as any other. Unfortunately, Litecoin is not fully fungible (as well as Bitcoin), which results in individual Litecoins being different from each other.
Due to the pseudo-anonymous nature of both Litecoin and Bitcoin, the lack of fungibility could challenge the value proposition of these cryptocurrencies as money. With both being traceable using the publicly available blockchain, certain coins may be worth less due to being ‘tainted’ as a result of being linked to addresses involved in hacks, drug deals, money laundering and so on.
To position itself better in the cryptocurrency market, one Litecoin developer has recently introduced plans to incorporate confidential transactions to strengthen Litecoin’s fungibility property. To make Litecoin transactions anonymous, the community faces two choices; a soft-fork is required to enable confidential transactions whereas a hard-fork would be necessary to implement ring signatures to improve anonymity further.
However, while the former only requires consensus from Litecoin miners, the latters risks a split in the Litecoin blockchain, like the one that occurred with Ethereum’s hard-fork, as a successful hard-fork requires an unanimous decision from the entire Litecoin community.
While the proposal may not make Litecoin fully anonymous, it is a step in the right direction. The founder of Litecoin, Charlie Lee, explained in another Reddit post the after-effects of making Litecoin anonymous:
“It’s true that Confidential Transactions (CT) will increase the transaction size and slow down node processing. The good thing is that Litecoin has plenty of spare block space. Mind as well make use of it. One thing I am a big proponent of is to make sure that incentives are aligned. So we try to make sure that the fees charged for a CT is proportionate to how much it strains the network to support those transactions.”
Lee also stated that users will not be forced to make confidential transactions and would only be used if it is wanted, with a higher transaction fee to be paid if users want to benefit from the anonymity features.
So what does the future hold for Litecoin? The creator Charlie Lee reckons that numerous cryptocurrency networks will evolve to serve different markets. For example, he states that in the example of someone buying a house, they would use the currency with the most secure network (e.g. Bitcoin), but when buying a coffee, they will choose the currency with the fastest transaction times and lowest fees (e.g. Litecoin).
Litecoin’s conservative approach to development is seemingly serving them well, as they wait on the sidelines and prepare to capitalize on the niche market that other cryptocurrencies are not suited to.