Litecoin Breathes Life into Segregated Witness
After a month-long deliberation, the Litecoin community came to a consensus to activate Segregated Witness on Litecoin. On May 10, Litecoin creator and Coinbase Director of Engineering Charlie Lee celebrated the implementation of SegWit on his social media; litecoin will serve as an experimental testbed for bitcoin and may go some way toward a progression in the scaling debate.
Almost immediately after activation, Lee revealed the first SegWit transaction made in the Litecoin network, demonstrating a successful implementation process of the Bitcoin Core development team’s solution.
Although it seems as if the mining and development communities are currently in full support of Segwit, it was not an easy task to convince Litecoin miners to push the activation of Segwit. Lee along with other influential figures launched their first ever Litecoin Global Roundtable Resolution 001 (2017) in order to establish a consensus to implement Segwit.
In consideration of the mining community’s rejection of the user-activated soft fork (UASF) voting mechanism, Litecoin developers and miners agreed upon the activation of Segwit in the traditional way.
On April 21, the participants of the Litecoin Global Roundtable Resolution 001 stated:
“We agree that protocol upgrade should be made under community consensus, and should not be unilateral action of developers nor miners. We advocate that Litecoin protocol upgrade decision should be made based on the needs of the users, through the roundtable meeting voting process, and activated by miner voting. Through a voting process, the participating members unanimously agree to the following plan regarding to Litecoin protocol upgrade: to implement Segregated Witness softfork on Litecoin.”
Litecoin has also played a major role in serving the cryptocurrency community as a practical testbed to bitcoin. Because Bitcoin was not able to activate SegWit, the Litecoin community came to a consensus to observe its effect on the Litecoin blockchain. With Litecoin willing to adopt the upgrade, hard evidence can now be presented to the Bitcoin community and should serve to move the scaling debate forward. Also, SegWit will open the door to new features on Litecoin such as Confidential Transactions.
Currently, one issue with Litecoin’s activation of Segwit is its block size. Unlike bitcoin, the Litecoin’s 1MB cap or block size is nowhere near its capacity. Thus, to refer to Litecoin and assume that an identical effect will happen on the Bitcoin blockchain may not be wholly appropriate.
The Bitcoin Core development team, Luke Jr in particular, have advocated Segwit’s ability to increase on-chain capacity by at least 75 percent. Also, Luke Jr emphasized the impact the Lighting network could have on a blockchain such as Litecoin and bitcoin. He previously noted that it could optimize bitcoin blocks by 90 percent.
Luke Jr wrote:
“All legitimate uses of the blockchain currently amount to approximately 750k/block average. If inefficient and microtransaction usage is put aside, likely below 500k would be sufficient. No block size increase is likely to be needed in the near future. Before we reach the point that 1MB is insufficient, we are likely to have the Lightning protocol working in production. This improves efficiency of blockchain usage by magnitudes, possibly reducing 1 MB block usage to ~10k.”
However, as Ryan Shea of Blockstack previously said, SegWit is a ‘Swiss army knife’ of a solution. It fixes transaction malleability which is absolutely necessary for hardware wallets and applies fixes to a wide range of issues involving bitcoin and Litecoin’s codebase. Hence, scaling is simply a byproduct of SegWit.
The price of litecoin, LTC-USD, on one of the exchanges hosting the largest volume for the altcoin BTC-e recently peaked at $36.30, the highest since December 2013. The chart below shows the hourly price action for LTC-USD, with the market price just above $31.20 at the time of writing. We obtain a buy signal at $32.2251, with the Awesome Oscillator displaying a bullish saucer. Consequently, a move above $32.2251 could see another bullish run.
The green Ichimoku cloud provides a support zone around $26 to $27, and indicates equilibrium for the altcoin around $30-$32 for the late hours of May 11 (UTC).
The monthly chart below shows that $34.88 is a key resistance over the long run, with a close above this level at the beginning of June providing a signal for futher gains.