It has been less than two weeks since Litecoin founder Charlie Lee has announced the pursuit to add confidential transactions – and it already seems like Bitcoin’s little brother is exploring much more than Greg Maxwell’s protocol proposal. On February 7th 2019, the Medium page of Beam (one of the two Mimble Wimble implementations) published an article which announces a collaboration with The Litecoin Foundation.
The purpose of this collective effort, according to the article, is to create “on-chain conversion of regular LTC into a Mimblewimble variant of LTC and vice versa”. The bridge between the two blockchains would be provided by extension blocks, so that Mimble Wimble LTC can exist and get transacted.
No further technical details have been published, but the best news for the entire cryptocurrency world is that the joint effort’s results are going to be open-sourced. Therefore, anyone in the future will be able to replicate this type of privacy enhancement – which means that Bitcoin might be able to benefit from Mimble Wimble too (possibly Grin).
Why Beam instead of simple Confidential Transactions?
There are two different layers to this question, and they include “Why Mimble Wimble instead of Confidential Transactions?” and “Why Beam instead of Grin?”.
The first question has a pretty simple answer: MW is the more advanced privacy protocol which uses both Maxwellian Confidential Transactions and the Chaumiam Coin Join (which merges multiple transactions into one, therefore making it harder to trace individual sources). It’s both obfuscated and minimalistic in design, and therefore allows for greater scalability, as more transactions can fit into a block.
One of the criticisms of Confidential Transactions is that the size of one single transaction increases significantly, which makes the blocks fill faster and increases the price per operation. Litecoin seems to have avoided this scenario by implementing a more refined privacy protocol.
The next question refers to choosing Beam instead of the more cypherpunk Grin. Well, The Litecoin Foundation definitely finds it easier to collaborate with a similar institution which funds its own research and has a sustainability plan. Furthermore, there are more similarities between the two protocols in terms of inflation and supply, as Beam borrows a monetary policy that is very much akin to Bitcoin’s. With Grin it would have been much more difficult, since the inflation is very different (60 coins get minted every minute, and the supply is unlimited).
What are Extension Blocks and do they require a hard fork?
One of the biggest concerns of cryptocurrency owners is to not lose access to their funds due to unexpected network splits. However, extension blocks are based on a 2013 proposal by Bitcoin Core developer Johnson Lau, which sought to extend the block size through a soft fork.
Therefore, backwards compatibility with the old nodes is granted by design, so no hard fork will ever be required to accomplish this task. Nobody is forced to upgrade their protocol to also run Mimble Wimble, so privacy will become an optional feature for Litecoin.
The idea probably involves creating an auxiliary block for every other block on the main chain, and store the Mimble Wimble transactions in them. It’s like a parallel blockchain that records all confidential transactions, from which miners can keep on collecting fees. But where mining doesn’t happen – you have to transfer coins from the main blocks, and then carry on with the obfuscation.
It’s definitely a smart design and an interesting choice of protocol, and it will be interesting to watch how Mimble Wimble LTC turns out.
Litecoin price pumps 10%, the flappening happens again.
The flappening is yet another one of Charlie Lee’s self-fulfilling prophecies which involves LTC overtaking BCH in market cap. It has happened in mid-December, and it was only a matter of time (and positive news) until Litecoin reclaimed its spot below Ethereum.
At press time, according to Coin Market Cap, LTC is 10.53% up. It is ranked as the 4th biggest coin in terms of market capital, and it has once again passed the threshold of 1% of BTC’s price.
It’s one of these rare bear market instances when good news actually translate in a positive market movement, and it’s going to be interesting to observe if the price movement is sustained as the community echoes the information.
Mimble Wimble Litecoin definitely sounds better than just Confidential Transactions Litecoin, and the entire concept of Extension Blocks (despite being more experimental) is better at preserving the values of the main chain as we know it now.
Charlie Lee interview
In late December 2018, Charlie Lee did an interview with Crypto Insider. At the time, he expressed interest in adding more privacy to Litecoin, but wasn’t very specific about the means. If you’d like to learn more about Satoshi Lite’s thoughts, watch the video interview below: