If there is one property that is missing from the Litecoin network, it is fungibility, the ability to carry out completely anonymous and confidential transactions on the Litecoin blockchain. Since the Litecoin blockchain is more or less a replica of its bigger brother Bitcoin network, whatever ails Bitcoin ails Litecoin.
The lack of fungibility is a property that Litecoin inherited from Bitcoin. To solve this problem, Litecoin founder Charlie ‘SatoshiLite’ Lee has announced that he is working on introducing Confidential Transactions on the Litecoin network to increase fungibility of the digital Silver to Bitcoin’s gold.
This is Charlie’s 2019 goal and he made a tweet yesterday on the 28th, January 2019 saying that:
“Fungibility is the only property of sound money that is missing from Bitcoin & Litecoin. Now that the scaling debate is behind us, the next battleground will be on fungibility and privacy. I am now focused on making Litecoin more fungible by adding Confidential Transactions.”
Initially, Bitcoin was thought to be anonymous and private but this was later discovered not to be the case. At best, Bitcoin offers pseudo-anonymity properties which means that once a Bitcoin (and by extension a Litecoin) address has been linked to an individual, their entire history of transactions associated with that address is uncovered. Law enforcement agencies have often used this property to their advantage to arrest and convict criminals who were conducting their businesses through Bitcoin.
So far the leading coins that offer fungibility and privacy are Zcash (ZEC) and Monero (XMR) coins. Zcash makes use of Zero-Knowledge proofs technology to ensure the privacy of transactions while Monero employs ZK-Snarks and Ring Transactions to hide transaction trails, therefore, ensuring the privacy of addresses and transactions. Both of these coins have been rather successful due to these two properties – privacy and confidentiality.
However, the Litecoin network still has more market value than either of these coins and if SatoshiLite succeeds in introducing Confidential Transactions to the Litecoin network, he could potentially catapult Litecoin to among the top five coins as most individuals and businesses that accept Bitcoin and Litecoin but crave privacy will have no reason not to switch from Bitcoin to Litecoin. Even the users of Zcash and Monero could make the switch as Litecoin is more widely accepted.