Privacy coins have rocketed this year, fueled by the increasing ease with which bitcoin transactions can be de-anonymized and traced to real world identities. Zcash, which was a $10 coin in January, peaked at $376 in June, while monero started the year at $12 before reaching $136 in August. Now, testing of Confidential Transactions (CT) suggests that litecoin and bitcoin could follow suit by adding a privacy layer.
Reclaiming the Right to Privacy
Bitcoin and litecoin are the OGs of crypto, the latter essentially a clone of BTC. This means that features which work on the litecoin network will often work on bitcoin and vice-versa. Segwit and the Lightning Network, for example, both made their debut on litecoin. This week, it was announced that progress had been made with testing Confidential Transactions in an update posted by Coinjoin developer Greg Maxwell.
In previous testing, CTs had been 16x the size of normal transactions. Researchers Benedikt Bünz and Jonathan Bootle have now found a way to compress CTs so that the resulting output is only 3x the normal size. The basic premise with Coinjoin is that two users can make a transaction simultaneously, thus masking the inputs and outputs of both parties.
Regarding the new breakthrough with CTs, Maxwell explains:
This cuts the bloat factor down to ~3x for today’s traffic patterns. Since the scaling of this approach is logarithmic with the number of outputs, use of CoinJoin can make the bloat factor arbitrarily small.
This is a major step forward, one which moves bitcoin and litecoin closer to adding this monero-like privacy feature. Litecoin developer Charlie Lee was particularly pleased, tweeting: […]