Litecoin Core to Pursue Confidential Transactions, Privacy Solution.
Charlie Lee, Litecoin Creator and Managing Director of the Singapore based, Litecoin Foundation, has just announced via Twitter the Core development teams plans to add Confidential Transactions into a future release of the full node implementation sometime in 2019.
Lee has mentioned CT previously in presentations and his interest in the technology as a comprehensive and safe solution to the fungibility problem, something he sees as the final hurdle for cryptocurrencies to be ‘sound money’.
fungible — /ˈfʌn(d)ʒɪb(ə)l/
“The property of a good or a commodity whose individual units are essentially interchangeable.”
Confidential transactions as described by one of its pioneers, Bitcoin Developer Gregory Maxwell, obfuscates the amounts being transacted over the network but not where coins are being sent.
“All the transaction data must be conspicuously public so it can be verified, which is at odds with the normal expectation of privacy for traditional monetary instruments.”
While it’s not complete privacy, when spending coins parties no longer would have insights into how much the other owns, something very valuable for individual security as well as business operations. CT is an optional parameter in transactions which means regulated bodies would still be able to deal in the asset so long as transactions made to and from them are clear and publicly viewable on the blockchain.
CT was first being proposed in 2013 by Adam Back, Creator of HashCash, a bitcoin precursor and now CEO of Blockstream. It was expanded on a few years later by Maxwell and the Blockstream team, with a sidechain in the Elements project setup to further test the implemetation.
While CT can be safely implemented via a soft-fork, there are some drawbacks with the system. We can expect a decent increase in the size of bandwidth reqirement and the Unspent Transaction Output set due to the size increase of the output value to 33 bytes from 8 bytes and a substantial increase in validation costs. Perhaps the most concerning is if Pedersen commitment of range proofs is broken by quantum computing (QC) an attacker would be able to print new coins into existence without restriction, but it can be fixed in the future by softforking in a quantum-safe rangeproof algorithm before QC becomes powerful enough to break Pedersen commitments.
Further efficiency improvements have also since been added, as outlined and in Blockstream’s Financial Cryptography ’17 paper, yet despite this the technology has yet to be accepted.
CT might not be quite there yet for Bitcoin. But I think it’s a good time for Litecoin.
- Charlie Lee
The core team, lead by Adrian Gallagher, are once more taking a proactive position in the space, taking the lead on a controversial technology that may eventually, if proven successful on Litecoin make its way into Bitcoin.