Privacy coming to Bitcoin

Lightning network teams are working on protocols that work ontop of Bitcoin. When Bitcoin moved over to Segwit, it paved the way for lightning network to work their magic. The lightning network will have many layers. The layer being discussed today is CT which is Confidential transactions.

Bitcoin's testnet

Members may not appreciate the term given to Litecoin by it's founder Charlie Lee and Bitcoin community, but Litecoin is a Guinea pig for Bitcoin. It provides a testnet that enables Litecoin to adopt groundbreaking technologies and be able to prove to the Bitcoin community that the technology works. This isn't a bad thing. Bitcoin has a risk averse community that needs complete proof before upgrades gain adoption. Much like the Segwit softfork that Litecoin adopted first and Bitcoin after.

Bitcoin's future

You can listen to Bitcoin Core developers and they state their wish is to see Bitcoin more anonymous. You can come to a relatively sure assumption that Bitcoin's future will evolve into a more fungible, cash like currency. This digital cash would meet the ideal ethos that Satoshi Nakimoto and many of Bitcoin Core team have.

Bitcoin implementing Segwit was to enable Bitcoin to benefit from many of the Lightning network developments. Many of the Lightning Network developments are set out in the Litecoin roadmap.

On the Litecoin roadmap it clearly shows that confidential transactions (CT) is a protocol that is destined for Litecoin and most likely Bitcoin.

https://litecoincore.org/

Pro's of confidential transactions (CT)

CT provides real fungibility.

In cryptocurrency, fungibility means that all bitcoins have the same value, regardless of who owns them or what their history is – and fungibility is extremely important to the success of a decentralised network.

To understand why, we have to analyse how bitcoin's current limited fungibility is creating real problems in the marketplace.

For example, it's common for exchanges and merchants to discriminate between bitcoins based on the owner or their history. An example is that exchanges like Coinbase will attempt to block bitcoins that have been stolen, especially if the theft was well publicised.

Other points of discrimination can extend to include bitcoins associated with drugs, gambling and other illegitimate activities. But it's important to note, this can happen even in cases where the owner of those bitcoins hasn't engaged in any such behavior.

In summary Bitcoin's lack of fungibility could mean Bitcoins with clean history can be accepted everywhere, while coins with dirty history can only be accepted in places that aren't performing strict background checks. Thus decreased value Bitcoin's based on historical use.

Con's of confidential transactions (CT)

The transaction costs will be more because of the additional data required for CT to work.

Some exchanges may not accept CT. Although with atomic swaps, this problem can be circumvented by avoiding exchanges and exchanging cross chain on the lightning network.

When is CT coming?

If you look at the Litecoin roadmap you will see that CT is right at the bottom of the page with simplified heading 'future developments'. Chances are CT will be one of the last developments on the radar. Yet with Bitcoin using Segwit, Lightning Network development is gaining real traction. In a recent interview with Charlie Lee, Charlie said that it was a longer term development. He would not give a date for release, stating that many features needed to be implemented first.

https://www.reddit.com/r/litecoin/comments/2yasup/charlie_lees_opening_keynote_at_mit_bitcoin_expo/

https://www.reddit.com/r/litecoin/comments/53lqq3/litecoin_confidential_transactions_philosophically/?utm_source=amp&utm_medium=comment_list