Bitcoin and Litecoin could soon become more anonymous

Ever since government and regulatory agencies have become more zealous and competent at tracing bitcoin transactions to their real-life owners, users have been considering moving to less conspicuous coins to protect their privacy. Zcash has become notably popular, as it peaked at $376 in June after its humble beginnings at $10 per Zcash coin in January. Monero has also enjoyed increased popularity, as is demonstrated from its price growth from $12 in January to $136 in August.

However, Confidential Transactions (CT) tests have indicated that Litecoin and Bitcoin could soon regain some anonymity by adding extra privacy features.

Bitcoin and Litecoin are the founding fathers of cryptocurrency. The latter functions very similarly to the former. Both cryptocurrencies employ the same protocols and Lightning Network. Additionally, Segwit was first featured on the Litecoin network before migrating to Bitcoin.

Earlier this week, Greg Maxwell, the Coinjoin developer, confirmed that a dedicated team has progressed significantly in terms of Confidential Transactions (CT) trials on both networks.

Previous trials gave dire results, as a single CT transaction was 16 times the size of a regular transaction. However, two researchers on the team, Benedikt Bünz and Jonathan Bootle, have recently discovered a way in which they can compress the size of a CT to reduce it to only three times the size of a regular transaction. Essentially a CT would mask the sender's and recipient's input to add more privacy to transactions.

According to Maxwell, the team’s latest discovery means that current traffic patterns will experience minimal bloat even if the transaction sizes are slightly larger. Since the network uses a logarithmic approach in its outputs, the team is confident that they can keep the transactions sufficiently small.

This will greatly add in securing both Litecoin's and Bitcoin’s users’ privacy, which has become increasingly precarious. Litecoin creator, Charlie Lee, expressed his enthusiasm via Twitter:

https://twitter.com/SatoshiLite/status/930343030342561792

It is still too early to tell what effect will be felt by the crypto community if Litecoin or Bitcoin decide to implement CTs. Considering that Litecoin has the smaller network, it is more likely that Litecoin will be quicker to implement CT instead of Bitcoin, as Litecoin won’t require a hard fork. Considering Bitcoin’s roller coaster year of many hard forks, it is likely that they will be slower to implement CTs. Despite the added attractive features of privacy, it does not seem that this is likely to attract Zcash and Monero users away from their chosen cryptocurrency. Rather, it will serve as an added peace of mind for existing Litecoin and Bitcoin users.