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Litecoin’s privacy upgrade: Hidden inflation a risk ‘users will be willing to take’

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At the moment, Bitcoin, Litecoin, and Ethereum are all on their way to integrating and implementing privacy features. While concerns persist that these developments could end up elevating these cryptos as a threat to privacy-focused coins, another major question that arises here is – How will the coins’ infrastructure change and what impacts will privacy-enhancing technologies have on the users?

Litecoin creator Charlie Lee appeared on a recent podcast and spoke about how Litecoin will operate once MimbleWimble implementation is complete. Will users be able to make normal Litecoin transactions or will they be forced to use the MimbleWimble chain version? Addressing these questions, Lee said,

“Initially the use of Litecoin post the MimbleWimble implementation will be difficult; it’s going to be a learning curve. Not all wallets will support it from the start[…] Since it is a soft fork, the whole ecosystem won’t need to care about it until they want to. I’ve actually talked to many exchanges about this to make sure that on the regulatory side they’re kind of okay with such an upgrade.”

Putting things in perspective, users will have an option while making transactions to choose or not choose the privacy-enhanced version. However, since Litecoin will be more private than ever with this implementation, this might be a good thing for the coin, price-wise as well.

Additionally, hidden inflation is another major concern in privacy coins at the moment. Blockchain researcher Tim Ruffing had tweeted about the same, warning that “all” privacy coins might include fundamental cryptography bugs that could enable hackers to counterfeit infinite amounts of money. “All cryptocurrency designs with privacy features may have bugs in their cryptography that allow undetectable inflation,” he had noted.

If there’s a bug in the cryptography, hackers can manage to take advantage of that and create coins out of thin air for themselves, without anyone noticing any changes in these privacy coins. So, if Bitcoin, LTC, and ETH end up becoming a type of privacy coin with their respective protocol implementations, could they be exposed to such risks? Sharing his thoughts on this, Lee commented,

“Hidden inflation an issue that’s affected a few privacy coins. The good thing about in our ecosystem is the extension block for Litecoin; it would be kind of isolated by itself. So even if something happens to that, it won’t infiltrate the main chain because one won’t be able to withdraw more coins. So yes, if you put coins in the extension block, it’s risky but is a risk that one will be willing to take if they want to experiment with the new privacy features.”


A Psychology and Journalism graduate, Rakshitha focuses on UK and Indian markets. As a crypto-journalist, her interests lie in blockchain technology adoption across emerging economies.
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