Litecoin founder Charlie Lee is detailing two key upgrades coming soon to the 13th largest cryptocurrency.
In an interview with crypto analyst Scott Melker, Lee highlights why Litecoin’s upcoming update, which will add more fungibility and privacy to the digital token, is crucial to sound money principles.
“Fungibility is something that is missing, or, not as good in Bitcoin and Litecoin today…In terms of properties of good sound money, BTC and LTC have everything except fungibility.”
By fungibility, Lee means that every coin is the same as every other coin. Fungibility allows users to interchange goods or assets with another good or asset of the same type because they are identical and have equal value.
Even though one Bitcoin can be traded for another Bitcoin, with both having equal value, blockchain transactions inherently provide additional information. For example, one specific Bitcoin may be held in a wallet that is worth millions while another Bitcoin may be held in a wallet worth $10.
“For money, you want it to be fungible. Any $20 bill you spend should be indistinguishable from any other ones…And it’s not true today for Bitcoin and Litecoin. If you really look into it, when you’re spending coins, you should pick and choose which coin you spend so that it doesn’t reveal any private information you don’t want to reveal.
So if you got paid $10,000 as a salary, if you use those coins to buy a coffee, then the recipient will see that you have $10,000 in your bank account worth of Bitcoin.
That’s the kind of information that you wanna keep private, even if you have nothing to hide. Financial privacy is important.”
To tackle this privacy concern, Lee and his team are planning to implement new technology, dubbed “MWEB”.
“What I’m working on is getting a technology called MimbleWimble onto Litecoin as extension blocks. The project’s called MWEB, which stands for MimbleWimble Extension Blocks. That would add more privacy and more fungibility to Litecoin, and I think that’s gonna help it become a better form of money.”