In Effort to Differentiate, Litecoin Makes a Move to Privacy

Oct 14, 2020 at 05:00 UTCUpdated Oct 14, 2020 at 10:44 UTC.Litecoin, a nine-year-old cryptocurrency whose price returns have chronically underperformed the bigger and better-known bitcoin in recent years, is hitching its wagon to a new star: privacy.

The blockchain industry subsector of "Privacy coins" - cryptocurrencies with embedded technology that shields identifying information from public view - is becoming one of this year's hottest buys.

One of the biggest privacy coins, zcash, which offers "Shielded transaction" capabilities, has nearly tripled so far in 2020, while monero, which uses a technique called "Ring signatures" to obscure sender and receiver data, has doubled.

Litecoin founder Charlie Lee told CoinDesk in an interview the project is now looking to adopt key privacy-enhancing features, which he sees as increasingly attractive to cryptocurrency users.

Litecoin is up 21% this year after a 38% gain in 2019, which pales in comparison to bitcoin's 59% year-to-date gain and a 94% increase last year.

Lee, a former Google and Coinbase software engineer who spearheads litecoin, is a closely watched entrepreneur partly because his experience dates back to the early years of cryptocurrencies, following bitcoin's launch in 2009.Litecoin is often referred to as the silver to bitcoin's gold, and it's been used over its history as a grounds for testing technologies that later became a mainstay of bigger blockchain networks, including bitcoin's.

The network processes new data blocks four times faster than the Bitcoin system, but its smaller size makes it less secure.

The new privacy features are designed to operate in accordance with cryptocurrency exchanges' increasingly stringent compliance with global regulators.

It's not yet clear whether regulators will move to curtail the use of privacy features, which potentially could be used to conceal transfers of illicit funds or shelter money from tax authorities.

Europol, a European Union law enforcement agency, recently declared privacy technologies, including privacy-focused coins, a "Top threat" in an assessment of Internet-based organized crime.