If you have been keeping up with crypto news, you would know that Litecoin reached a successful milestone recently. The overall usage of its SegWit protocol would reach an all-time high percentage.
Since the launch of the ‘Segregated Witness’ activation on the Litecoin network back in 2017, the adoption has been slow. For all the potential it holds, it would appear that widespread acceptance of the technology has not been immediate. If anything, it has been quite slow. It would settle and experience a flatline at roughly 50% for the majority of last year.
However, since August of 2019, that number would soar. In September, it would reach a progressive peak at 75%. As a result, it set a brand new all-time high for the metric, effectively breaking the previous peak of 66% in November of 2018.
Overview of the crypto
Litecoin is an alternative cryptocurrency that draws its foundation from the model of Bitcoin. Its creation and inevitable launch in 2011 was thanks to Charlie Lee, an MIT graduate, and former Google engineer. Litecoin is based on an open-source global payment network that is not under the control of any central authority. Litecoin separates itself from Bitcoins in a variety of aspects. Some of these include a faster rate of block generation and the use of script as a proof-of-work scheme.
The purpose of Litecoin’s inception was to basically be the “silver” to Bitcoin’s “gold.” It would go on to garner an exceptional amount of popularity since the time of its launch. It is a peer-to-peer digital currency that is a fully decentralized global payment network. The development of Litecoin was out of a need to fix the shortcomings pertaining to Bitcoin. The ambition of the platform would lead to industry support, along with high trade volume and liquidity.
Litecoin’s overall design allows it to produce four times as many blocks as Bitcoin. To be exact, it generates one new block every 2.5 minutes. Moreover, it facilitates up to four times the coin limit. Taking these factors into account, its main appeal ties primarily to the speed and ease of acquisition.
Litecoin is a recurring presence among the largest cryptocurrencies in terms of market capitalization. Even though it is nowhere close to Bitcoin, it is still in the top 10, currently ranking at the #6 spot. At this point in time, there are over 52 million litecoins in circulation.
Like a lot of other cryptocurrencies, Litecoin’s main objective is to right the wrongs of Bitcoin. Specifically, it aims to solve a glaring problem that even die-hard Bitcoin supporters cannot ignore so easily.
It is no secret that over the years, Bitcoin keeps facing an enduring problem that plagues its system. That issue is the processing of more and more transactions leading to the addition of more blocks to the chain. Why exactly is this a problem? Well, it all comes down to the speed of the procedure. Generating blocks for the chain occurs every 10 minutes and the maximum size is 1 megabyte (MB). Due to this constraint, the number of transaction additions to the block is incredibly specific.
The vast majority of the transactions are actively weighing down the network. What’s more, they are creating delays in transaction processing and verification. In some cases, it can take several hours to confirm the validity of a transaction. The best way to look at this is as an ever-growing stack of transactions. All Bitcoin transactions dating back to the platform’s 2009 inception are piling up on the blockchain. Over a long period of time, the system would no longer be sustainable if there isn’t a change.
Segregated Witness (aka. SegWit) is a name that will frequently come up when discussing or researching Litecoin. It is a protocol upgrade whose main intent is to provide state-of-the-art protection from ‘transaction malleability.’ Not only that, but it also aims to increase block capacity. Its core process expands the block size limit on a blockchain by way of signature data removal from Bitcoin transactions. When it removes parts of a transaction, this makes enough space/capacity to add more transactions to the chain.
From its development to its inception, SegWit has been a contentious change to the network. For a while, there was heavy political disagreement in regard to what many refer to as the ‘block size controversy’. Basically, it all comes down to the aforementioned issue with Bitcoin. The protocol would enable a handful of changes, which includes fixing the malleability issue on the network. In doing so, it would help in paving the way to layer two scaling
A solution to the problem
In terms of digital signatures, they tend to take up roughly 65% of the space of any transaction. What SegWit aims to do is basically ignore the data of a signature. To execute this, it strips the signature from within the input before moving it to a structure near a transaction’s conclusion. This, in turn, increases the 1 MB limit for block sizes to a little under 4 MB.
In addition, SegWit solves the issue in which a receiver could intercept and modify the sender’s transaction ID. This questionable act is done in a bid to acquire a lot more coins from the sender. By detaching the digital signature from the input, the malicious party cannot alter the ID without terminating the signature.
SegWit was the final protocol change that would result in the Lightning Network becoming safe for deployment on the Bitcoin network. The new witness field largely consists of Script versioning. Due to this, it is possible to make changes to SegWit scripts. For that matter, it is also possible to introduce new opcodes specifically to those scripts.
The activation of SegWit effectively increases the development of an array of other features. One of these includes MAST, which permits the existence of more complex Bitcoin smart contracts. Another is Schnorr signatures, which later result in another boost in transaction capacity. A third feature is TumbleBit, which is an anonymous top-layer network.
What’s taking the adoption so long?
With all the potential SegWit holds, it begs the question of why embracing it is taking as long as it is. While the SegWit protocol possesses plenty of good elements, that does not mean it’s not susceptible to valid criticisms. Like with other seemingly “flawless” systems, there are a few drawbacks that keep it from reaching perfection.
There are a variety of critiques of the protocol, but the most prominent ties to its intentions. Not the aspirations themselves, but the claims SegWit makes about them. Many people believe that SegWit is not the ultimate solution for Bitcoin’s own shortcomings that it claims to be. In fact, there are a lot of people who think it’s, at best, a temporary fix. It is a case of “kicking the can down the road,” so to speak.
The all-time high
In the midst of this resistance for SegWit adoption, Litecoin’s success in September of last year may provide some assistance. Litecoin Core developer, Loshan, says that growing SegWit adoption is a testament to the crypto’s innovation-centric development:
“Litecoin led the way forward in adopting the bloat-reducing tech: SegWit. In the future, we hope to lead adoption in cutting-edge blockchain technology.”
Litecoin preceded Bitcoin with the implementation of SegWit integration, allowing an increase in capacity. At the same time, it was able to declutter some of the unnecessary data from within transactions. Of course, as mentioned earlier, SegWit is no stranger to controversy because of this. However, it cuts down the transaction fees while at the same time improving the blockchain’s efficiency.
The popular crypto exchange, Coinbase, was one of the catalysts for boosting the adoption of SegWit adoption on Litecoin’s network. In February of 2018, it implemented the protocol and the usage rate would jump from 9% to over 33%.
Litecoin will play a part in the installation of thousands of cash machines in South Korea. Not too long ago, the Litecoin Foundation entered a partnership with MeconCash, a South Korean blockchain startup. From this, ATM users will be able to properly convert litecoins to fiat currency at real-world locations.
Among other benefits, this collaborative effort will allow users to exchange litecoin for Korean won. They are then able to withdraw the fiat currency for spending at shops that do not accept crypto as payment. This deal will also lead to MeconCash integrating Litecoin with its MeconMall. Users can use the crypto asset as a means to pay for an array of digital goods, such as mobile games.
Charlie Lee comments on the recent partnership by stating the following:
“Litecoin’s integration into M.Pay’s platform and large network of ATM’s is a big step toward expanding Litecoin’s footprint in the South Korean market.”
The crypto market is incredibly competitive. Therefore, it’s difficult to imagine Litecoin being the unique solution to any problem. However, this partnership, as well as the 75% achievement, may change that. Perhaps it may help drive the adoption of both SegWit and the crypto asset; the latter of which frequently struggling to stay relevant in this volatile market.