If you're wondering why
litecoin is attracting new attention of late, you might not be alone.
The often-overlooked alternative cryptocurrency is in the midst
of a historically uncharacteristic price spike and a vicious bout of technical
drama that is rivaling bitcoin's own scaling debate.
In fact, litecoin's new
developments are perhaps best viewed as simply the latest extension of
bitcoin's two-year scaling debate, since the controversy also revolves
around a proposed blockchain upgrade called Segregated Witness.
The long-in-progress code
change, supporters say, could usher in a wave of changes that could
improve bitcoin's usability. But, some miners and users in
the community are opposed to the change on technical and political
grounds – a fact that, months after the code's release, has effectively stalled
adoption.
However, while bitcoin is struggling to secure the needed
levels of support from miners for the upgrade to go through, litecoin has almost reached the necessary threshold.
Some say that making the
change on litecoin will help to signal whether it's a safe and beneficial
technical change, or not. Thus, it's beginning to look almost like a testbed
for bitcoin. Others argue it could be a way for litecoin to become a novel
network, one with a distinct value proposition in its own right.
Still, it's been a bumpy
road. One minute the community thinks SegWit is about to activate, the
next it doesn’t seem so clear. In this way, the story could soon take another
turn soon.
But first, let's start
with the basics.
A quick history
Litecoin, a
cryptocurrency branded as 'the silver to bitcoin’s gold', first emerged in
2011. At a technical level, it's nearly identical to bitcoin, except for a
shorter block time, a different hashing algorithm and a few other changes
originally designed with merchants in mind.
In January, litecoin
released a new version featuring code for SegWit and an activation threshold of
75% of miner signaling (rather than the 95% required for activation on
the bitcoin network).
"[W]ith SegWit and bitcoin’s current block scaling
deadlock, I see a potential for litecoin to help bitcoin break through this
deadlock," said litecoin creator Charlie Lee in a blog post.
Further, hashrate support for the change has, for the most part,
been on the rise over the last couple of months,
prompting buzz and renewed interest in the altcoin.
Why hasn't SegWit activated yet?
Because SegWit tweaks
consensus rules, changing how nodes validate blocks, it needs a
supermajority of miner support to activate quickly and safely.
On litecoin, if 75% of
blocks feature a snippet of code indicating support for the change within a
two-week period (known as a 'retarget period'), then the change locks in. The
market has been reacting as its inched toward that mark.
This has prompted some
further discussion about whether the ability of miners to veto code changes is
good or bad for public blockchains.
What's next?
Some litecoin users have been calling for a
user-activated soft fork, where the cryptocurrency's so-called economy
paves the way for an upgrade, rather than mining pools.
In a nutshell, 'user-activated soft forks' (UASFs) are one of a few ways of pushing through consensus rule changes
– rules that all nodes need to agree on unless they want to be left on an
alternative blockchain. It's contentious because it could cause a network
split. Another downside is that they take more time.
Despite all the recent
hype, though, it’s hard to say if SegWit will ever activate on litecoin, even
if it’s close to doing so.
Nonetheless, some users
and developers are making plans in case it does.
Bitcoin Core developer Johnson Lau said that, should SegWit activate on litecoin, he
will shift some of his efforts there to work on MAST, a project that could
expand the cryptocurrency's smart contract capabilities.
Lee also noted that a version of Lightning Network is also
in the works, suggesting innovation could migrate to litecoin should it
activate the change.
Litecoin image via Shutterstock
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