Litecoin's privacy feature testnet returns as news emerges that Europol sees privacy and
coin mixing technologies as major digital threats
Litecoin (LTC) has relaunched its MimbleWimble testnet — a protocol designed to enhance privacy and obfuscate the traceability of distributed ledger transactions.
MimbleWimble is a modified implementation of the proof-of-work algorithm underpinning Bitcoin (BTC) in which blocks appear as a single large transaction, preventing the individual inputs and outputs relating to the transactions from being identified.
David Burkett, the lead developer of the MimbleWimble protocol for Litecoin, will now focus making it easier for “non-technical Litecoin users” to begin testing to functionality, in addition to ironing out aspects of the code that are “fragile.”
Burkett is targeting full activation of the protocol sometime next year, noting in a Telegram channel that it will be down to Litecoin’s miners and node operators to decide “when or even if they want to activate.”
LTC’s MimbleWimble testnet was previously launched on September 30, but was postponed due to low community participation.
Litecoin’s MimbleWimble progress comes as regulators increasingly look to crack down on privacy-enhancing crypto asset technologies, with Europol calling out privacy coins and naming decentralized marketplaces, cryptocurrency mixers, and anonymizing wallets among the top online organized crime threats.
In its ‘Internet Organised Crime Threat Assessment’ for 2020, Europol asserts that “privacy-enhanced wallet services using coinjoin [..] have emerged as a top threat,” citing Wasabi and Samurai’s respective wallets as examples. Wallets that use Coinjoin mix the coins of multiple users engaging in separate transactions, effectively providing a decentralized mixing service.
Europol asserts that the operators of darknet marketplaces are increasingly moving to integrate coinjoin wallets onto their platforms.
Europol also notes that while Bitcoin is still the dominant currency across darknet marketplaces, Monero (XMR) is emerging as the most popular privacy coin, followed by Zcash (ZEC), and Dash (DASH). The report identified Litecoin and Ethereum (ETH) as the two most popular altcoins on darknet marketplaces.