Litecoin's SegWit Activation: Why it Matters and What's Next | Jubiter.com

Litecoin's SegWit Activation: Why it Matters and What's Next

Litecoin was the first Bitcoin fork to implement SegWit. Charlie Lee announced its activation with a tweet on May 10, 2017, by using the Bitcoin Improvement Proposal (BIP) 9 miner signaling process.

The activation of the Segregated Witness (SegWit) protocol had been on the table since 2015. Bitcoin Core developers saw it as the ideal solution to deal with Bitcoin scaling issue in the long-term. Litecoin has only modified some of Bitcoin’s features but follows every update closely.

The proposed change achieved easily the required 75% consensus threshold in a two-week (8064 blocks) activation period and Litecoin activated SegWit on block 1201537. Upon the advent of SegWit, Litecoin saw a price increase from $22 to $38.

The Litecoin community falsely saw SegWit as an unnecessary scalability solution. According to Charlie Lee, while scaling would just be a positive side-benefit, it wouldn’t be the main goal. He said, “SegWit is not just a block scaling solution. I would even say block scaling is just a side benefit of SegWit. The main fix is transaction malleability, which would allow Lightning Networks (LN) to be built on top of Litecoin. And there are a bunch of more nice features of SegWit.”

The transaction malleability is a vulnerability in the original structure of the blockchain, in which signatures can be tampered. SegWit eliminates this issue by completely removing the signatures and prevents malicious users from changing the txid. By removing the signature data, the positive side-effect was that useful space per block was released. Consequently, the block size quadrupled virtually and increased the blockchain’s capacity, relieving it from congestion.

Fixing the transaction malleability also lays the ground for the Lightning Network, a parallel chain that will enable instant payments, confidential transactions and smart contracts. Moreover, it will lay the Litecoin blockchain interoperable with Bitcoin and other blockchains. In other words, a Litecoin user will be able to execute payments towards a merchant that only accepts Bitcoin.

Besides the initial modifications on Bitcoin’s features, Litecoin hadn’t introduced any innovation or upgrade until the coming of SegWit. Instead, Litecoin maintains its original blockchain and resembles Bitcoin. It acts as the testbed for new technologies designed for Bitcoin, hence it gains in value and credibility this way. The community’s majority believes that Litecoin contributes in Bitcoin’s development and this is why Litecoin has a constant presence in the top-ten of all cryptocurrencies.