MimbleWimble adds new features for Litecoin, but some exchanges balk

Litecoin is among the earliest alternative coins (altcoins) that emerged after Bitcoin (BTC). Created in October 2011, it is now the 20th most important cryptocurrency, boasting a market capitalization of over $4 billion, according to CoinMarketCap information.

The MimbleWimble upgrade was very first developed more than 2 years earlier as part of the Litecoin Improvement Proposal. That remained in November 2019, as the network began intending on improving privacy in between senders and receivers of a deal on its network.

And now, the MWEB is lastly out following approval from most of nodes. The upgrade was done at Litecoin’s block height of 2,257,920 and featured substantial personal privacy function modifications to the Litecoin network.

But, there’s more to the MWEB than simply the newly-added personal privacy features for LTC users. The MWEB likewise brings crucial enhancements to activities on the blockchain. For circumstances, it helps in reducing needless deal information from the blocks to the barest minimum utilizing its cut-through function.

The cut-through function makes sure that long deals are broken down into a single one. That is, rather of taping each input and output independently, the block would just tape one input-output set, consequently eliminating excess information.

Following long years of advancement and anticipation by its community, Litecoin (LTC) lastly triggered its MimbleWimble Extension Blocks (MWEB) upgrade on May 19. But, with the blockchain upgrade generally concentrated on performing personal deals on the network, worldwide guidelines might unquestionably be flouted. 

South Korean guidelines weakened

Despite the buzz around the transactional privacy that has actually now been released by Litecoin, there appear to be concerns on the regulative front, especially with regard to Anti-Money Laundering (AML) and Know Your Customer (KYC) laws. In reality, it was for this factor that leading exchanges in South Korea delisted the coin from their platforms. 

On June 8, 2022, Upbit, together with 4 other leading crypto exchanges in South Korea, got rid of assistance for Litecoin. The other exchanges consist of Bithumb, Coinone, Korbit and Gopax. However, each of the exchanges has actually pointed out likewise worded factors, declaring that the MWEB upgrade does not line up with the arrangements of the Act on the Reporting and Use of Specific Financial Transaction Information. According to the arrangements of the law, all Korean crypto exchanges are anticipated to satisfy KYC and AML requirements. Upbit composed in part:

“The optional function that does not expose transaction information included in this network upgrade corresponds to an anonymous transmission technology under the Specific Financial Information Act.”

Upbit has actually constantly repeated its resolution to reduce cash laundering and illegal activities of all sorts. Therefore, it is not surprising that that it, together with other leading exchanges, is not all set to be captured on the incorrect side of the law, specifically with the current privacy-focused MimbleWimble upgrade on the Litecoin blockchain.

Bithumb and Upbit jointly account for most trading volume in South Korea and with their current delisting, more South Korean exchanges are anticipated to do the same.

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South Korean exchanges have actually prevented privacy-related cryptocurrencies after regulators presented strict and clearly forbade darkcoins in 2020.

How exchanges might remain certified

Meanwhile, all hopes might not be lost right now concerning Litecoin in South Korea. On June 3, blockchain analytics and crypto compliance company Elliptic revealed what it declares will be a service to the curious circumstance caused by the MWEB upgrade.

The company firmly insists that it doesn’t plan to trace whoever lags any masked LTC deals. However, it thinks it can assist managed companies to continue supporting Litecoin deals, all while remaining in compliance with standing AML guidelines.

According to Elliptic, its services will assist make it possible for merchants to determine when a Litecoin deal or wallet holds funds that have actually travelled through an MWEB deal. With such info, companies might then choose versus continuing with such activities that will be evaluated as “high risk.”

Essentially, this implies that companies, consisting of South Korean crypto exchanges, can continue supporting Litecoin as long as they remain in the understand at every time the personal privacy function is triggered by users.

According to Tom Robinson, primary researcher and co-founder at Elliptic:

“By providing visibility of Mimblewimble activity, Elliptic’s transaction and wallet screening solutions provide businesses with the risk insights they need to continue to support Litecoin while meeting their legal obligations.”

Robinson, in reality, spoke particularly about exchanges and the possibility of needing to delist Litecoin. He declares that the exchanges do not need to, as they can perform their companies completely well without always flouting any AML guidelines in assistance of Litecoin. Furthermore, he included that at some point, one needs to recognize that practically all cryptocurrencies have some method to conceal their deal streams, consisting of conjoins on Bitcoin or Tornado Cash (TORN) on Ethereum.

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Interestingly, this is not the very first time Elliptic will be providing services to privacy-protecting innovations such as the MWEB. In 2020, the crypto compliance company likewise included assistance for the Zcash (ZEC) and Horizen (ZEN) personal privacy coins.

Growing adoption of Mimblewimble

Without a doubt, the intro of Mimblewimble has actually been an amazing accomplishment in the blockchain market. Especially with its cut-through function and other advantages connected to the upgrade. 

In light of this, a couple of other blockchain tasks like Beam and Grin may currently be checking out the capacity of carrying out the MimbleWimble style, albeit in technically various methods. While Beam utilizes the Mimblewimble procedure to decrease blockchain bloating and likewise enhance scalability, Grin utilizes it to eliminate previous deal information that may weigh on its platform if such information is kept on-chain.

For now, nevertheless, there is still an air of unpredictability concerning the possibility of Mimblewimble seeing a considerable level of adoption, specifically considering its propensity to cause policy compliance concerns. Nonetheless, the concept is really young and unquestionably really appealing too.