Is Litecoin Velvet Fork coming?
Updated: Jul 9
Litecoin had its 9th birthday last month. The project was released under the MIT/X11 license in 2011. It was a source code fork of the Bitcoin Core client with some differences. Litecoin significantly differs from Bitcoin as per total supply, block generation time and hashing algorithm. By 2017, it became a top 5 cryptocurrency as per market capitalization. Litecoin was envisioned as a faster version of Bitcoin and people accepted it with an open heart. Litecoin is easy to be used as a mode of payment. Yes, that was the original use case but use cases evolve along with time as innovation is a key characteristic of blockchain technology. Charles Hoskinson, creator of Cardano (ADA) approached Charlie Lee, creator of Litecoin, in early July with the proposal of performing a ‘Velvet Fork’.
WTF is Velvet fork?
A velvet fork is a protocol upgrade performed on a cryptocurrency code. It is neither a hard fork nor soft fork as this operation doesn’t require majority consensus. The proposed ‘Velvet Fork’ will help Litecoin code to allow cross-chain communications. It’ll also improve scalability and the ability for smart contracts. Here you can find the proposal of Charles Hoskinson. The miners can decide whether they’ll upgrade or not as a ‘velvet fork’ isn’t a mandatory upgrade. For example – miner team A may like to upgrade and miner team B may prefer to not upgrade. It doesn’t affect any of the pools and both teams can accept each other’s blocks.
”Given the opportunity to research and provide input into the feasibility, pros, and cons of such an endeavor, I have had a number of informative exchanges with Charles’ team on not just what a Velvet Fork is, but also how it affects the base code and what it would mean potentially for the continued growth and utility of Litecoin as not just a store of value, but also as a means of exchange and method of settlement within smart contracts.” - Charles Hoskinson post
Non-Interactive Proofs of Proof-of-Work (NIPoPoWs) are short stand-alone strings which are inspected by a program to verify that an event happened on a proof-of-work (PoW) blockchain without getting connected to the blockchain and without downloading all block headers. A technical paper on this topic is available here. Basically, these are the proofs which can illustrate that a cryptocurrency transaction took place. NIPoPoWs brings interoperability to different blockchains. It helps different blockchains to interact like APIs. So what is the final result? A blockchain like Cardano has smart contract abilities whereas Litecoin has no such feature. Now, with help of this new method, Litecoin can be used inside a smart contract of Cardano. Cardano will basically validate NIPoPoWs used within the velvet fork enabled Litecoin sidechain.
Although the mentioned velvet fork is a Cardano community proposal, the method can allow Litecoin payment settlement on any smart contract enabled blockchain. Litecoin is really a good method of payment due to its speed and it has maintained store-of-value in the crowd of numerous cryptocurrencies even after a long time. Litecoin is still a top 10 cryptocurrency after 9 years of launch. Now it may start interacting with various blockchains and smart contracts. A ‘currency’ focused cryptocurrency like Litecoin may find new adoption rate. The discussion between Litecoin and Cardano community has already begun. To velvet or not? Time will tell you soon but we definitely need programmable fast money.