According to Cointelegraph, Charlie Lee, the founder of Litecoin (LTC), addressed the Proof of Work Summit in Frankfurt, Germany, to discuss Litecoin's privacy-enhancing features compared to the Bitcoin (BTC) network's transparency. Lee emphasized that Bitcoin's unspent transaction outputs (UTXOs) carry a history of transactions, which can compromise the fungibility of the digital asset. He explained that each Bitcoin is not equal to another due to its transaction history, which is a significant concern for money.
Lee provided a hypothetical scenario where an onchain analytics company labels a Bitcoin address linked to illicit activities. Such labels could deter investors or traders from accepting BTC associated with that address, potentially lowering the market value of those specific coins. Additionally, if these Bitcoins pass through centralized exchanges or institutions with Know Your Customer (KYC) controls, they could be frozen or seized by authorities like the United States Office of Foreign Assets Control (OFAC).
The issue of privacy on the Bitcoin network is challenging but not insurmountable. On September 20, a group of developers announced a fork of the privacy-focused Samourai Wallet. The Ashigaru Open Source Project employs CoinJoin and other mechanisms to obscure Bitcoin transactions, building on the original Samourai team's work, although the new team has denied any connection to the previous developers.
Paul Brody, the global blockchain leader at EY, also highlighted the importance of privacy for blockchain adoption during Token2049. He noted that privacy is crucial for large institutions that need to keep certain information confidential. Businesses are willing to disclose their carbon savings but prefer not to reveal such data on a frequent basis.
