Confidential transaction (CT) on Litecoin was proposed years ago. Given that the underlying technology has matured enough, the Litecoin team just started to work on CT. Its impact on Litecoin can be huge, and these QAs should answer many of your questions.
1. When will Litecoin launch confidential transactions?
The estimated release time is 2019 depending on the funding situation of the Litecoin Foundation.
2. Why does Litecoin need confidential transactions?
Litecoin targets at the payment market segment, where fungibility is important. The current Litecoin transactions are transparent and Litecoins could be tainted by their transaction histories, e.g. transactions involving in darknet purchases. A tainted Litecoin could have a lower value than another non-tainted Litecoin; this undermines the foundation of a payment tool, i.e., all Litecoins should be equal. Confidential transactions solve this problem by making transaction histories obfuscated. We see privacy as a side effect of confidential transactions, which may be needed by some people.
3. What's the technology that the Litecoin confidential transactions will be based on?
Bulletproof. For more details, check https://crypto.stanford.edu/bulletproofs/
4. Is the technology matured enough?
The bulletproof idea was proposed in 2017 and then deployed on Monero 0.13.0 in Oct 2018 and has been running smoothly since then. Actually, the Litecoin team have been discussing the CT since two years ago but have been waiting for the maturity of the technology. Now we think it's the time to add CT.
5. Does it require a hard-fork?
No, it does not. A soft-fork is sufficient, so there is very little chance for a chain split to happen after the upgrade.
6. How about regulatory issues?
The Litecoin confidential transactions will be optional just like ZCash. We see that ZCash was launched on highly regulated exchanges including Gemini and Coinbase, and thus there should be no regulatory issues. Delisting from existing exchanges is unlikely.
7. Why does Litecoin adopt the optional privacy instead of making all transactions private?
The first reason is backward compatibility. Litecoin has been deployed at many places; maintaining the existing ecosystem is crucial. Therefore, we have to make it backward compatible. The other reason is regulation friendliness. It is much easier for regulators to accept a coin with optional privacy.
