Segregated Witness (SegWit), a code update best known for its role in Bitcoin’s scaling debate, is due to activate on the Litecoin network today. News of SegWit implementation sparked optimism amongst investors. Litecoin had been trading between 1.5 and 5 USD/LTC between 2015 and March 2017. Today, prices stand at around 32 USD/LTC, up 788% since the beginning of the year.
The main reason behind the recent rally has been the rising support and adoption of SegWit. Litecoin, like Bitcoin, has a block capability that limits the number of transactions per block. As the network grows, this tends to slow down the confirmation of transactions.
SegWit is an update originally developed for Bitcoin. If activated, the soft fork allows a capacity increase and the elimination of transaction malleability.
Charlie Lee, a MIT graduate, former Google engineer and the creator of Litecoin, has been advocating for SegWit to activate on Litecoin as well as Bitcoin.
“SegWit is not just a block scaling solution. I would even say block scaling is just a side benefit of SegWit,” Lee wrote in a blog post in January. “The main fix is transaction malleability, which would allow Lightning Networks (LN) to be built on top of Litecoin. And there are a bunch more nice features of SegWit.”
SegWit adoption requires a network consensus which has hindered its upgrade in the case of Bitcoin. 95% of miners have to signal support in a two weeks period in order to activate SegWit.
Implementation of SegWit for Litecoin is a positive development for the cryptocurrency and its successful upgrade could possibility trigger the same for Bitcoin, which currently has only 34% of pool support for SegWit.
“That example of a successful soft fork in litecoin has made people start to think that we could get a successful SegWit implementation in Bitcoin and that could increase capacity and move us to the next level,” Daniel Masters, director at Global Advisors Bitcoin Investment Fund (GABI), told CNBC in an interview yesterday.
Bitcoin soared above $1,700 this week, adding one billion to its market capitalization in just 24 hours on Tuesday. Recent developments in bitcoin are sustaining the rally which began in December 2016.
Japan’s decision to recognize bitcoin as a legal method of payment earlier this year has led to a spike in popularity and a surge in bitcoin trading in yen.
More than ten companies in Japan are planning to launch digital currency exchanges in the coming months. Yesterday, Tokyo-based Coincheck announced that it will soon offer interest-paying fixed deposit accounts for bitcoin. GMO-Z.com Coin, an affiliate of GMO Internet, is set to launch on May 24 an online trading platform for bitcoin.
Last week, Vertcoin became the second cryptocurrency after SysCoin to deploy Lightning Network after it successfully activated SegWit on its network.
SegWit successfully activated on Vertcoin network as of block 713,664!
— Vertcoin (@Vertcoin) 7 May 2017