Binance, a cryptocurrency exchange founded by Changpeng Zhao, announced this Monday (13) that it will not work with deposits and withdrawals of Litecoin (LTC) that use the MimbleWimble Extension Blocks (MWEB) feature. Going further, the broker explains that such deposits will not be processed, as well as they will not be refunded as MWEB makes it impossible to know from which address the shipment was made, in order to carry out the refund. In other words, whoever uses such a feature will lose all money deposited. Such an upgrade to the privacy-focused Litecoin blockchain is proving to be a big problem for the community. After all, regulatory requirements are already putting pressure on other exchanges to ditch LTC for MimbleWimble.
What is Litecoin’s MimbleWimble?
MimbleWimble Extension Blocks (MWEB) is comprised of two technologies. The first is MimbleWimble, already used by smaller coins like Beam (BEAM) and Grin (GRIN). The second, Extension Blocks, was proposed to be used on Bitcoin in 2017, however it has not been activated. Therefore, the main purposes of MWEB are to increase privacy in transactions, even if they are not 100% private, as well as network scalability.
“In terms of fungibility and privacy, I believe MWEB delivers 90%,” said Charlie Lee, creator of Litecoin. “For most people this is good enough. It’s the difference between living in a glass house and living in a house with windows. For people who need 100% privacy, they can live in a windowless house.”
With so many nearly identical coins on the market, Litecoin is therefore taking a different path. Furthermore, LTC has always been known for testing new features before they are introduced in Bitcoin.
Consequences could be devastating for Litecoin
Although Litecoin has already served as an experiment for other features such as SegWit, it is hard to believe that MimbleWimble Extension Blocks (MWEB) will be introduced to Bitcoin in the near future. The main reason is the regulatory issue. Many countries do not allow exchanges to handle anonymous coin deposits and withdrawals. After all, they believe that these cryptocurrencies could be used for illicit purposes. Therefore, Litecoin can be removed from several exchanges, losing international liquidity.
Binance Will Not Accept Litecoin Deposits Using MWEB
Therefore, one of the largest exchanges on the market, Binance, announced that it will be another one that will not work with Litecoin’s MimbleWimble Extension Blocks.
“Binance will not support Litecoin (LTC) deposits and withdrawals using the MimbleWimble Extension Blocks (MWEB) function,” points out the Binance statement. “Any LTC deposits made to Binance through the MWEB function will not be received or returned as we are unable to verify the sender address, resulting in the direct loss of funds.”
Despite this, the exchange will continue to work normally with deposits and withdrawals that do not use MWEB. However, it is notable that the feature is affecting the price of LTC, which is already 85% below its all-time high due to the bear market.
