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Litecoin (LTC) and smart contract platform Cardano (ADA) are exploring a “Velvet Fork” partnership that will unlock new features in the 10th largest cryptocurrency such as cross-chain communications, smart contract capability and improved scalability.
In July, Cardano creator Charles Hoskinson invited Litecoin Foundation CEO Charlie Lee to potentially collaborate on testing cross-chain communications between the two cryptocurrencies.
@SatoshiLite it would be great to do something together. I love the idea of testing the cross-chain communication between Litecoin and Cardano. We have a lot of ideas and I’m sure you guys do too
– Charles Hoskinson (@IOHK_Charles) July 7, 2020
Since then, the two teams have been in communication, says Litecoin Foundation project director David Schwartz.
“Given the opportunity to research and provide input on the feasibility, pros and cons of such an undertaking, I had a number of information exchanges with Charles’s team not only about what a Velvet Fork is, but also how it affects the code base and what it would potentially mean for Litecoin’s continued growth and utility not only as a store of value, but also as a medium of exchange and settlement method within smart contracts. “
According to Schwartz, a velvet fork is a protocol update mechanism run on a cryptocurrency code; it’s neither a hard fork nor a soft fork, Schwartz notes, because it doesn’t require the consent of the majority. Miners will be able to continue serving on the Litecoin network regardless of whether they choose to upgrade or not.
With the Velvet Fork update, Schwartz explains how Litecoin can be used on smart contract platforms using non-interactive Proof of Work (NiPoPoW).
“It allows blockchains to interact like APIs, allowing a cryptocurrency such as Litecoin to be used within a smart contract in a blockchain that has smart contract capabilities (Ethereum, Cardano, etc.). Basically the blockchain capable of smart contract validates the NiPoPow used inside the Litecoin sidechain to which the velvet fork was added to allow this action to take place.
While the partnership with the velvet fork promises multiple benefits to Litecoin, Schwartz highlights that the partnership should “make sense in terms of the security and integrity of the currency”.
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