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 capabilities, and improved scalability.
In July, Cardano creator Charles Hoskinson invited Litecoin Foundation managing director Charlie Lee to potentially collaborate on the testing of cross-chain communications between the two cryptocurrencies.
Since then, the two teams have been in communication, says Litecoin Foundation project director David Schwartz.
“Given the opportunity to research and provide input into the feasibility, pros, and cons of such an endeavor, I have had a number of informative exchanges with Charles’ team on not just what a Velvet Fork is, but also how it affects the base code and what it would mean potentially for the continued growth and utility of Litecoin as not just a store of value, but also as a means of exchange and method of settlement within smart contracts.”
According to Schwartz, a velvet fork is a protocol upgrade mechanism performed on a cryptocurrency code; it is neither a hard fork nor soft fork, notes Schwartz, because it doesn’t require majority consensus. Miners will be able to continue to serve on the Litecoin network whether they choose to upgrade or not.
With the velvet fork upgrade, Schwartz explains how Litecoin can be used in smart contract platforms by using Non-Interactive Proofs of Work (NiPoPoWs).
“It allows blockchains to interact like API’s, enabling a cryptocurrency like Litecoin to be used within a smart contract in a blockchain that has smart contract capabilities (Ethereum, Cardano, etc.). Basically the smart contract capable blockchain validates the NiPoPow used within the Litecoin sidechain that has had the velvet fork added to allow for this action to take place.”
While the velvet fork partnership promises multiple benefits to Litecoin, Schwartz highlights that the partnership should “make sense in terms of security and integrity of the coin.”