Scrypt is a password-based key derivation function and the algorithm was specifically designed to make it costly to perform large-scale custom hardware attacks by requiring large amounts of memory. In Anoncoin, scrypt is the proof-of-work algorithm that miners use to compete to add blocks to the block chain.
Anoncoin uses the same values as Litecoin for the call to scrypt as follows:
The source code in C++ for the scrypt hashing function can be found here: scrypt.cpp