WBD006 Audio Transcription
Charlie Lee on why he Sold all of his Litecoin
Interview date: Thursday 1st March
Note: the following is a transcription of my interview with Charlie Lee. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.
In this podcast I chat with Litecoin creator and Crypto heavyweight Charlie Lee. We discuss the origins of Litecoin, why Charlie sold all his Litecoin, leadership in Crypto and his relationship with Monero.
Interview Transcription
Peter McCormack: Hi, Charlie. Thank you for agreeing to do this interview with me. I also need to thank Jameson Lopp for introducing us. I've been pestering you a while on Twitter, but I do appreciate you making the time to see me. When I've been doing my podcasts, I've been asking people who they'd like to have on; two people come up regularly: it's yourself and John McAfee.
Charlie Lee: How about Satoshi Nakamoto?
Peter McCormack: Well, he could be sat opposite me right now! I read a thing on Steemit about that, but I didn't buy it.
Charlie Lee: I didn't buy that either.
Peter McCormack: No, I didn't. But thank you for agreeing to do this. I originally bought Litecoin back in 2013 at about $20. I don't know where that wallet is now, by the way, which is a massive disappointment, but it is something I've bought regularly. I appreciate everything you've done for the crypto community, but where do you see the role of Litecoin now in what is quite a congested market?
Charlie Lee: Litecoin has always been a payments currency, a cryptocurrency that people use for everyday payments, and that's always been my vision and where I see Litecoin fitting in.
Peter McCormack: And, have you cashed in your Litecoin Cash yet?
Charlie Lee: I don't have any Litecoin, so I didn't get any Litecoin Cash.
Peter McCormack: I assumed you would have kept a small amount.
Charlie Lee: I do have a small amount just for spending for testing, yeah. So, they're all on Coinbase; so Coinbase, I assume, will not support Litecoin Cash any time soon, so I don't have any Litecoin Cash.
Peter McCormack: So, you call it a scam?
Charlie Lee: In a sense that it is trying to piggyback off of the Litecoin brand name, so it's confusing users, and also it has a premine. I don't know, I think it mined like 1% or 10%? I think it's only 1%.
Peter McCormack: I've ignored it.
Charlie Lee: But, yeah, it's still 1% of a pretty big market cap, so trying to pass off as something related to Litecoin or the Litecoin Foundation or me.
Peter McCormack: Do you think that makes it therefore as big a scam as Bitcoin Cash, because essentially they've done a very similar thing? I know there was a split in the developer community, which makes Bitcoin Cash different.
Charlie Lee: I wouldn't really call Bitcoin Cash a scam. Maybe I have said that before! I think people behind it, some people behind Bitcoin Cash, or the movement of Bitcoin Cash, might be doing it for personal reasons for pumping it or making money off of it. It might be miners that want to control a coin so they can make more money, and there's definitely a lot of pumping and dumping of Bitcoin Cash, like any other cryptocurrency.
The one thing I can say about Bitcoin Cash is there wasn't a premine, so on that point, that's better than Litecoin Cash.
Peter McCormack: Could you argue that there didn't need to be a premine, because the people doing it already owned a bunch of Bitcoin, therefore were going to get a bunch of Bitcoin Cash?
Charlie Lee: Yeah, but then if someone's willing to pay money for Bitcoin Cash, which we know people are willing to pay money for Bitcoin Cash, there's some value in that, so people who have a lot of Bitcoin want to support Bitcoin Cash, because they can create more value out of their holdings of Bitcoin and Bitcoin Cash. I don't see any fault in that, per se.
Peter McCormack: So, where do you see fault with Bitcoin Cash?
Charlie Lee: The fault I see with Bitcoin Cash is that people support it, but wanted to claim that it is the real Bitcoin, or the fact that it follows the whitepaper more closely than Bitcoin; and trying to call Bitcoin on their name, like "Bitcoin Core", just to make it seem like Bitcoin Cash and Bitcoin Core are on the same level.
I mean, I see Bitcoin Cash as another altcoin, so it's doing something that pretty much most of all these other altcoins have been trying to do, which is to complement Bitcoin, to be used as currency; so, what Litecoin has been doing for the past six or seven years. So, for a coin to come out to say that, "Now, this coin is actually Bitcoin", is just kind of scammy to me.
Peter McCormack: And the use of Bitcoin properties to promote Bitcoin Cash?
Charlie Lee: Yeah. I mean, Bitcoin is a decentralised currency, so it's confusing definitely when Bitcoin.com and the @Bitcoin Twitter account comes out to support Bitcoin Cash and claim that that's Bitcoin; that's definitely confusing for people. It's not unexpected; it's like a brand attack, because Bitcoin is not trademarked. There's nothing you can do about it.
Peter McCormack: Well, I'll ask you a bit more about that later on. I do want to focus more on Litecoin. You said you sold all your Litecoin and you've made it quite clear why and I'm going to ask you about that in a second. At first, I was a bit surprised, as somebody who held it and would have preferred it; but now I've seen the explanation, I kind of understand it. I don't think it's like you need the money, but can you just explain so the people listening to this know why you sold your Litecoin.
Charlie Lee: So, the main reason why I sold it is due to conflict of interest, and this is kind of hard to explain why I would have conflict of interest to own Litecoin and be the creator of Litecoin. Over the past year, I've been very active on Twitter and been promoting the coin; and to some people, I'm pumping the coin. So, I definitely do have some insider news and if I hold coins and I trade Litecoin, it kind of is a conflict, because do I want to release news that pumps the price and then trade it; or, should I do stuff that would help the price, but not be good for the long term for Litecoin?
So, things like that bothered me a little, and I decided to just sell all my coins and just focus on developing Litecoin and working on Litecoin adoption; basically, work on the long-term success of Litecoin and not worry about daily price movements.
Peter McCormack: And, is the increase in the regulatory lens over crypto, did that play a role in this decision?
Charlie Lee: No, not really.
Peter McCormack: Okay. And, I have seen previously, you have shown market caps. So, are you interested in the market cap for Litecoin; is that important? Do you think price is important?
Charlie Lee: I think price, in the end it's not important, but it's important because it gets people to pay attention and start using it. So, when the price rises, people talk about it a lot and people actually buy in. And, some percentage of those people will actually start trying to use it and see how useful Litecoin is as a form of payment, as opposed to just as a means of investing and speculating and making more money. So, the price definitely helps with that, and the price doesn't affect whether or not Litecoin is a good form of payment.
Peter McCormack: I understand. So, if we went back to the early days of Litecoin, when it peaked at around 50$, was it November 2013; and then hit a low of $1.33 January 2015; was that a hard thing to go through, or did that not affect you?
Charlie Lee: It didn't affect me that much, because I'm still working on Litecoin, it's still my project. It definitely affected a lot of user feel towards Litecoin; so, when the price is low, everyone's upset, people aren't out there promoting Litecoin as much. And Litecoin, just like any other decentralised currency, needs grassroots movement to get people to start using it, for merchants to start accepting it.
Peter McCormack: So, price is really linked to marketing?
Charlie Lee: In a sense, yeah.
Peter McCormack: Okay, interesting. So, going back, just so other people understand, how did you first get into this; how did you first discover Bitcoin? I know you've probably answered this a bunch of times; but for people like me, I still don't know the origin story for you, so it would be good to know.
Charlie Lee: Sure. Well, to start, I didn't create Bitcoin!
Peter McCormack: No, I mean how did you discover Bitcoin, but create Litecoin?
Charlie Lee: Yeah, so it was early 2011 when I read an article about Silk Road and got really excited about Bitcoin, the currency, because I previously understood the concept of good money, how gold and silver were used, and I saw Bitcoin as a better version of gold. The only difference is that it's not physical, but other than that it has all the good properties of money of gold, but better, because it's easier to send; it's cheaper to send; it's cheaper to store; and it's borderless. So, I immediately saw the potential of Bitcoin becoming a store of value and a means of payment.
Peter McCormack: And, the reason to create Litecoin was…?
Charlie Lee: For fun.
Peter McCormack: Just for fun?
Charlie Lee: Yeah.
Peter McCormack: Insane! You've created a multibillion-dollar bit of fun?
Charlie Lee: Yeah. I was experimenting with the code, and there were quite a few other altcoins before Litecoin; that I saw a need to create something that's better than what's out there. Most of the coins out there were created by developers that were quite greedy, so to speak. They wanted to create something, premine a lot of coins, put it out there and then pump it and make a lot of money, not dissimilar from the ICOs you see today.
Peter McCormack: And, your brother's in the space as well, I believe?
Charlie Lee: Yeah.
Peter McCormack: Do you two talk and discuss it a lot; are you competitive?
Charlie Lee: No. I mean, I introduced Bitcoin to him way back in 2011 and he didn't really jump in until, I think it was 2013 or a bit later, where he cofounded the Bitcoin China exchange.
Peter McCormack: Do you disagree on things? Did you agree on SegWit2X?
Charlie Lee: We did disagree on SegWit2X. He wanted SegWit2X to happen and I thought it wasn't that good an idea. So, we do disagree on stuff.
Peter McCormack: And, SegWit2X didn't happen; was that a surprise to you?
Charlie Lee: Was that a surprise? I didn't expect it to succeed. I thought that even if the SegWit2X fork happened, the original fork would have more value, and the SegWit2X fork would eventually lose value and not be worth anything.
I did not expect it to be cancelled, and the fact of how it was cancelled made it seem very silly, because it was decided by a handful of people to just cancel something that's supposed to be a decentralised currency, right? So, from that, it was pretty obvious that SegWit2X was not supported by the majority of the people, because just a handful of people can just cancel it. And, I also didn't expect it to have that many bugs, after the fact when we eventually looked at the code. When we looked at it trying to launch, we saw how buggy it was, so we didn't expect that to happen either.
Peter McCormack: And Jeff Garzik came under quite a lot of criticism for that as well?
Charlie Lee: For sure.
Peter McCormack: I think I noticed it on his LinkedIn, though; he's got a recommendation for you?
Charlie Lee: Yeah.
Peter McCormack: Have you worked with him?
Charlie Lee: Yeah, I like Jeff Garzik. I mean, he was the main developer behind SegWit2X and you can't expect one person to be able to write perfect code; so, it didn't get a lot of code reviews, so a lot of bugs weren't caught. But he's not a bad developer, per se; it's just what it is.
Peter McCormack: Did it highlight the role that Core played, and the important role they play?
Charlie Lee: Sure it does. I mean, the Bitcoin Core developers is just the top of the class. They're amazingly good developers and we should be happy that we have such a good team of developers working on Bitcoin.
Peter McCormack: Is there a similar group of developers working on Litecoin?
Charlie Lee: We do have a group of developers, but I wouldn't say they're -- I mean, we're kind of piggybacking off of Bitcoin code, right. So, whatever goes into Bitcoin, we get for free and so, we don't need to be world-class cryptographers. So far, we're not really pushing the boundary in terms of what Bitcoin is doing.
Peter McCormack: But also, interestingly, it seems like you seem to be the test bed for a lot of the technology. I think you've still got pinned on your Twitter your road map, and that seems to be, you've positioned yourself as Litecoin as almost like a test bed for Bitcoin?
Charlie Lee: To some degree, we can move faster than Bitcoin, like we've seen with SegWit; Litecoin would adopt SegWit before Bitcoin did. And, we expect to do more of that in the future to help Bitcoin wherever we can.
Peter McCormack: I think it's kind of an interesting thing, where most people tend to work on and promote their crypto asset, whereas you tend to be a supporter of the crypto asset movement as a whole and you're very supportive of Bitcoin, rather than seeing it as a competitor?
Charlie Lee: Yeah, and I think one of the benefits of having altcoins, I mean there are a lot of people who are Bitcoin maximalists who think that Bitcoin is the one coin that should rule everything, that other coins shouldn't exist, because Bitcoin can do everything. And, the reason why I see a role for Litecoin and all these other cryptocurrencies is because it makes cryptocurrency anti-fragile. Governments can actually kill Bitcoin right now if they really wanted to.
Peter McCormack: They can?
Charlie Lee: Yeah, they can, because the US Government, if they really wanted to, they can buy ASICs, right; they can create an ASIC farm; they can even build their own ASICs. I mean, you have enough money, you can just keep printing money to do this, right? So, they could buy a lot of Bitcoin ASICs and overrun the network. It would cost them trillions of dollars maybe, but who's counting, right?
So, they could do it if they wanted to but the fact is, if they did kill Bitcoin by 51% attacking it, there are all these other coins out there. They can't kill all of cryptocurrency. They can kill one specific coin, but the fact that there are others out there, or the fact that Bitcoin can pivot and switch to a different algorithm makes it so that you just can't kill all of cryptocurrency.
Peter McCormack: It seems a counterproductive move?
Charlie Lee: Yeah.
Peter McCormack: It seems like the only people who've effectively killed it is the Chinese Government, but almost within a --
Charlie Lee: Within their own country.
Peter McCormack: Yeah. Do you see, with the change in the regulatory lens from the US, which is quite supportive obviously within a framework within the SEC, obviously that's a good thing for crypto and Bitcoin; as the world adopts and grows, do you see a potential that the Chinese Government will have to change their stance on this?
Charlie Lee: I mean, they don't have to change their stance. I understand why they have their stance. They want to protect their citizens, so from their point of view, investing in crypto is too volatile, and especially ICOs. So, if their citizens invested all their life savings in crypto and it dropped to zero and they lost all their money, then there could be civil unrest, and that's something that they don't want to see happen. So, it's better to clamp down, don't let people touch this volatile currency, than to let people play with it.
Peter McCormack: And conversely, we now have nation state crypto; while questionable, that is quite an interesting move though. If we ignore what happened in Venezuela as a bit of a disaster, the fact that we've seen Iran and Turkey and other countries that are interested in it, do you think there's a potential for nation state crypto to work?
Charlie Lee: I do. I think very soon, we'll have countries that would adopt crypto as their currency. I think cryptocurrency is unstoppable; it's just a matter of when, before it takes over.
Peter McCormack: And, what is the signal of taking over? I mean, do you have a vision of the future?
Charlie Lee: I think fiat currency has always failed. The US dollar is really strong today, but will it last another 50, 100 years? I think, at one point, it wouldn't and it will have -- before currency was backed by gold, and I see in the future where currency will be backed by cryptocurrency.
Peter McCormack: Right, so like a symbiotic relationship then?
Charlie Lee: Yeah. There will always be fiat currency, I believe.
Peter McCormack: Right. And within that, what currencies do you believe then will survive and will be part of this, because we've got so many now, right? Personally, my favourites have always been Bitcoin and Monero, but I also hold Litecoin, I hold Dash; but amongst currencies, I can't see us having too many.
Charlie Lee: Yeah, I think there will be a handful of currencies that really act as a store of value and means of payment. There will be coins and tokens that will be used for other things, but in terms of actually storing value, there'll be a handful.
Peter McCormack: So, do you see them all as a store of value and means of payment, because it seems that all are trying to solve the peer-to-peer payment issue. So, Bitcoin scaling with Lightning Network; I believe Litecoin's taking Lightning Network as well; Bitcoin Cash, that's fundamentally what they're about; Dash has been about fast payments? I don't see it as something Monero's touching, but I think privacy's more important than fast payments. So, where's the differentiation between these currencies for the future?
Charlie Lee: I think Bitcoin, the reason it didn't adopt SegWit2X is because it didn't want to compromise on decentralisation and security for a kind of throughput and low fees. Bitcoin is, in my mind, always the king of crypto, where it is the most secure, most decentralised, which means it is the coin that cannot be censored, which is important. And, there's a trade-off, right?
So, where Bitcoin is targeted towards that, Litecoin and other coins are targeted more towards lower fees and faster payments and for use for every-day payments; whereas, Bitcoin will be good for sending large amounts of money, because you need the security of decentralisation for that. For Litecoin, it will be good for sending small amounts of money.
Peter McCormack: I understand. And, looking at Litecoin, one of the key differences is that it really does have a leader, right, in yourself?
Charlie Lee: Yes.
Peter McCormack: You call yourself the creator, but what is your role in Litecoin and, I don't want to say CEO, but it does have a leader in yourself; where do you see your role?
Charlie Lee: I see it more as I'm kind of trying to steer Litecoin towards my vision, so I did create it and I'm also working on it full time now, and I'm helping it succeed, helping it achieve mass adoption. That's what I'm trying to do.
Peter McCormack: Do you think that's something Bitcoin has lacked, or does it not matter?
Charlie Lee: It's plus and minus, right? So, the fact that I am the leader, I'm leading the Litecoin project, means that Litecoin is more centralised. So, it's good because we can move faster, we can make decisions faster, I can rally the community around my vision. So, if there's a fork or anything, it's easier for someone to say, "Hey, Charlie the Creator supports this versus other things".
Whereas, with Bitcoin, you can't really do that. Both sides, for example the Bitcoin Cash and the Bitcoin side, think that they're real Bitcoin. And then, Bitcoin Cash says, "Well, do we follow Satoshi's vision?" which is something that you can't really argue once people start talking about Satoshi's vision.
Peter McCormack: Well, does Litecoin follow Satoshi's vision?
Charlie Lee: Litecoin follows Satoshi Lite's vision!
Peter McCormack: Satoshi Lite's vision! So, one of the things I think hasn't helped Bitcoin is it hasn't had a leader to fight back against the leadership in Bitcoin Cash, and that's one of the things that I've felt is a shame. But, the position of --
Charlie Lee: But having a leader also makes it easier to take down.
Peter McCormack: True.
Charlie Lee: So, someone can really take down Litecoin by targeting me, by throwing me in jail, or just making me look bad, creating fake stories about me.
Peter McCormack: Has any of that happened?
Charlie Lee: No, not yet, at least not that I know of!
Peter McCormack: I think everyone just likes you, though!
Charlie Lee: I wouldn't say that!
Peter McCormack: Well, maybe not Roger Ver.
Charlie Lee: So, that's the good part about Bitcoin, where you can't really attack Bitcoin, because it's decentralised; it's a decentralised currency, no one controls it. So, I think that's the good part. The bad part is, it's inefficient and it can get attacked and there's no one to stand up and defend Bitcoin.
Peter McCormack: So, what happens to Litecoin if you are put in jail?
Charlie Lee: I think it will be fine. I want to make Litecoin -- eventually, Litecoin cannot depend on me. So, selling my coins was the first step towards that, where I can't sell any more, I can't cause the price to crash. I didn't cause the price to crash; I didn't have that many coins to start with. But that's one thing people criticise Bitcoin, is because people believe Satoshi has 1 million Bitcoins and if he actually decides to sell all of it, it could crash the market.
So, selling my coins was the first part of it. Eventually, if Litecoin does succeed and becomes used worldwide, I have to step away, I have to let the community take over and work on Litecoin and not be a centralising figure.
Peter McCormack: How does that actually happen though?
Charlie Lee: I don't actually know yet!
Peter McCormack: So, is there a succession plan, say you were to disappear one day?
Charlie Lee: I don't want a succession plan; it sounds like I'm passing the reins to someone else. It's more like, it needs to not have a leader.
Peter McCormack: But when does that happen? I mean, it's very hard. I've heard you talk about when Litecoin is a success, but isn't it already really a success?
Charlie Lee: It is really a success.
Peter McCormack: What did you mean by that?
Charlie Lee: It's hard to pinpoint exactly when. It's more like, if everyone, not everyone, but if the majority of people actually start using Litecoin and stores are really accepting Litecoin, it's really used as a payment, then it's succeeded.
Peter McCormack: And, how do we get to that point? I told you I was with Laura earlier, and Laura made the point that it's quite easy now, when you're in a shop or online, to just pay with your debit card; it's a very easy process. Whereas, with paying with crypto, it's slightly harder. When I bought my mining gear from Bitmain, despite the fact I had to use Bitcoin Cash, spending a significant amount of money on 50 machines, that was a very good process, because it was ten minutes, $3 fee, or something ridiculous.
But on smaller transactions, how do we get people to use crypto; or, why would they use crypto instead of fiat?
Charlie Lee: So, yeah, I'm in the US; using credit card is so much easier today, and that's why cryptocurrency hasn't really taken off as a form of payment yet. I think the reason why people would want to use cryptocurrency for payment is because there's no fraud; there are lower fees. So, right now, the fees are seen by the merchant and not passed on to the user.
So, Visa was really smart, Visa/Mastercard were really smart the way they pushed it out, where users actually get the cash back. They get the kick back from using credit cards; they don't see the fees; but whatever they're buying actually costs more, it's just hidden from them, because the merchant is paying 3% to Visa/Mastercard and then the Visa/Mastercard kicks back up to 2% to the user and they pocket 1%, or something like that. So, they're pretty smart about the way they're doing it.
It's hard for people to realise the benefit of crypto; but with cryptocurrency, when you're paying with Bitcoin or Litecoin, you're not giving away anything that's sensitive. You don't need to give out your credit card number, you don't need to give out your zip code or social security, or anything like that; and, there's nothing for the merchants to lose. So, right now, the merchants are paying a lot of money to secure your cards and make sure their database is not hacked. But if we switch to crypto payments, then there's no risk of that happening.
Peter McCormack: So, there's a big incentive for the merchants too?
Charlie Lee: There is, and they don't have to pay the 3% fees to Visa/Mastercard. So, there's definitely win/win, but it's just not easily seen by the end user today.
Peter McCormack: So, a potential game changer on that, I don't know what it's like out here, but in the UK when you're booking a flight, if you pay with a debit card, you have essentially no fee; if you pay with a credit card, there's a higher fee. So, if you were on, let's just use Amazon as an example, the price for a laptop is X if you pay with debit, but the price is X if you pay with Litecoin. If you could see that you're paying a lower price…?
Charlie Lee: Yeah, people would use it. So, I think in the end, people would say that if you pay with cryptocurrency, it's 3% off, because that's how much they're paying to Visa, if you're using a Visa card, and then people would use it more. So, we haven't seen that happen yet. I expect to see that in the future. Merchants right now still see cryptocurrency as more of a PR move to accept it; they haven't really seen the benefit. I mean, some have, but adoption's not there yet, and that's what we're working towards.
Peter McCormack: Were you at Coinbase when they did their first merchant tools?
Charlie Lee: Yes.
Peter McCormack: Because they stopped it for a while, didn't they; and they now have a new one?
Charlie Lee: I'm not sure if they actually -- they stopped promoting it. Yeah, and their new one's pretty good. The new one is, you control your own coins, your own keys.
Peter McCormack: Right. And, Litecoin's include within their new one?
Charlie Lee: Yes, it is.
Peter McCormack: So, LitePay, did that go live yesterday?
Charlie Lee: It did go live in terms of merchant sign-ups. Their plans for the debit card was pushed back.
Peter McCormack: Is that because of Visa being difficult?
Charlie Lee: I would assume so. Visa has been pretty openly hostile and I guess with good reasons. So, it's kind of hard to get a deal done with Visa. I'm sure there are issues. I'm guessing they'll wait until the last minute, and they can just around these issues.
Peter McCormack: But that's across all banking really?
Charlie Lee: Yeah.
Peter McCormack: I mean, I'm a miner and I've tried to register a business to process my mining costs and my fees and to pay. I can't get a bank account in the UK because of cryptocurrency. I've tried three banks; every bank has rejected me.
Charlie Lee: Yeah, you have to find a bank that is willing to take the risk of dealing with cryptocurrency. Previously, everyone was using the same bank for their Visa cards; I forget what the name was.
Peter McCormack: Yeah, I know where you mean.
Charlie Lee: Oh, I think it was Waiparous. They stopped supporting crypto cards because of Visa's switchback. So, I'm not sure which bank LitePay was talking to, but I assume they got the same pushback and they're trying to find other solutions, but it's hard.
Peter McCormack: What do you think the risk is? Is it really a risk, or is it just a way of fighting --
Charlie Lee: The risk for who?
Peter McCormack: For the banks. They said they don't want the risk, but the banks I spoke to said, "We can't prove where the funds have come from".
Charlie Lee: Yeah, so there's regulatory risk, where the government can remove the insurance for banks if they did anything bad. So, if you can't prove the funds are not from money laundering, then the banks get in trouble with the Federal Government.
Peter McCormack: How's that different from fiat, though, if I put £1,000 or $1,000 in the bank?
Charlie Lee: It's easier to trust. Well, if you deposit cash, there's a limit before they start asking you where the money's coming from, right? But, it's easier to track fiat if it's moving between banks. So, it's easier to do AML KYC with fiat than it is to do with crypto. So, there definitely is a risk for banks to work with crypto. Then, there's also the issue with Visa. I assume Visa could punish banks if they decide to stop working with the bank.
Peter McCormack: It feels like, as crypto expands and improves, that the banks become more against it; and it feels like it is more of a threat. I mean, for example, mining; the coins I'm mining essentially are fresh coins. I can prove they've not come from money laundering, because they've come from fresh coins, but I'm still rejected by the bank.
Charlie Lee: They don't understand it right now. I mean, you can prove to them, but they don't really care; they'd rather not touch it, most banks.
Peter McCormack: So, getting back to LitePay, is there a reason for merchants to have LitePay and the Coinbase solution?
Charlie Lee: No, I mean they're different. They're both merchant processing, so merchants can choose one or the other to help them process Litecoin payments and convert it to fiat, if they need to.
Peter McCormack: And are you seeing much interest from merchants wanting to adopt Litecoin?
Charlie Lee: There's definitely a lot of inbound interest from merchants that want to adopt Litecoin; we've received tons of people asking for help for that, and that's definitely a good sign.
Peter McCormack: I know from the community I'm in, the thing people most want to use crypto for is booking flights and hotels!
Charlie Lee: Is that right?
Peter McCormack: Yeah, I don't know, I'm making an assumption of why they want to use crypto for that; but that's where I've seen it. So, LitePay will be going live about when?
Charlie Lee: They've already gone live, in terms of signing up merchants. I don't know when a merchant will actually start accepting Litecoin via LitePay yet; I assume pretty soon. But LitePay is just one of many merchant processors, like you talked about. There's Coinbase Commerce and there's Align Payment. LitePal is also coming out with a solution, so there are many --
Peter McCormack: LitePal? Is that anything to do with PayPal?
Charlie Lee: No.
Peter McCormack: So, they're going to be in trouble.
Charlie Lee: You think so?
Peter McCormack: I would think that's a brand issue.
Charlie Lee: Really? Just the fact that it's called something-Pal?
Peter McCormack: Yeah, I assumed it was them.
Charlie Lee: Oh, really?
Peter McCormack: Yeah, when you said that.
Charlie Lee: I don't see why it would be an issue.
Peter McCormack: We'll see. So, you put out a tweet recently; everyone loves your Twitter that follows it, and you put four things on there. We've just talked about one. There's a popular online wallet; I'm assuming you can't talk to me about that?
Charlie Lee: No! I'd talk to you, but I don't think I have an announcement.
Peter McCormack: Well, I'm more excited about a goods trading platform; I think that sounds really interesting. And then, everybody will obviously want, and a couple of friends know I'm here, they're like, "Ask Charlie to tell you what the huge, unexpected surprise is". I was like, "I guarantee he won't tell me". But there's lots happening, right?
Charlie Lee: There is. I mean, I put out this tweet in December, so we've been working hard with all these companies to support Litecoin one way or another; so, there's always stuff going on. People keep asking and I guess that tweet, I asked for it by posting that! But I'm not the one that's going to be announcing something, right, so it's these companies that are supporting Litecoin; it's up to them to decide when they want to announce that, yes, they've added Litecoin support. It could take some time. It could be tomorrow, it could be in a few months, but we'll see more and more companies adopting Litecoin.
There are actually more companies than these three other ones that haven't been announced yet; there are more exchanges that are going to support Litecoin; more merchant processors and more merchants; and people using Litecoin in various different ways.
Peter McCormack: Litecoin seems to, and you have to take credit for this, seems to have a positive community around it, not really a negative community, whereas Bitcoin has. People love it or hate it; Bitcoin Cash has people who love it or hate it. How do you think you've managed that?
Charlie Lee: I mean, we've had haters also!
Peter McCormack: Of course, I mean everyone has haters. But as a percentagewise, they're very few compared to the others. I rarely see Litecoin detractors.
Charlie Lee: Yeah, I guess that's good. Why do I see that?
Peter McCormack: It's probably a tough question to answer, isn't it?
Charlie Lee: It is. I actually don't know. I think me being kind of the central figure around Litecoin helps a bit, where people can rally around my vision and people that support Litecoin do.
Peter McCormack: And the Flappening! That would be a big moment.
Charlie Lee: Definitely. When Litecoin's market capital overtakes Bitcoin Cash's market cap?
Peter McCormack: Yeah.
Charlie Lee: I'm working towards that.
Peter McCormack: Do you know what; it seems a realistic goal. And actually, in some ways, they had a head start on you at the point they hit the market, so it seems more you've earned it, as opposed to having forked it?
Charlie Lee: Yeah. I mean, I think when Bitcoin Gold forked, it had at one point a higher market cap than Litecoin also.
Peter McCormack: $6 billion, wasn't it?
Charlie Lee: Yeah. So, Litecoin, it's been many years since we started, so I'm very proud of that. That's been around for, what is it; seven years almost; six-and-a-half years. That's more than a lot of all these other coins. And the fact that Litecoin is still up there in terms of market cap is amazing, because I've seen the ups and downs of all these other coins that have gone by the wayside. It's not easy to stay near the top.
Peter McCormack: So, what was last year like? Obviously, I bought back in, I think, around $4, and there were the Coinbase rumours, the SegWit2X rumours; there were various rumours coming out and it just exploded and had an amazing year. Whilst you say price isn't important, but you understand it towards marketing it, it did bring exposure. So, what was last year like for you?
Charlie Lee: Pretty crazy. I mean, in 2016, mid-2016, I decided to go part time at Coinbase to start focussing my time on Litecoin. I realised the role that Litecoin and I could play in the whole cryptocurrency space, which was to help Bitcoin get past this scaling debate. I saw people FUDing SegWit and saw SegWit's adoption stall on Bitcoin, and I realised that Litecoin could actually get SegWit through, because I could influence that, make that happen, and show that SegWit is nothing to be feared; it's actually something that would help Bitcoin. So, that's what I did.
So, we worked on adding SegWit to Litecoin and then pushing it out and convincing miners to adopt SegWit. It wasn't easy! I mean, most of the Litecoin miners were also mining Bitcoin, and there's this issue where they were afraid of upsetting Bitmain, and they didn't want to support SegWit, because then they don't have a reason to not support SegWit on Bitcoin.
But then, when people started signalling SegWit on Litecoin, the price shot up, so people can clearly see that the market wants SegWit on Litecoin. And eventually, slowly but surely, miners started to signal SegWit on LiteCoin and the price kept going up. And then finally, it activated; took a lot of work, unfortunately. I didn't expect it to take a lot of work from my part. And then, it activated, the price went up.
Peter McCormack: And up, and then up!
Charlie Lee: Yeah. So, that's great. And then, Coinbase added Litecoin. So, because of SegWit on Litecoin, the price went up, trading volume went up, especially on GDAX and that's when I told Coinbase, "Hey, it would make sense now to support Litecoin on Coinbase, because there's demand for it. And frankly speaking, Coinbase would make a lot more money by supporting Litecoin", and convinced them and they did add Litecoin, and the rest is history!
Peter McCormack: So, what's your life like now; is it very different now?
Charlie Lee: It's nice to not have to work for someone. So, I work on Litecoin, I work on what I'm passionate about; and it's also nice to work at home.
Peter McCormack: Yeah, I know that, just doing this; and I get to travel with it as well, but obviously really appreciate you giving the time to do this. I notice you do a lot of podcasts and you've made time for the community, which is obviously great.
So, let's go back. You mentioned Bitmain. Do you think they have an unhealthy position in the market; or, do you actually think it's a good thing, because they have obviously grown mining and grown adoption? Are they as big a threat as people say they are; do you have a view on this?
Charlie Lee: I do. I think it's a bit unhealthy for one ASIC manufacturer to have a dominating position. This is all second-hand, but I've heard that they've used that dominating market share to actually hurt the competition and to do things that are not cool. So, I don't think that's good to have. It's better for mining to be more decentralised, in terms of security, right. The fact that it's centralised means that the Chinese Government can come and say, "Bitmain, you have to do this; or, you have to do that". Maybe they've already done that; we don't know. But if mining were more decentralised, then it's harder for anyone to control it.
Peter McCormack: But you've met Jihan, right? What are his motives?
Charlie Lee: I don't know what his motives are. I mean, he's a nice guy. I've talked with him quite a few times, liked him a lot.
Peter McCormack: Yeah, because I don't actually personally see them as a threat in that, why would they destroy the business that pays for them?
Charlie Lee: They're not.
Peter McCormack: But I understand the Chinese Government point.
Charlie Lee: Yeah. I mean, they're not trying to destroy Bitcoin; they just want to make more money. But they could be doing something that makes them more money, but it hurts Bitcoin.
Peter McCormack: I always forget the name, I can't pronounce it; the Innosilicon?
Charlie Lee: Yeah.
Peter McCormack: Do you mine yourself for fun?
Charlie Lee: Yeah. So, Innosilicon gave me an A4. They've also given me one of their newer machines. I also got a miner from Bitmain. So, all the mined coins are donated to my foundation, and it's cool mining Litecoin.
Peter McCormack: But do you, say with Halong coming out, I don't know how much you know about them. I've ordered some DragonMints; fingers crossed, they're going to be cool. Do you know if they've got any plans to do any Litecoin miners?
Charlie Lee: I don't know. I think Litecoin mining is pretty cool, because we have two companies at least that are on par and it's not one dominating company. So, I'm happy to see Halong mining coming up. There's a few more ASIC miners that are popping up.
Peter McCormack: Some of the big companies are looking to get into it, right?
Charlie Lee: Yeah, so that's good. Recently, I saw a post by Cobra, one of the maintainers of Bitcoin.org, that says we should do a proof over change.
Peter McCormack: Yeah, I saw that. Nobody really accepted it, right?
Charlie Lee: No, I don't think so. I think that's a bit crazy. It's not at a point where we need to do that yet.
Peter McCormack: Well, all that will do is create another altcoin, right, because all the ASICs will carry on mining the old one?
Charlie Lee: Yeah. I think the community's not set on doing that; I think it's just one person, or a handful of people don't want to do that.
Peter McCormack: What do you think of proof of stake?
Charlie Lee: I think there's definitely room for a proof-of-stake coin. I think it's a different security than proof of work and I'm glad that a coin like Ethereum is going to try to test it out. I'm always concerned that proof of stake is -- there's an issue with proof of stake, because there's no such thing as a free lunch. With proof of work, the security comes from the amount of work you put in. With proof of stake, it's unclear. The attack vector is different, so it's unclear that it's as secure as proof of work.
Peter McCormack: Okay. So, something else I want to ask you about. You've been talking quite a bit with Fluffypony, talking about working more closely with Monero. That's the only coin I've never sold actually.
Charlie Lee: Never sold? Not even for drugs?
Peter McCormack: Not even for drugs, no. And as a trader, I'm a trader and I trade everything in and out; it's the only one I've never sold.
Charlie Lee: How come?
Peter McCormack: Two reasons. Firstly, very stable price growth. Of every coin I have, it's the most -- when I look at both the dollar and Bitcoin, very stable price growth. It doesn't appear to speculate as much, which is also good.
Charlie Lee: I think Fluffypony has a lot to do with that.
Peter McCormack: Yeah, he's kind of cool. I'm hopefully going to be going to South Africa to interview him as well. But the other reason was, there was a time when I went to try and sell everything, just before China banned, and I had to upgrade my Monero desktop wallet and it was getting stuck on a block. I'm not technical, so there were so command line things I had to do. Anyway, I couldn't do it.
Charlie Lee: So, the crappiness of the wallet prevented you from selling!
Peter McCormack: Yeah, and I think that was a gift from the crypto Gods! But the thing is, I've never sold it. So, when people talk about holding and accumulating Bitcoin, I'm the same with Monero. So, I think it's a really interesting relationship. What does it mean for Litecoin; what does it mean for Monero?
Charlie Lee: You're talking about the atomic swap thing I suggested?
Peter McCormack: Well, there are two things. So, I saw the atomic swap, but also the alliances working together. Was that real, a real thing?
Charlie Lee: No. So, we haven't worked together.
Peter McCormack: So, I couldn't work out; so, there was a merger between them and I couldn't work out if that was a joke!
Charlie Lee: Yeah, that's unfortunate; that was a joke! So, the coins aren't merging.
Peter McCormack: No, I didn't mean the coins; I thought the alliances may be working together to achieve goals together.
Charlie Lee: I hope to see that happen; we haven't started really working on anything yet. The idea behind the proposal was that I think we could have a very good, synergetic relationship between Litecoin and Monero, because Litecoin is very liquid, it's on practically all the exchanges, so you can easily exchange between fiat and Litecoin; and Monero is not, and for reasons that people understand; because people are afraid of KYC AML stuff --
Peter McCormack: It will never be on Coinbase?
Charlie Lee: -- people are afraid to accept Monero, to support Monero. So, if we have something like a website, if we work together to make it easy for people, dead simple for people to atomic swap between Litecoin and Monero, then it would be very easy for you to bridge the two worlds, where there's the privacy world and there's the regulatory world; and Litecoin and Monero can act as a bridge between the two.
Peter McCormack: So for, I say, about 90% of people that I speak to, cryptocurrency is very confusing. I mean, I'm trying to pursue as much knowledge as I can and I don't know a lot, but I'm doing my best. What are atomic swaps, for the normal man on the street; explain an atomic swap?
Charlie Lee: The basic idea is that two people can swap their coins at a value that they decide, at an exchange value that they decide to swap the coins, without a third party, online. So, if I met someone online I want to sell, whatever, 1 Litecoin for 1 Monero, I can do that with someone in an atomic way; atomic meaning that it either happens or it doesn't. There's no in between where you got my Monero and I didn't get your Litecoin, or vice versa.
Peter McCormack: How's the technology for that being developed?
Charlie Lee: The technology already exists. I've done an atomic swap between Litecoin and Decred, Litecoin and Bitcoin. Monero doesn't have that capability yet, so that's something on their end that they would need to add. It might require a hard fork from Monero, but hard forks are pretty simple for Monero. But once they had that capability, then it should be pretty simple to do an atomic swap between Litecoin and Monero.
Peter McCormack: Okay. I'm conscious of time; we're nearing a limit. A few last things that I just want to ask you.
Charlie Lee: Sure.
Peter McCormack: We'll finish on Litecoin. Any wider thoughts on the market? We've obviously had a huge amount of growth last year, it is a price-speculative market; but any other thoughts on the market in terms of things you think are needed to improve and increase the growth of crypto?
Charlie Lee: Sure, a few things. So, last year, near the end of the year, I made a tweet about how the price could drop 90% and go near a bear market, so people should be careful, and this is something that I've always noticed, is that Bitcoin and Litecoin go on a tear, right; 100X, 10X, 20X increase within the timespan of a year and then everybody starts hearing about it and they buy in.
A lot of people actually buy in at the top, at the near-term top; and then the price proceeds to drop 90%. We've seen that happen with Litecoin and Bitcoin and people spend too much money; money that they can't afford to lose buying in, and they're forced to sell at the low, or near the low. Those are the people that got hurt; so my point was, if you can't withstand a 90% drop in your portfolio value, don't buy.
Peter McCormack: That was a very un-Charlie Lee tweet!
Charlie Lee: Was it? People think I FUD Litecoin all the time, so this is one of the features I want people to be careful of. They shouldn't buy stuff that they can't afford to lose, with money they can't afford to lose. I mean, you hear people taking a mortgage out of their house to buy crypto. They could get lucky and make a lot of money, but --
Peter McCormack: It's insane.
Charlie Lee: Yeah. A lot of people will actually lose a lot of money, and that's unfortunate.
Peter McCormack: I just wrote an article in my blog, because I have a community, and I spoke to a lady in New Zealand, two kids; they put all their investments in, $100,000, into crypto, bad ICOs, bad investments and they're down to $20,000 now. It's awful.
Charlie Lee: Yeah, it is. And also, you hear people put all their money in Bitconnect and it's worse than investing in crypto; that's investing in a Ponzi scheme.
Peter McCormack: So, that is a Ponzi scheme, right?
Charlie Lee: Yes, I assume so.
Peter McCormack: So, what do you think about things like CoinMarketCap showing adverts for them? It doesn't help.
Charlie Lee: It doesn't help, but it's hard for CoinMarketCap to decide what's a Ponzi scheme and what's not. If someone's willing to pay for an ad, then they show an ad.
Peter McCormack: Yeah, fair enough.
Charlie Lee: People have to make money, right. I mean, I don't like ICOs; I think most of them are scams. I hope that we rode out all the bad ICOs and I actually want regulation to come in and stop all these ICOs and to put more rules in place.
Peter McCormack: So, is it really you don't like bad ICOs?
Charlie Lee: I think ICOs in general are bad, because they create the wrong incentive structure. So, even with projects that intend to do well, once they get the money, they don't have the incentives to continue to develop the project. Once you get $110 million, $100 million, why do you care about your project? You've already won.
Peter McCormack: Well, I guess it's the same problems that happened in the first era of dotcom, right; raising too much money, going on private jets.
Charlie Lee: Yeah. Throwing big boat parties!
Peter McCormack: Yeah, when there was no money, and you had to develop. I mean, in some ways, Litecoin, I guess you had to self-invest in that a bit? Certainly time.
Charlie Lee: Yeah, definitely time. Yeah, all the Litecoins that I had were mined or bought by myself. I didn't premine any, so yeah, people were complaining that I hurt Litecoin by selling all my Litecoin, but I invested in Litecoin just like anyone else. It's not like some of these other coins where the creator actually printed maybe even $1 billion worth of coins and they're sitting there and they can sell and hurt the market. I didn't do that. I just had a little bit that I owned, because I bought and mined, and I believe in Litecoin more than others.
Peter McCormack: So, ICO regulation's a good thing?
Charlie Lee: I think so. There's too much money right now, too many scams. It's hard to figure out what's good and what's bad; everybody has a whitepaper. The better, the longer, the more wordy the whitepaper is, probably the worse the project is!
Peter McCormack: Yeah. I mean, I've worked in start-ups; it's usually just sitting down and making something and getting on with it. Okay, cool. Look, Charlie, obviously you're a really busy guy and fitting this in, I really do appreciate it. Just a final question to close out: what's the future for you, future for Litecoin, any messages you want to give out to people, any final words?
Charlie Lee: Yeah, so I mean I'm still working harder than at any time in my life on Litecoin. So, even though I sold all my Litecoins, I'm still invested. I think I'm more invested in Litecoin than anyone else, because it's my project; I want it to succeed more than anyone else. And sadly, I pay more attention to price today than I did before, because I actually want the price to go up more than I ever wanted to, because I don't want people to think that I sold at the high. So, I'd love for the price to be higher, much higher than what I sold it at.
Peter McCormack: The Bitcoin price is higher, well it was. You've got a new all-time high on Bitcoin.
Charlie Lee: Sure, yes. Litecoin over Bitcoin is higher than when I sold it. In terms of the dollar price, it's still 50% lower than when I sold the final stash of my coins, so I'd like to see that go higher and I'm working towards that.
Peter McCormack: Brilliant. Charlie, look, I really appreciate this. Thank you so much.
Charlie Lee: Sure. Thanks, Peter.
