Charlie Lee is a firm believer of the power of cryptocurrency. One day, he envisions people paying for everyday goods and services using a mix of Bitcoin and other virtual currencies – like Litecoin, the currency he created two and a half years ago.
A former engineer at Google Inc., Lee currently works for Coinbase, a digital wallet provider allowing users to buy, sell, and accept Bitcoin from each other.
He will be featured as a speaker at Canada’s first Bitcoin Exposition, a conference focused on building a community around the alternative currency. Set to be held in Toronto, it runs from April 11 to April 13.
The following interview has been edited and condensed for length and clarity.
Candice So: I’ve read your brother, Bobby, is very involved with Bitcoin as well, as the CEO of BTC China. So cryptocurrency seems to be a family interest. When did you both get involved with it?
Charlie Lee: I first found about Bitcoin about three years ago. Then I introduced Bobby to Bitcoin. Back then, the price was around $30 [per Bitcoin]. And then two and a half years ago, I created Litecoin.
So I’ve always realized the power of fiat currency, where the government can just print an unlimited amount of dollars. And I’ve been an investor in gold before this. So when I found out about Bitcoin, I saw something that is similar to gold, but better in various different ways. So we were immediately convinced that Bitcoin would become huge.
So: When you first started building up Litecoin, why did you think there had to be alternative currencies besides Bitcoin?
Lee: One thing is that people do like choices. There were already a few other alternatives out there, and people just like to have a choice and to play around with different kinds of coins.
And Litecoin does contribute to Bitcoin development. A lot of what we do with Litecoin gets merged upstream, so you can do a lot more experimentation on the Litecoin network, and test stuff out and add it to Bitcoin. So I think it’s a win-win for both currencies.
I consider it like, Bitcoin is Visa and Litecoin is like American Express. So it’s a different payment method, and one thing I think about in the future is, it’s possible that Bitcoin will be used more for larger purchases, and Litecoin more for smaller purchases.
It’d be easy for merchants and consumers to use both. And wallets could hold both Bitcoin and Litecoin … Litecoin transactions would be faster, so for in-person transactions like buying coffee.
So: You launched Litecoin back in October 2011 … the goal was to have some improvements over Bitcoin. So how does Litecoin improve upon what Bitcoin does?
Lee: There’s a few small changes. Litecoin has faster transactions so blocks are created, on average, every two and a half minutes, so it’s four times faster than Bitcoin. What I set out to do was create silver to Bitcoin’s gold. So, I wanted to create something that’s a bit cheaper, very lightweight, so that’s why I decided to make it four times faster and also have four times more coins.
Litecoin gets confirmed faster, so people will receive it faster and it feels like you can use it more easily for transactions. Sometimes when you’re doing in-person transactions, like Bitcoins and Litecoins in person, waiting for one confirmation of Bitcoin, it takes 10 minutes. But sometimes you can wait up to an hour for a confirmation, because the network is kind of random, it can be slower. So when you sell Bitcoin and someone comes and gives you cash, you can be waiting there for an hour until you’re sure the transaction went through, whereas for Litecoin, it’s two-and-a-half minutes on average. You can wait up to 10 minutes, but that’s pretty rare.
And then I also made a different mining algorithm [called a scrypt], so it wasn’t competing with Bitcoin for the same set of miners. That way you wouldn’t have miners jumping back and forth between Bitcoin and Litecoin. The goal there is to make it more fair. If you have the latest generation of mining hardware, you’re not totally destroying the previous generation. The idea is to make it more decentralized, so mining is not consolidated into a few big players who have the latest and greatest.
So: What do you think of some of the other alternative currencies out there – like Dogecoin, Coinye?
Lee: Dogecoin is interesting in that it somehow managed to capture people’s interest, and somehow introduce a lot of new people to cryptocurrency, so that’s good. It’s good when different coin users are trying different things, and seeing what works and what doesn’t.
But a lot of coins are just scams and pump-and-dumps, where people are just throwing something out there and trying to make it popular and trying to get rich off it. Unfortunately, a lot of people fall for it and invest in crappy coins and have their money wiped out. So it’s very highly speculative.
So: I guess the main concern people have with cryptocurrency is that a) they’re scared of the lack of regulation; and b) they’re afraid of volatility … Do you think cryptocurrencies have a chance of becoming more mainstream, with people using them to buy things regularly?
Lee: I expect the volatility to stabilize and slow down. As more and more merchants begin accepting Bitcoin or Litecoin, more and more will spend their Bitcoins and Litecoins to buy stuff. I use Bitcoins and Litecoins to buy stuff all the time. It’s a very good currency for consumers and merchants. I think right now, we’re at a speculatory stage … It has huge potential, but it’s not there yet because everything’s still being built out, and the regulatory environment is still unclear. So it could go either way, so that’s why the price is so volatile.
So: When Mt. Gox declared bankruptcy in February, a lot of people weren’t very confident about Bitcoin’s survival … Is that a bad sign for cryptocurrency?
Lee: It’s a speedbump. It’s unfortunate what happened with Mt. Gox, but it’s not a problem with Bitcoin the currency. It’s more with the largest exchange of Bitcoin. It’s like if an investment bank went bankrupt, it’s not a problem with the dollar.
It’s unfortunate a lot of people got hurt from Mt. Gox because people were not aware of the issues … but it’s something Bitcoin would overcome. It will take some time.
So: What’s in store for the future of Litecoin?
Lee: We’re doing quite a bit of development around Litecoin, trying to make different wallets, trying to make it more lightweight. The end goal is merchant adoption, just like Bitcoin. So with a lot of merchants accepting Litecoin and Bitcoin the same way they accept Mastercard, basically that’s where we want to get to.
And in order to get there, we need payment processors like Coinbase and BitPay to accept Litecoins, and make it simpler for merchant use. Before we get there, we need a lot of the big exchanges to accept Litecoin. So I guess the path for success is pretty clear.
So a lot of what I’m doing is going out there and talking to people about Litecoin to come in from that, and to say, Litecoin is here to stay and it’s a good currency to support.
