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Litecoin Founder Charlie Lee on Bitcoin Censorship Resistance and Dragon Ball

“Crypto Titans” is a series of personal interviews conducted by CoinMarketCap with prominent and forward-thinking minds tinkering on and behind the scenes of the cryptocurrency landscape. Click here to see all the Crypto Titan interviews up to today!


Charlie Lee has worn quite a lot of hats in the tech world: software engineer at Google, director of engineering at Coinbase, founder of Litecoin, Chikun at Magical Crypto Friends. 

While his most well-known contribution to the crypto space (besides the role of Chikun) is the creation of Litecoin — which he has described as the silver to Bitcoin’s gold — Lee is also known for selling almost all of his Litecoin back in 2017 to avoid any conflict of interest between his social media presence and Litecoin price swings. 

Nowadays, Lee works from home on Litecoin development, plays around with his new VR headset and waits for the perfect blockchain-based video game to convince him that crypto and gaming can go hand in hand.

Do you remember the moment that first piqued your interest in crypto?

Lee

It was 2011. I read an article from Gawker about Silk Road, and the article mentioned Bitcoin being the only currency accepted. That got me interested in that there is a digital currency that works in the wild.

Did you want to buy anything on Silk Road?

Lee

No, I didn’t. But I did check it out, though. I used Tor, obviously, and checked out the website. It was slow, but it was pretty neat. It’s a marketplace, there are actually sellers that get reviews, it was a vibrant marketplace going on. 

I read about Bitcoin and then I fell down the rabbit hole, because I’ve been into gold since 2000 and I saw Bitcoin as a better form of gold. It has properties very similar to gold, but with the ability to transfer it digitally and also store it for low to no cost. Whereas gold, you have a storage cost and it’s not impossible, but it’s really hard and expensive to transfer it.

I’ve asked this question to many people — Erik Voorhees, Meltem Demirors, Charlie Shrem — and they all say they “fell down the rabbit hole” when they first heard about Bitcoin. What is it about Bitcoin and cryptocurrency that makes people think of Alice and Wonderland and fantastical rabbit holes?

Lee

I think it’s just an expression, I don’t think there’s any connection to Alice in Wonderland. For me, what I meant by falling down a rabbit hole is that the second after I read the Gawker article, I looked it up and read Satoshi’s white paper, and that made a lot of sense to me. After that, I just read everything I could about Bitcoin. 

The amazing thing back then was that you actually could read everything that’s going on with Bitcoin at the time. Everybody is visiting the Bitcoin talk forum, it was on the domain forum.bitcoin.org, and basically everything that’s happening with Bitcoin happened on that forum. You can just follow everything that’s going on.

I do want to mention the block size debate that happened a couple years ago. Different people got into Bitcoin for different reasons or different things attracted them.

But as Bitcoin grew, it had to decide what is most important, because there are tradeoffs involved, you can’t be perfect for everything.

In the beginning, Bitcoin was good at everything because there weren’t that many people using it. Fees were low, transactions happened without any problems, it was secure and decentralized. 

But as Bitcoin grew, it had to decide what is most important, because there are tradeoffs involved, you can’t be perfect for everything. That’s why there is a split in terms of the different camps, because some people want Bitcoin to stay with low fees and high throughput, which is a tradeoff you have to make. If you do that, then it becomes less decentralized and potentially less secure. Bitcoin chose one path, which is to focus on security and decentralization above all else. That’s why there was a split in the Bitcoin and Bitcoin Cash folks.

And you’re on the Bitcoin side?

Lee

Yes, because when I first got into Bitcoin, I realized the most important thing is censorship resistance. It’s a new form of currency that can’t be controlled in any way. That’s what gave Bitcoin value. 

It was cool back then, the fees were low and transactions happened really fast. But that’s not the reason why Bitcoin is valuable, right? It’s not PayPal. PayPal has low fees, or possibly low fees, and fast transactions. But it’s not Bitcoin. It’s not censorship resistance.

PayPal has low fees, or possibly low fees, and fast transactions. But it’s not Bitcoin. It’s not censorship resistance.

Did you ever try to get in touch with Satoshi or any of the other really early Bitcoin developers?

Lee

By the time I got into the space, Satoshi already left. I did talk to Gavin [Andresen]. I actually bought my first Bitcoin from Mike Hearn. 

Mike Hearn was a developer at Google, and I was a developer at Google at the same time. He was a big proponent of Bitcoin inside Google, so I found out about him, contacted him and bought my first Bitcoin from him.

What are some of the biggest misconceptions you have run into over the years about Bitcoin?

Lee

Bitcoin has always been called a Ponzi scheme. There are people complaining there is nothing backing it, it will go to zero, because it’s a Ponzi scheme. That’s one of the biggest misconceptions.

The other is that people keep saying that Bitcoin is dead, or that it will die — it never dies.

I’ve heard people say that Bitcoin is now more centralized because there is a large concentration of mining power in China. Is that another myth that needs to be busted?

Lee

Yes. For one thing, it’s not true that Bitcoin mining only happens in China: it’s all over the world. But it is true that there is a lot of it in China. A lot of the mining manufacturers are in China, and they sold a lot of the miners to people in China. 

But even if that is the case, it’s still decentralized. Those miners in China have no incentive to attack the network — they’re in it for money. That’s what Satoshi designed — everyone is greedy, trying to make money from mining. Because of that, the system works, so we haven’t seen an issue with minor centralization, and I don’t think it’s currently an issue.

Do you have any advice for people who want to enter crypto right now? Are there things that they 100% should not do?

Lee

I always tell people don’t invest more than they can afford to lose, so a small percentage of their wealth.

Because if Bitcoin succeeds, it will go up 10 times, a hundred times, and that’s going to be significant. And there’s a non-zero chance that it will fail and go to zero, or it can crash significantly. 

Definitely, the problem is when people invest too much of their wealth in it. When it moves around a lot, when it’s very involved in crashes, they can’t afford to lose it. So they sell. Those people who buy in at the high and sell at the low, which is just the opposite of what you want to do.

If you treat it like money in the bank, then you will buy Bitcoin from an exchange like Coinbase and leave your money there.

A second thing is that Bitcoin is a new system, a new way of doing things. People have to learn the right way to handle Bitcoin.

It’s not money in the bank. If you treat it like money in the bank, then you will buy Bitcoin from an exchange like Coinbase and leave your money there. That’s risky, leaving Bitcoin on an exchange. You need to learn how to protect your own keys, learn about hardware wallets, learn about multisig and other solutions to have control of your own Bitcoin, which is hard for most people. It’s definitely a big learning curve.

You need to be careful, because there’s two ways you can lose money. You can lose money if you get hacked or an exchange gets hacked, and you can also lose money if you screw up and forget your seed or your password. It’s tricky. 

The hardware wallet may not be the best solution for everyone, because some people may write down their seed on a piece of paper and lose it. If their hardware wallet breaks, they’re s*** outta luck. Or, they may forget their passphrase, or they might not even put a passphrase on their card or wallet, which means that if someone steals it, if they lose it and if someone finds it, they may be able to break into their vault.

One solution is to put the seed in a metal device. There’s these metal devices that you put the seed in, and then you put that in your bank safe.

Didn’t the Winklevoss twins write down their seeds on paper and then fly all over the country and put them in 10 different banks and bank deposits?

Lee

I read their book recently, Bitcoin Billionaires. They split their seed into three parts and then went to 12 different bank safes and put each part in the safe. It’s hardcore. I’m surprised they even talked about it, because then people know what they did, assuming they didn’t change it. They might have changed it.

I’ve seen that you’re backing Samson Mow’s development of Infinite Fleet, a blockchain-based game, and the Litecoin Foundation also recently partnered with Atari. How do you see crypto and gaming interacting in the future?

Lee

I’ve always been a gamer. Videogames are the main reason why I got into computer science in the first place. I wanted to make games, and then studied computer science in college. It’s one of the reasons why I got into Bitcoin, because I understood it — I read the code, I looked at the code and understood it.

This is why I trusted it more than other people initially. People who don’t have a computer science background may not trust Bitcoin as much, they don’t know what’s going on behind the scenes.

In terms of gaming and tokens and crypto: before cryptocurrency, one of the most popular games — even today — was World of Warcraft. Warcraft has their gold, and people would farm for this gold and sell it, because there is actual value for a World of Warcraft gold. You can buy items and stuff in the game that is valuable. People would farm gold and the items, and sell them on the marketplace.

People who don’t have a computer science background may not trust Bitcoin as much, they don’t know what’s going on behind the scenes.

Some people in the crypto space came from that space. They were into selling World of Warcraft gold and learned about Bitcoin that way.

There’s definitely a connection with crypto today. I think there’ll be more and more interest in having in-game currencies be on the blockchain. For example, the Infinite Fleet announcement recently that they’re going to do in-game currency on the Liquid blockchain. There’s our partnership with Atari, we’re potentially looking to have Litecoin be used in a game. We’ll see about that.

In World of Warcraft, the makers of the game can print their gold out of thin air, so it can totally destroy the economy. But if you have a cryptocurrency in the game, then it’s controlled. It’s not something that any company can just print as much as they want.

Is working with Infinite Fleet and Atari fulfilling a dream of yours of being able to bring together cryptocurrency and gaming?

Lee

Yes. But the jury’s still out whether or not this will work, whether or not it makes sense for games to be using cryptocurrency. I think it has a lot of potential, but I’m not totally convinced yet.

In the end, it has to be a fun game. There’s all this hype about using blockchain for things. In the end, there has to be a compelling product. You can’t just attach blockchain to anything and it’ll become successful.

But in the end, it has to be a fun game — and then the currency is just a cherry on top to make it even better. The currency shouldn’t be the only reason people get into this game.

It’s the same for a game. For Infinite Fleet, I know Samson [Mow] has hired the best developers and game designers for it, so I think they’re going to create an awesome game. But in the end, it has to be a fun game — and then the currency is just a cherry on top to make it even better. The currency shouldn’t be the only reason people get into this game.

 Do you have a favorite crypto meme?

Lee

The Vegito 9,000 meme. It’s been so overused.

I’m also a big fan of Dragon Ball, the anime. Actually, if you can see, I’m wearing a Dragon Ball t-shirt right now with Litecoin and Bitcoin. I just happened to have some Dragon Ball crypto T-shirts that someone made.

Have you found that you’ve been more productive during quarantine, or has nothing really changed?

Lee

I would say about the same. Even before quаrantine, I’ve been working at home exclusively since I left Coinbase. I’m used to spending most of my day at home anyways. But like everyone else, on weekends I don’t go out, so there’s more time to do some stuff.

Recently, I got a VR device, Oculus Quest. I can do more social stuff on VR, which is pretty cool. Obviously, some gaming on VR, it’s pretty impressive how much VR has improved over the past few years. I was pretty shocked.

Do you think that anything during this current financial crisis has highlighted some of the positive aspects of cryptocurrency, or do you think it’s highlighted some of the ways that it’s still not fully developed?

Lee

It definitely highlighted the positive aspects, juxtaposing the Bitcoin block halving with the government printing fiat like crazy. Governments can print a trillion dollars, which it did just out of thin air — and people actually are praising them for it. 

That’s the beauty of Bitcoin: no person, company or government can actually control and just print as many Bitcoin as they want.

Whereas with Bitcoin, the blocks get halved, and then the inflation gets cut in half. That is set in stone and no one can change it. That’s the beauty of Bitcoin: no person, company or government can actually control and just print as many Bitcoin as they want. Today, we have not seen the effects of the money printing yet, but it’s inevitable if the government keeps printing money like this. The currency will just get devalued, and Bitcoin and gold prices would just go up relative to fiat currency.

This interview has been edited and condensed.

Enjoyed reading our Crypto Titan series? Catch our last interview with VC investor Tim Draper! Or check out the full list here.

About Molly CMC

Molly Jane is a content manager at CoinMarketCap. Previously the head of news at Cointelegraph, she has also contributed to Decrypt and Modern Consensus. You can find her on Twitter at @MollyJZuckerman.

3 comments on “Litecoin Founder Charlie Lee on Bitcoin Censorship Resistance and Dragon Ball

  1. Too many softball questions. I would have asked him about his bank venture in Germany and Mimble-Wimble.

  2. Rj Thermo

    Great interview very enlighting for others who don’t realy know the whole whole of Bitccoin mechanism.

  3. I alway read news on Litecoin. All I need on Coinmarketcap.

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