Charlie Lee created Litecoin, it is intended to serve as “silver to Bitcoin’s gold”. Charlie Lee has been in the Crypto Space since 2011, was the Director of Engineering at Coinbase from 2013-2017, but is focused on Litecoin solely at the moment and serves as the director of the Litecoin Foundation.
Interview Date : 2nd December 2020
What were some early coin launch issues?
I entered the Bitcoin space in early 2011, and around mid-late 2011, a small altcoin boom had formed. That was the first time Altcoins started to become popular as people would fork the Bitcoin code and launch their coins. The problem with many of the early Altcoins was the creators were greedy. They would pre-mine a lot of coins for themselves before launching their coins. In other words, in the genesis block of the coin, they would assign millions of coins to their own address. Later, they would promote their coin, and if the coin would become successful, they would have made a lot of money.
How was the pre-mining coin culture?
One of the early coins called Tenebrix was the first coin to use the scrypt proof of work mining algorithm, which made CPU mining possible again on a coin. The creator was anonymous and he gave himself 7 million pre-mined coins. After the launch, the coin was fairly successful, but the community wasn’t very happy with the pre-mined coins. Hence, the community pushed to create a fair version of Tenebrix, called Fairbrix. I helped the technical side of that coin; it was launched with 0 pre-mined coins. It was very much identical to Tenebrix but without the pre-mined coins. However, there were some issues with the launch and it didn’t take off. After experiencing that failed experiment, I decided to create a new coin and made sure to make it fair with 0 pre-mined coins. I didn’t give myself any coins, took all the good features of other coins like the scrypt proof of work mining algorithm to secure faster blocks and transactions, and launched it. That was Litecoin, and I call it “silver to Bitcoins gold”, and the rest is history.
Are there any ethical issues in generating a Coin?
I wouldn’t say it is “not ethical” to hold your coins, but when people complain saying “ You don’t have skin in the game”, the reality of the matter is that it is my creation and I am tied to the success of Litecoin. Now, if Litecoin succeeds, that is good for me. I don’t need to additionally tie my financial interest in the coin. It actually could be a misalignment of interest for the creator to hold the coin. For example, one could be releasing fake news, and making announcements to pump the price to profit off of. That’s not good for the success of the coin. That said, I don’t think it would be an ethical issue to hold your coin, but it depends on what you do and what your actions are as a coin creator. If you are working on your coin and your goal is to make it successful, the price will follow that.
What do you see Litecoin as?
I have been talking about Litecoin being silver to Bitcoins gold since the beginning. I think that statement is still applicable. The goal for Litecoin is to function as money, and it’s still being used as a store of value and is a means of exchange. Approximately 500 billion dollars have been moved on the Litecoin network over the years, and it has run flawlessly for the past 9 years without any downtime or issues, which cannot be said about most other coins, including Ethereum and Bitcoin. So, it is a very good tool for storing and transferring value.
Is there Privacy features to Litecoin?
Privacy is one of the aspects of Litecoin I am working on lately. It is important for money to be fungible, and you need privacy for fungibility. People don’t want to think about which coins to spend because they differ in value. Every single Litecoin of all the 84 million should be indistinguishable from each other. Unfortunately, that is not the case today which is something I am working on. This has brought us to our next project, MWEB. MWEB stands for Mimblewimble Extension Blocks. Extension blocks are similar to sidechains. It is like a sidechain that is attached to the main chain, so one MWEB block exists for every Litecoin block. Using the MWEB protocol for transferring coins allows for Confidential Transactions. With Confidential Transactions, when we send coins, no one will know how many coins were sent. Mimblewimble is also very scalable. It’s one of the few privacy-enhancing improvements that maintains scalability of the blockchain.
What is the main difference between Litecoin and Bitcoin?
The main difference between Bitcoin and Litecoin is the mining algorithm. Bitcoin uses the SHA-256 Hash algorithm for the mining hash function whereas Litecoin uses scrypt. I chose to use a different algorithm because we don’t want Litecoin miners to compete with Bitcoin miners, i.e., If Litecoin would have used the same algorithm, it would be attacked easily by the Bitcoin miners because it has a much smaller hashrate than Bitcoin, which dominates the network. We have seen BitcoinGold get attacked by SHA-256 miners, and Ethereum Classic get attacked by Ethereum miners. This happens because the smaller coins have a much smaller hash rate and a much smaller network. Thus, it’s very easy for miners to attack it. Therefore, using a different algorithm prevents miners from attacking a smaller network with the same algorithm.
What is the problem with Algorithm Dominating Networks
The other reason for why I chose scrypt is because, at that point, scrypt was only CPU minable. That was good for the initial stages of a coin when the community was basically only made of miners. As a creator, I wanted to allow anyone with a CPU to be able to join the community and the network, and start mining Litecoin. It was a place for miners and non-miners to enjoy the mining community and Litecoin community. Over the years, GPU’s emerged and the software started to run with them. Today, Litecoin is protected by its scrypt network, and it dominates the scrypt mining network with 97%, thus making it very hard for anyone to attack Litecoin.
Interviewer , Editor : Lina Kamada
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