Charlie Lee: DeFi Will Bring More and More Hacks, Finance Doesn’t Need Decentralization
8btc: Please share with us the latest updates and news about Litecoin.
Charlie Lee: So in terms of development, we’ve been working hard on M web, which is the privacy fungibility feature that we’re gonna add to Litecoin, which adds a MimbleWimble as an extension block. The testnet is currently live, we’ve been testing it. It’s a developer focused testnet. If that’s all good, we’re gonna do a testnet for users to play around with MimbleWimble M web, like creating transactions and moving coins between the two – the main chain and the extension block. If all goes well, we’re gonna push it out to the code to live as a soft fork next year, early next year and then there will be a miner activated soft fork. So take some time for miners to update their software. Hopefully it will go live sometime next year. We’ve been working hard on the development side.
8btc: Anything new from the user side?
Charlie Lee: Yeah we recently announced we launched the Litecoin card, which is only in the US for now. It’s a Visa debit card that is backed by Litecoin. You deposit LTC to the card and then when you swipe the car to buy stuff, Litecoins get converted to us dollar, which gets paid to the merchant. It’s a Litecoin backed crypto Visa debit card, which the community has been anxiously waiting for a while. That we’re working on having light wallet integrated with the cards. So you can move coins from your light wallet to the card and also view transactions and card transactions and other stuff related to the card. So that’s very exciting.
Obviously, there was the recent announcement of PayPal supporting Litecoin as one of the four coins that they support from the start. The community is very excited about that, to be able to kind of introduce new people to Litecoin. PayPal has hundreds of millions of users and all, those users going to paypal.com or the mobile app will see the ability to purchase Bitcoin Litecoin Ethereum and Bitcoin Cash, which is really cool.
8btc: Is there any other like mainstream payment tools adding LTC?
Charlie Lee: PayPal is the biggest one right now. Because the through the PayPal announcement, next year they’re gonna support crypto on Venmo, which PayPal owns. Venmo is also a huge kind of peer-to-peer payment software in the US. And also they’re gonna open up crypto to all the merchants that use PayPal. Any PayPal merchants can accept Bitcoin Litecoin Ethereum and Bitcoin Cash, which is gonna be huge. They’re mostly US focused right now and I assume they’re going to expand like globally.
8btc: Great! Hope we will learn more about Litecoin more updates in the future. So we know that actually people in Chinese community, they think Grayscale’s portfolio means a lot. We know that recently Grayscale bought a lot LTC what do you think the meaning behind it?
Charlie Lee: Grayscale’s product like the GBTC the Litecoin one’s LTCN and I believe they make it very easy for institutional people to get exposure to Bitcoin and Litecoin. So’ there’s a lot of demand. You can see that from the price. The LTCN price is like 100% higher, sometimes like a few 100% higher than the actual LTC that they hold. And that’s because there’s a lot of demand coming from there. That’s good news for Litecoin. I think it opens up a lot of kind of people from institutional side to Litecoin, which is great. And I think that’s just the beginning.
8btc: We know that recently Bitcoin Cash was forked again. Compared with Litecoin, it has stay strong for about 9 years. What do you think it means for Litecoin stay strong for so many years and BCH was forked several times?
Charlie Lee: I think the community has a lot to do with it Litecoin has been very stable for 9 years since launch. It hasn’t really had any like downtime it’s been running flawlessly for 9+ years. One of the things that kind of I set out to do was to just keep Litecoin very close to Bitcoin, like not trying to change anything that’s not broken which means that it’s very similar because Bitcoin works. So kind of the philosophy is different from the Bitcoin Cash. Because of that, we haven’t had any like contentious hard forks. The community is very kind of in line with everyone. And there’s no split in community wanted to do something different. So that’s good.
Bitcoin Cash and Litecoin all trying to be kind of money. And for money, stability is very important. You can’t have your coin just split off into two coins or have infighting and have contentious hard forks every 6 months. And we’re seeing that with Bitcoin Cash and it’s really disruptive. Exchanges stop trading it and then merchants stop accepting it. Everything goes on pause when there’s a contentious hard fork. And then you see like the ABC side getting attacked by miners. It’s just a mess and it’s not good for anyone involved.
8btc: Next topic about DeFi. What do you think of the DeFi craze anything good or bad in it?
Charlie Lee: I’m not that interested in DeFi. I think lot of the DeFi stuff, there’s gonna be a lot of hacks, a lot of people losing money. It’s just the nature of this because you can’t write like perfect code. All these people trying different things, there’s just gonna be a lot of bugs. And hackers will exploit it and steal money because there’s a lot of money involved. And that’s also reason why like Bitcoin and Litecoin are very conservative, because there’s so much money involved. You don’t want to take a risk and do things that can introduce a bug that let people steal your money.
Unfortunately, with DeFi, we just gonna see more and more hacks, more and more of these exploits. And yeah and I’m not optimistic that we’ll be able to fix these problems because you just can’t write like perfect code and you kind of need that for finance. And that’s also why like traditional finance, there’s always the ability to kind of reverse transactions.
Like the stock market sometimes run into an issue where orders get executed at the wrong price and then the stock market will come and say, ok we’ll just undo the whole day’s transactions and return everyone’s money. But you can’t do that with DeFi. There’s a problem, the thief or the hacker already stole the money, you can’t claw back like a hard fork. In the end, I’m not convinced that kind of DeFi needs total decentralization. Centralized finance works well. There’s only certain things really need decentralization decentralization is good for censorship resistance. For example, stuff that needs it maybe like a gambling app would need decentralization because it would be banned and blocked by countries. But if you’re doing normal finance, let’s say a smart contract platform is written by Google or Amazon, most people would trust it. Or if it’s run by like Nasdaq, people will trust it because in the end they need to trust the kind of the institution to handle money anyway.
So decentralization in terms of finance, I don’t think is that important, but I guess we’ll see what happens with this experiment. I think it’s good that people are experimenting with DeFi, I guess we’ll see what happens.
8btc: So you just think’ it’s an experiment rather than an innovation?
Charlie Lee: It could be an innovation. I mean Bitcoin is an experiment itself, right? It’s still an experiment. Bitcoin could still fail. So DeFi is definitely an experiment right now. Some of them it’s pretty cool. I can’t deny that. But we’ll see how successful the whole space is. A lot of the success like a lot of the trade volume is only happening because some of these coins are printed in there and they’re using the coin to pay off. It’s very similar to ICO in that sense where you’re just pumping the price of the coin and people are only mining it or liquidity mining it because it’s value in the coin. It’s kind of similar to the ICO craze. I’m not bullish on that continuing.
8btc: You’re saying you don’t see any good in DeFi right now?
Charlie Lee: Nothing that is kind of that compelling. But in the end, I’m focused more on kind of the money side of things. For Litecoin, it’s similar to a Bitcoin where it’s important for it to be a stable platform, stable network and for transferring value. It just needs to do that well. Transferring value, just that one kind of thing has to be like perfect and that’s it. Then DeFi is kind of the opposite of that. It’s just doing experiments trying to do like hundreds of different things.
8btc: Do you think Litecoin blockchain is suitable for DeFi apps?
Charlie Lee: You can always do like DeFi stuff on top of Litecoin or any other chain, be it a like second layer if you want. Whether or not it’s suitable, it’s up to the market to figure out.
8btc: Talking about layer two, do LTC team or developers are working on anything like layer two solutions?
Charlie Lee: It’s not so like things like Lightning is not as critical for Litecoin as it is for Bitcoin. Because Litecoin network it’s not clogged up. But there is a Litecoin Lightning Network. It’s running. It’s not as used as the Bitcoin Lightning Network, because it’s not really needed. But if we ever get to a point, where Litecoin blocks are full, then people start using the Litecoin Lightning Network. And in a sense, the MimbleWimble M web feature is kind of like a layer two it’s an extension block, which is similar to like a side chain. So you move coins from the main chain to the extension block and you can move coins back and forth. So it’s similar to a layer two and it will scale that way also.
8btc: I think we barely hear from Lightning Network recently, since people are all focused on DeFi or something like that, can you share with us about anything new about Lightning Network?
Charlie Lee: The Bitcoin developers are a lot of them are working on a Lightning Network. I think it’s not as like exciting as the recent DeFi craze because there’s no like money to be made. So people are more excited about DeFi because there’s money to be made. Lightning is for payments and it works. It’s being worked on. I’m actually not haven’t been following very closely with Lightning been busy with Litecoin stuff. But it’s making good progress from what I can tell.
8btc: Is there anything you’d like to say to Chinese crypto community?
Charlie Lee: I’m not sure what specifically I like to say to the Chinese crypto community. I guess like keep trading Litecoin. I think liquidity is very important for a coin. So Litecoin is on all the exchanges, having high liquidity on the exchanges is key for Litecoin to succeed. And keep mining Litecoin.
8btc: Anything else you’d like to add for this interview?
Charlie Lee: For Bitcoin, we’re back to all time high. So that’s very exciting. I think this is kind of just a start because there’s so many good news around everything crypto related with companies. A lot of news I like I’m focus are more US centric. Maybe the Chinese community may not know too much about it. Like there’s a company called Microstrategy in the US that has put like half of their company treasury into Bitcoin. They believe that Bitcoin is a better form of store value than anything else than gold than stock than US dollar. They put $500 million worth of the company money into buying Bitcoin. Then you also see Square putting like $50 million buying Bitcoin. I think you’re gonna see more and more companies doing that. That’s just adding a lot more demand.
As we know, we just had the Bitcoin halving so the supply got cut in half, the new supply got cut in half. There’s all this new demand now with like even if like Grayscale increasing their fund like tremendously. The amount of coins bought by Grayscale by Square, by Microstrategy by all these companies getting in is just so much more than the supply out there. So that’s only gonna be good for the price. I’m very bullish about what would happen in the next year or two. So it’s gonna be a very exciting year or two.
8btc: So for the next year or two, what do you expect from it?
Charlie Lee: Who knows? I don’t make price predictions or try not to. I think we’re just at the start of the next bull market. It’s very exciting.