Cashing in on cryptocurrency? Hear from Charlie Li, the founder of Litecoin!
On 23 Oct, BLOCK71 Singapore played host to Mr Charlie Li, the founder of Litecoin, the most popular alternative currency to Bitcoin, for a Kopi Chat. Charlie shared his views and insights on Segwit, Litecoin and the future of cryptocurrency to an audience of 155. Previously, he was the Director of Coinbase before leaving the company to focus fully on Litecoin. Prior to joining Coinbase, he spent 6 years at Google working on YouTube Mobile, Chrome OS, and the Google Play Games platform. Charlie graduated from MIT with a Bachelors and Master’s degree in electrical engineering and computer science. If you would like to know more, read the takeaways we have assembled below!
The benefits of SegWit
- SegWit fixes transaction malleability so that users will not encounter a situation in which they are unable to find their transaction as the signature has been altered.
- SegWit fixes quadratic signature hashing bug and reduces the time taken to validate the transactions. This allows scaling of the cryptocurrency.
- SegWit makes signature prunable so that signatures that are no longer needed can be removed.
- SegWit makes future upgrades soft forks such as Schnorr Signatures and Confidential Transactions
SegWit derailed by fears, uncertainties and doubts
There are fears that:
1. Miners can undo SegWit and steal peoples’ money
2. SegWit is no longer a chain of signatures
3. SegWit is not a blocksize increase
4. Using SegWit might invite patent lawsuits
The Future of Litecoin
- Making the UI easier so users don’t have to understand the underlying structure (e.g. whether its on chain or off chain)
- Fungibility — Litecoin transactions have a history. Coinbase can recognize if your coins came from a dodgy source and might shut your account down. Fungibility will allow users to hide the history of a transaction.
- To make signatures more compact or aggregate signatures to allow decentralization and decrease transaction size.
Q & A (Answers by Charlie Li)
What are the differences between Bitcoin and Litecoin? What is the future direction for Litecoin?
Bitcoin is good at storing value, Litecoin is good for transactions. There is some overlap and I see the two working together to meet transactional needs for cryptocurrency. Things like SegWit and Lightning network help to make that a reality.
With regard to lightning network, how many transactions can be done per second? What are the various upgrades needed to get it to be as fast as MasterCard or Visa?
To be on par with Mastercard/Visa, we still need to do a blocksize increase in future. Lightning network still requires an on chain, you still have to open and close the payment channels. We won’t know how the network technology will be like until we actually start using it. The last estimate, to accommodate 7 billion people using Bitcoin, it would need to be like 32 MB block sizes. Maybe Litecoin can help this, not everything needs to go on Bitcoin. Litecoin will have lower transaction fees so maybe micro-transactions will happen on Litecoin lightning network as the fees are too high on Bitcoin. It’s still an experiment to see how this will all work.
How far away do you think lightning network will be? When do you think we will start to adopt atomic swaps?
The teams, working on lightning network, are still fleshing out the protocol. I think it will be another 6 months before it is usable by the average person. It could take a long time for the UI to be build up for it to be easy to use.
To your second question, I think there will still be a need for centralised exchanges. Decentralisation is by definition less efficient and fast than centralized solutions. It might be better for certain types of trades but for high velocity and frequency trades, you can’t really do it with decentralized solutions. At least, not that I know of with the current technology. It will take a while before decentralised changes will replace centralised exchanges.
How will Litecoin progress and scale with forks coming along?
Each successive hard fork will be less and less valuable. It won’t be 10% each time. I’m not worried about the forks constantly increasing, I think it will tape off. In terms of how this affects Litecoin, some people think Bitcoin cash is a competitor to Litecoin and it is, to a certain degree. And we’re just doing our best to develop Litecoin and keeping up with Bitcoin. We are creating a Litecoin Foundation and raising funds for it. The purpose of the foundation is to sponsor Litecoin and Bitcoin developers and we’re trying to make Litecoin the silver to Bitcoin’s gold.
If every country has their own cryptocurrency, how will Bitcoin/Litecoin survive in the future?
The government can print fiat tokens but these would be centralized and people won’t just start using them because the government is making them. There is still a need for decentralized cryptocurrencies like Bitcoin and Litecoin.
How is Litecoin different from Dashcoin/Monero?
Different coins are used for different things and I think there will eventually be a consolidation, in which there are some top few coins used for the transfer of value. Bitcoin, obviously and Litecoin, hopefully. Monero does privacy very well. If privacy in transactions is possible with Bitcoin and Litecoin there might not need a new coin for that. There will obviously be a lot of coins in future for a lot of different reasons.
When you see the cryptocurrency market as a whole, do you think we are in a bubble?
I can never read the market well. It seems like a bubble but it also seems undervalued. The power of cryptocurrency is undeniable and we haven’t seen of it. I’ve been in this space for 6 years now and I’ve seen many bubbles and crashes. My first Bitcoin I bought, it was at 30 dollars and then it went to 2 dollars. If I had sold, I would have lost a lot. It went to a 50, a 100 and then a 1,000, 200 and then 250 and it is 6,000 today. I don’t know if it’s a bubble now. Maybe, because it’s 5 times the previous high. I always tell people don’t invest more than you can afford to lose. The worst that can happen would be you hear a lot about of it in the news and you put your life savings in it, and then it drops 80% and you don’t have money to survive anymore. Another advice would be to do a dollar cost average buy, don’t just buy everything at once, buy a few coins a week or a month and hold it.
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