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Litecoin Price Falls after Segwit Confusion; Charlie Lee Explains Activation

Last Updated March 4, 2021 4:55 PM
Andrew Quentson
Last Updated March 4, 2021 4:55 PM

Litecoin has tripled in the past week, rising from $4 to above $12. The main, if not sole reason, appears to be its expected activation of segregated witnesses (segwit), a Blockstream proposal that fixes some transaction malleability vectors while allowing for layer two protocols.

Litecoin’s price over the last week

Price, however, fell sharply yesterday following a confusing series of events. Firstly, Charlie Lee, litecoin’s creator, publicly said that BW, a litecoin mining pool with around 8% network share, was not going to signal for segwit.

Surprisingly, BW responded  by saying they had not actually decided. When I asked them some weeks ago, BW gave me the same response, so I asked Lee why he said they will not signal. Lee told CCN.com:

“I have reliable sources that BW doesn’t plan to signal. At least the CEO hasn’t decided to signal just yet. And whoever runs their Twitter account may not know what their CEO is thinking. My tweet was to try to show them that the people want it. I hope I have accomplished that and made them reconsider.”

Then, Wang Chun, co-founder of F2Pool, litecoin’s biggest pool by far, surprisingly tweeted he was reconsidering segwit activation in litecoin. He credited  Gregory Maxwell for the decision, with his last tweet so far saying he will not stop signaling for segwit until 74.9% is reached. A joke, hack or serious? Who knows, but explaining segwit’s activation Lee stated to CCN.com:

SegWit doesn’t activate immediately upon the signaling percentage gets to 75%. We need on average of 75% of blocks signaling for a 2 week period. If that happens, SegWit will lock in and will activate in 2 weeks.

F2Pool could, therefore, if they wished, cause some chaos. That is, signal until 74.9% or even 75% is reached (currently segwit signaling has around 70% of hardware share) then stop signaling during that two week waiting period.

Price reacted quickly to Wang Chun’s statements, falling to around $10 from nearly $13 while litecoiners were left in a fog of confusion. A fog that continues as Wang Chun has not responded to our requests for comments.

Lee, however, says F2Pool “won’t stop signaling” before adding “Don’t know what he was thinking.” We asked him what makes him so sure. Lee told CCN.com:

“I talked to Wang Chun over wechat and he hasn’t stopped signaling. Of course, he could decide to change his mind in the future.”

If segwit does activate, then the Lightning Network will be deployed in a time estimate of “probably weeks,” Lee said, who further added “we are working with one of the Lightning Network teams on making it work on the Litecoin network.”

Featured image from Shutterstock.