Cryptocurrency-fueled scams seem to keep Litecoin founder Charlie Lee up at night, based on a report in Business Insider. Lee, who is an alum of both Google and Coinbase, spoke about the speculative nature of bitcoin and other cryptocurrency investing, saying that it’s not “bad” but instead a “natural progression,” adding that he sees nothing wrong with it.
But Lee, who himself has had to fight off rumors of manipulating the price of Litecoin, pointed to pervasive scams in which participants are just in it for a quick buck. Lee is quoted as saying:
“It’s quite easy for a founder to pump a coin and make it seem like it’s the latest and greatest and it will cure world hunger, and the price can go up to $10 billion. And it’s easy for whoever did that to cash out.”
As a result, people will lose money, he warned, which saddens him. Lee also pointed to the rush of ICOs, many of which are behind white papers comprised of fancy tech jargon, promising the world and raising hundreds of millions of dollars in the process. “These coins will likely just go to zero,” he said.
Fellow blockchain veteran Vitalik Buterin of Ethereum recently pointed to the social good that is inherent in the genesis of blockchain and what the “crypto community” should be focused on. Like Buterin, Lee would like to see a shift in the focus to technology and advancing the industry.
Lee in December sold his entire Litecoin portfolio, with the exception of a handful of “collectibles,” to prevent what he said could be construed as a “conflict of interest.”
Blockchain Pioneers Echo the Sentiment
Lee is not the first cryptocurrency pioneer to call out the rise of scams in the space, including upcoming ICOs. Ethereum’s Buterin has similarly railed against the unscrupulous activity, most recently lauding the efforts of one Reddit user for publicly questioning an upcoming ICO’s claims of having a Buterin association, in response to which Buterin tweeted: “This is exactly the correct way to react to an ICO claiming my involvement.”
Meanwhile, Fellow Ethereum co-founder Joseph Lubin echoed those sentiments, having recently told CNBC that many upcoming ICOs that fit the bill as “copycat” projects, with no intentions of providing value to investors. Ripple chief Brad Garlinghouse went so far as to say that much of what’s unfolding among ICOs is fraud.
Litecoin & Bitcoin
Meanwhile, fraud wasn’t the only topic of discussion highlighted in the Business Insider article. Lee created Litecoin in 2011 in many ways to improve upon bitcoin, with a focus on greater scalability and speed. Litecoin, however, appears to be more a rival to XRP than it is to bitcoin.
“So my vision for litecoin has always been to complement bitcoin — to be the payments currency. Where bitcoin would be digital gold, litecoin would be silver. It’s more useful for payments. And bitcoin would be better for store of value,” he said.
He goes on to point out, however, that Litecoin is 4x faster than bitcoin for transactions. But thanks to a different POW algorithm, cryptocurrency miners can’t mine both coins, which removes a facet of the competition.
He points to the Lightning Network as the underlying technology that will advance the payments sector, adding that it’s not a panacea and won’t combat high fees tied to bitcoin. “So litecoin I think can find its own niche to help address payment fees,” said Lee.
Litecoin, the No. 6 cryptocurrency based on market cap, at $9.6 billion, is off by a double-digit percentage today alongside all of the top 10 digital coins. Litecoin has advanced 650% since about July and is one of only a handful of cryptocurrencies that trade at Lee’s former employer Coinbase.