Untold Stories: Charlie Lee on Litcoin & The Ultimate Altcoin Story From 2011 To Today

Few Crypto OGs have the chops of Charlie Lee. He founded Litecoin and spent his early career at Google and Coinbase. These days, he spreads the gospel of Litecoin through the Litecoin Foundation and is a respected voice on Crypto Twitter…

Charlie Shrem
Hey everyone, this is Charlie Shrem and you're listening to Untold Stories. This is a show where we dive deep into the lives and personal histories of some of crypto's most influential leaders, and find out how the crypto movement truly came to be. Let's dive in.

I really enjoyed doing this episode with Charlie Lee, the creator and founder of Litecoin. We talked about what it was like in 2011 to start an altcoin, and actually, he coined the term altcoin to be alternative to bitcoin. And the creation of altcoins back then was very different than the creation of altcoins now. And then Charlie went on to actually work at Coinbase and be part of the founding and executive team there. We kind of go into all the stories behind the who, the what, the where, the why and the when, the people Charlie met along the way, and the fascinating stories. Have a great listen.

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Hey everyone, this is Charlie Shrem. You're listening to Untold Stories. Besides for being my namesake, Charlie actually doesn't really make sense besides for having the same first name as me, which automatically makes him awesome because everyone named Charlie is awesome. Charlie Lee is famous going back many years in the crypto space, most importantly, for founding and dreaming up of the concept of Litecoin. I want to get into that. Charlie, thank you so much for coming on the show.

Charlie Lee
Yeah, thanks Charlie.

Charlie Shrem
At this point, Litecoin is around the number five spot on the coin market cap, the circulation is around $5 billion worth of tokens. What was very interesting when I was doing my research is everyone knows the term altcoin. But I would say if I would ask 10 people, "Do you know what altcoin actually means? Or what does it stand for?" I would say nine out of 10 wouldn't know the answer. What's interesting is that what I know it, is from when you were... when you had started Litecoin, you coined that term as alternative to Bitcoin, and that was very interesting how you came up with that idea, and I want to go back to the pre Litecoin days and talk about why you so eagerly wanted to create your own digital currency around the crypto space back in 2011?

Charlie Lee
Sure, yeah. brings back memories. Most people don't know about those. Yeah, I mean, I think most people today would actually think that Litecoin is the second cryptocurrency after Bitcoin.

Charlie Shrem
It'll always be the second. I'm telling you as a die hard, it'll always be second to me in my heart. And just because of I guess the way you guys and eventually the foundation portrayed it, but I want to let you answer about what was going on in your head at the time going back. Take us on the Mind of Charlie Lee going back 2011?

Charlie Lee
Back then there was Bitcoin right? The second coin I actually created after Bitcoin was Namecoin. Someone decided to…Bitcoin and try to add, try to make it into a coin that replaces DNS.

Charlie Shrem
I remember Namecoin, I didn't know you were involved in that.

Charlie Lee
I wasn't involved in that, but I've played around with it actually, when I it first came out. I think Namecoin came up early 2011.

Charlie Shrem
And then there was Purecoin and Feathercoin I remember.

Charlie Lee
Yeah. Purecoin and Feathercoin both came after Litecoin. But there was about, I would say about 10 or so coins that came before Litecoin. I'm trying to remember. There was xCoin, SolidCoin.

Charlie Shrem
What about DarkCoin?

Charlie Lee
DarkCoin came after Litecoin also. DarkCoin I think was initially called xCoin, and then renamed to DarkCoin, and now it's renamed to Dash.

Charlie Shrem
The way I remember it was that Bitcoin was worth trivial amounts, and it was really for fun scientific exploration, if you will. Like economic testing and... I wouldn't even say economic testing because that would imply like a large scale, but the users of Bitcoin back then wouldn't even be large enough to make a sample size of a proper experiment. I think what it boils down to, it was just fun. That's what it was, right?

Charlie Lee
Yeah. When I created Litecoin, it was just for fun. When I created Litecoin, bitcoins market cap was, I think only, like, less than $200 million. It's one 1000s of today's market cap. So yeah, totally didn't expect Litecoin to become what it is today. I mean, back then the community was maybe 1,000 to 10,000 people, right? I don't know If you remember in 2011 when I created Litecoin, I mean there was the first Bitcoin conference in New York. Were you there Charlie?

Charlie Shrem
That was the Bruce Wagner's conference.

Charlie Lee
Yeah.

Charlie Shrem
Yeah.

Charlie Lee
That was that was pretty crazy. I mean, it was pretty much like every single Bitcoin supporter.

Charlie Shrem
I was like, 17 years old or something. I was young in the corner. I don't even remember who... I think I just met Roger there, and maybe... I don't even remember it was so long ago, and I was so young and scared.

Charlie Lee
Yeah. I mean, I was pretty new to the space. Met Roger, Jesse Powell. Let's see who else obviously Gavin Andresen.

Charlie Shrem
It's interesting, a lot of my guests talk about that and reference that conference as a very pivotal moment as like, one of my questions was going to be who are some of the first people you met in the space? And when I asked someone who got involved in Bitcoin before 2012, it's always at that event was like the first real time.

Charlie Lee
It is. It was pretty cool. It felt to me like before that conference everyone was just, kind of knew each other online and Bitcoin was still like such a neat thing. And no one really, like it wasn't... It was very virtual and not physical at all. And that conference was the first time you actually met like, for me it was the first time I actually met someone else that was as crazy as me, that saw a potential in Bitcoin.

Charlie Shrem
Was it like a validation?

Charlie Lee
Yeah, it was definitely validation. Yeah, the other crazy people like me out there.

Charlie Shrem
For sure. I definitely got that feeling as well and I still felt crazy, but I think it gave us the... It gave us the ability to like not be afraid to talk about it knowing that there were other people, other like normal people. Because I grew up, and I'd like to know if it was the same for you. I grew up without a lot of friends socially in like school and stuff. But I had more of internet friends and my parents were, like, thought I was crazy. In fact, when I was around that year, I took a trip to Norway by myself to meet up with this group of people that I just knew online and, these gray hat, white hat hacker communities, and my parents thought I was insane. But I mean, those were my best friends.

Charlie Lee
Yeah. Well, you were insane so...

Charlie Shrem
I still am.

Charlie Lee
Yeah, definitely that conference brings back memories.

Charlie Shrem
I've been trying to actually get in touch with Bruce Wagner, but...

Charlie Lee
He like fell off the face of there.

Charlie Shrem
Around the time of my Bitcoin situation he disappeared. Yeah I think he's living in Thailand or something right now.

Charlie Lee
Yeah well he was...

Charlie Shrem
Off of all our Bitcoin.

Charlie Lee
He was pushing my Bitcoin on all his followers right? He had a YouTube channel and then my Bitcoin turned out to be one like I guess the first major scam in the space, where they stole all the all the coins that were put in that wallet.

Charlie Shrem
I think my Bitcoin was one of the first times that we... So for those who don't know my Bitcoin was a very simple... I think one of the first super simple fully custodial wallets and it was just easy to set up, and it allowed people to just do what you do on 99% of custodial wallets today but it was very early on, and I guess we shouldn't have been surprised that my Bitcoin pulled that exit scam. But the thing is Charlie, like I guess we were all still naive back then, and we were still like, "Oh, we're just friends and brothers doing this experiment thing. So we still can trust each other."

Charlie Lee
Yeah.

Charlie Shrem
And then when there was that big exit scam, it was like a big shock to us.

Charlie Lee
I mean it was the first time right? It was basically... initially people Bitcoin wasn't worth anything, so people put a lot of their coins on this online wallet that was very convenient for them. And then as the price went up, it really became worth something and then my Bitcoin decided to exit scam. Yeah, definitely a huge shock to the whole community. That was the first time that someone decided to steal all the coins.

Charlie Shrem
Why did it keep happening? As the community grew, these scams grew and they're still happening today. I feel like we're desensitized to it. So now you open up, Reddit... I don't go Reddit anymore and I'm sure you don't really much but, if you just turn on Reddit or whatever, you'll see like, "Oh, this exchange or this company is experiencing problems and they're not withdrawing." And then a week later, you see that they're offline. We brush it off now. We're like, we knew that was going to happen.

Charlie Lee
Yeah it happens like two times a year. That's kind of expected.

Charlie Shrem
Why are people still falling for this?

Charlie Lee
I think it's just that storing and protecting your own coins is hard for most people. It's not a simple thing to do. So people tend to trust others to help them people. People are-

Charlie Shrem
Do you remember the-

Charlie Lee
Yeah.

Charlie Shrem
Sorry.

Charlie Lee
People are just used to the current system where you put your money in the bank, and the bank protects it for you and is insured.

Charlie Shrem
Do you remember the early blockchain? Blockchain.info was one of the earliest mass used relatively safe wallets. Do you remember their slogan was "Be your own bank." I always thought of that as like cheeky. I would think about that, and then I realize... And I'll tell you a story I was at a VC fund office and I was that young and excited, and I was at a VC fund back in 2013 or something. I was trying to raise money for a BitInstant. I remember just being like glowing, just like, "Bitcoins amazing, cryptocurrency it's the the future. You can be your own thing. You have complete financial control." And then he literally looked at me when I finished my whole gospel, my whole spiel, the VC.

He paused, and he looked at me. You know what he said?

Charlie Lee
What?

Charlie Shrem
He said, "Charlie, I don't want to be my own bank." I was mind blown. I didn't know what to say.

Charlie Lee
Yeah. Most people don't actually.

Charlie Shrem
I didn't know that. I didn't think about that. I thought everyone wanted financial independence. So then, how do you build something... I guess we should take a step back and say I don't think that it's people that they don't want, it just... It's too difficult.

Charlie Lee
They don't understand how to be their own bank.

Charlie Shrem
Or they're scared. How do we build something where the user experience is good, but the safety and the security is still also good? How do we build something like that?

Charlie Lee
That's why people... So many people use Coinbase. It's just Coinbase makes it so easy for them, and Coinbase secures the coins for them. Although you have to trust Coinbase to not screw it up, but Coinbase does a better job at securing the coins for people then for most people than they can do it themselves. I think the solution or the path towards a solution will be like better hardware wallets, right hardware wallets that make it very easy for people to secure their own coins. But we're not there yet. It's still really-

Charlie Shrem
[crosstalk 00
16
55] Hardware wallets are still very geeky and very fun. I like them. I'm a big hardware, wallet snob. But they're like a geek... I have a whole drawer filled with them. But yeah, they're not they're not for everyone yet. I want to go back to 2011 for a second. A lot of people, not a lot of people, but, we talked to someone new and you ask them what's Litecoin? They a lot of ignorant people will say that it's just a clone of Bitcoin and it doesn't really change anything, or…could answer as like, Litecoin is bitcoins testbed. And it allows it to do novel things. But really, that's not the case. When you launched Litecoin, and back in 2011, there were a lot of of differences, right?

The hashing protocol itself was different if I recall. The transaction time for blocks was different. I think the supply was different as well. Did you do that as like more of an experiment, or did you really see that those properties of Bitcoin wouldn't work in long term?

Charlie Lee
I wouldn't say the properties of Bitcoin wouldn't work. I was trying something different. Litecoin wasn't the first coin that that tried to do like faster blogs. But one of the reasons why Litecoin succeeded is because it was launched fairly. Before Litecoin all the other coins were launched with like pre-mines, with mining rewards given to the founders and with just... Some of the... Like, if you were around at the time some of those coins had really crazy founders like doing crazy stuff.

Charlie Shrem
Well even Dash and DarkCoin had a huge developer mining and, you grew... I think [Tenner Bricks 00
18
49]. I forget the exact number wasn't it like 7 million coins or something like that?

Charlie Lee
Yeah, Tenner Bricks was the first coin that used the script mining algorithm so that it was easy to possible at that time to mind with your with your CPU. And Bitcoin at the time was mined with a GPU. But Tenner Bricks was released by an anonymous guy who pre mind 7 million coins for himself. And he claimed that he will use those coins for, I think for to do mixing coin mixing where you would send your coins to him and he would send cleans coins back to you something like that.

Charlie Shrem
Is  that what he said?

Charlie Lee
Yeah, basically, that's what's the purpose for those coins. But 7 million coins at the time was like, whatever, 99% of all the coins out there, so it was a huge pre mine. The story behind that was, people didn't like that fact. They thought the script mining was innovative, but they didn't like the pre mine. So there was a initiative pushing for basically a clone of Tenner Bricks with no pre mind at all. And that's how Fair Bricks was born. Fair Bricks was a clone of Tenner Bricks. And I did that. I was the one that basically came out and said, "I can help develop this." I mean, it wasn't that complicated, right, just cloning Fair Bricks and removing the pre mine.

That was launched, I think in September of 2011.

Charlie Shrem
Yes.

Charlie Lee
The launch had a lot of issues because the Tenner Bricks code had a lot of bugs in it, that I was unaware of before I forked it and launched it. After that whole fiasco with the Fair Bricks launch problems. I decided to just step back and say, "Why not just create another coin from scratch?" And a forth from Bitcoin, and try to copy a lot of the stuff that Bitcoin did well, and that's what happened. That's how Litecoin came about.

Charlie Shrem
What was the reception from... These were diehard communities right? This was all 99.99... It was 100% on forum.bitcoin.org.

Charlie Lee
Correct, yeah.

Charlie Shrem
It was before we even had that domain of Bitcoin talk... We didn't even have our own domain name right? We were like a sub domain, we were sub domain forums.

Charlie Lee
I actually don't remember when Bitcoin…came about.

Charlie Shrem
That was later.

Charlie Lee
Was that later?

Charlie Shrem
That was in 2013 I think or even 2012. This was surely form.bitcoin.org, I remember it, because I remember when Bitcoin talk, by they time Bitcoin talk was a thing, I was not really using the forums much anymore.

Charlie Lee
Yeah, it was forum.bitcoin.org. Yeah, I guess they moved away from that because they don't want to be the official like Bitcoin forum, so they moved to Bitcoinpart.org. But yeah, back then it was the official Bitcoin forum, forum.bitcoin.org.

Charlie Shrem
What was the reception people gave you?

Charlie Lee
The reception was... you can actually check right? The Litecoin lunch start is still there. It's actually pretty cool to go back and check what people are saying. I think a lot of people or half the people were saying like why another coin, which is pretty funny if you think about it from like from today right? Back then there was the 10th whatever it was, like around 10 coins and people were saying, "Why are you creating another one? We already have like all these points already." The other half people were quite excited about trying to... basically excited about the plan, which is to do a Bitcoin fork that is faster, has more coins in total and modeled after silver.

If you think Bitcoin is...gold Litecoin is digital silver, and that was the plan all along. I don't know if you've ever traded Bitcoin, with local Bitcoin. Like meeting a random person in a coffee shop somewhere to exchange FIAT for Bitcoin. If you've done that, you realize how slow Bitcoin is right? How slow transactions confirmations can be.

Charlie Shrem
Yeah there's like a funny story of, you're meeting someone in a Starbucks to buy some Bitcoin, and he hands you a few dollars in cash and you hand him, you give them the Bitcoin and then you sit there and have awkward conversation.

Charlie Lee
Yeah, and 10 minutes is not too bad, but sometimes Bitcoin, because of the randomness of blocks, like every now and then it takes like an hour or two for a confirmation. And you don't really trust... I mean, back then people weren't sure about unconfirmed transactions, about how easy or hard a double spend is. With someone that you've never met before, and let's say you're buying like $1,000 worth of Bitcoin or selling, you can't really trust them that they won't double spend against you. You just sit there for like an hour sometimes at that coffee shop or McDonald's or whatever and you wait for confirmation. Yeah, so Litecoin being four times faster. Having a 10 minute block for Litecoin is pretty rare, so it makes it so much... It makes the experience of getting a confirmation so much better.

I still have some physical Litecoins that I was given as gifts back in like 2013 I think it was. I'll never sell those. Make sure the Litecoin is actually still there, because there was some physical Litecoins that were-

Charlie Shrem
Oh no. Was it Liana, or Liana whatever?

Charlie Lee
Liana is good. I've actually met the creator of that coin, but there's some other coin, Coinographic that the creator just...

Charlie Shrem
No, really? I have one of those too.

Charlie Lee
Yeah, you should the check the…

Charlie Shrem
Oh no.

Charlie Lee
He kept all the private keys and stole all the coins like a few years ago.

Charlie Shrem
Oh no.

Charlie Lee
Yeah, it's pretty bad.

Charlie Shrem
You know what's interesting today? Like I said again, if you talk... This is a subject mining. Do you know people still don't understand mining. They don't understand proof of work. They don't really understand the concept of mining and the different algorithms. Do you mind taking us back to those days? Take us back to like when mining was able to be done on CPUs and eventually GPUs, and then tell me about script and why that came about? And then can you also let me know when my Butterfly Labs miner's coming?

Charlie Lee
Yeah. Sure. When I got into this space in April of 2011, Bitcoin was already not CPU minable. I mean it is, but it's not efficient enough that you would mine anything right? So you need to use GPUs to mine Bitcoin. I actually created my own GPU mining machine. I built a machine. I think, plugged in for graphics card into the machine, and it was... produce a lot of noise, a lot of heat but it was mining like... I think it was still a trivial amount of Bitcoin, but it was fun. It was almost like  you're creating money out of thin air.

Charlie Shrem
It was only mining five Bitcoin a day so you turned it off.

Charlie Lee
Yeah, something crazy like that but yeah. It became... After while as the difficulty went up it became too cumbersome to...  I mean it became too hot and too noisy to be worth it. But yeah most people turn off their machines after a while and then regret it later on when the bitcoin price shot up. But yeah, so back then the coin was GPU minable and this was before like FPGAs and ASIC came about. And yeah Butterfly Labs like you mentioned is the... was the main manufacturer of FPGA and ASIC  miners initially. I actually bought some and I received mine. Did you not receive your?

Charlie Shrem
What did you get your GPUs or your ASICs?

Charlie Lee
I got a couple FPGA machines, And then I got a few ASICs from butterfly labs.

Charlie Shrem
I never got mine.

Charlie Lee
Yeah, you just had to be lucky. They just [crosstalk 00
27
12] they went out of business like halfway through.

Charlie Shrem
I was asking Mike Caldwell about the butterfly labs on a previous show. He's waiting for his machines, and Stephen Pair as well.

Charlie Lee
I actually got a refund from them believe it or not.

Charlie Shrem
Yeah, but they were mining on our machines for like, ever.

Charlie Lee
Yeah. Well, I mean it wasn't the worst scam that I've seen in this space. So...

Charlie Shrem
True.

Charlie Lee
It was a honest. I think they were trying to do it the right way, but they just failed. They weren't out there to scam everyone. They actually had machines-

Charlie Shrem
[crosstalk 00
27
49] That's a good point. You think they had good intention?

Charlie Lee
They delivered the machines right? They actually delivered my ASICs and refunded some the ones that they didn't deliver. I think they had good intentions. They weren't out there to... They weren't trying to scam people from the start, unlike others.

Charlie Shrem
Good point.

Charlie Lee
Yeah. So I mean, building a GPU machine was hard, probably not easy for most people back then. So what script mining did was it made at least initially made it hard for GPUs to mine ScriptCoins. It was the first coin, at least Tenner Bricks was the first coin that got people back into CPU mining, right? It's pretty cool if you've never done it, where you just start up a program, right the Litecoin software and it would start mining coins in the background, and you don't have to set up a GPU box and you don't buy ASICS. So it really kind of... The reason why it mattered is back then the mining community is your community, right? The whole Litecoin community were miners.

Miners were the people that were actually supporting Litecoin and pushing for Litecoin adoption initially. And that was important.

Charlie Shrem
Why?

Charlie Lee
Because they were the ones that-

Charlie Shrem
Were holding the bags.

Charlie Lee
Kind of right? They benefited from the coin. Right? They were creating coins and they support the coin. So, yeah, in a sense, they're holding the bags, but-

Charlie Shrem
But in a good way.

Charlie Lee
Yeah, in a good.

Charlie Shrem
Because like you said, it was fair distribution. They were turning their own money and mining Litecoin, it wasn't like they were just getting it for free or something. They were investing in and they're promoting it, and that's why you said fair distribution. Let me ask you a question, do you think there's a such thing as fair distribution for proof of stake coins?

Charlie Lee
Yeah, so proof of work is as fair as we can possibly make it, but it's also-

Charlie Shrem
That's a good point.

Charlie Lee
If you're mining. You're spending electricity and turning that into coins. It's like mining for gold. Anyone can, or can go and try to dig for gold. You have to spend money to dig it up of the ground, and same for Bitcoin and Litecoin. You have to spend money, buy the hardware and spend electricity to mine Bitcoin and Litecoin. It's there.

Charlie Shrem
And time.

Charlie Lee
Right.

Charlie Shrem
Time... When people factor in mining, they forget to factor in time and time is the most finite resource we have in this world.

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Charlie Lee
A lot of people would still think proof of work is unfair because if you got into the coin late, then the mining rewards is less and there's already people who already had a lot of coins before you got in. It's pretty much impossible to do a perfectly fair distribution. I mean, what do you consider fair? Every one person having one coin? With proof of stake, that's even worse because you have to initially figure out how to distribute that stick. A lot of proof of state coins start off initially as proof of work, to distribute it fairly initially and then over time turned into proof of stake, like what…is trying to do.

There are also other coins that are proof of stake, but they initially just randomly distributed to people who have Facebook accounts, trying to try to do it in a fair way, but it's kind of... everything can be gamed. I think, was it... is it Stellar or Ripple that gave away coins to Facebook accounts, but your story is about someone creating thousands of Facebook accounts to get 1000 times the number distributed probably.

Charlie Shrem
Yeah, there's a there's a term for this, a 'civil attack'.

Charlie Lee
Yeah.

Charlie Shrem
Basic... yes, there's... BitShares and Steemit ran into a similar situation as well, with basically creating these accounts that have no incentive, so they're not finite. You just create a million accounts and you get as many coins as you want whereas if you create an account that's tied to something that can't be civilled, like a real identity or something, then you could limit... you can prevent that from happening.

Charlie Lee
Yeah, but I think everything can be game one way or another. It's a tough problem. Also...

Charlie Shrem
Sure you just have to make it economically infeasible, or disincentivize that, I guess right?

Charlie Lee
Yeah. Then also, in the end, someone is deciding how to distribute those coins. It's not fair why they get to decide how the coins are distributed. I think mining, proof of work mining is probably the fairest we can make it.

Charlie Shrem
Where does... okay, so if we... let's just say we look at it like a spectrum. Spectrums are always changing. We look at decentralization and centralization, whatever. All the way... one way you have Bitcoin, Litecoin, majority of fair distributed proof of work coins on the left or the full decentralization side of the spectrum or the scale. Then you have other proof of stake or other type of extremely unfair distribution all the way on the right side, which is the opposite end or decentralized end of the spectrum. Now, do you think or do you see the ability to have something that's even more fairer or more fair? Not more fair. More fair or fairer than the way Bitcoin or Litecoin does it now with proof of work? Is there something else? Are people even theorizing about that? Is there anything out there?

Charlie Lee
I don't think there's anything out there and I don't think people actually care. On the other side of the...

Charlie Shrem
Right. If you're making money. Why would you care?

Charlie Lee
Yeah. On the other end of the spectrum, it would be coins like Ripple, where Ripple printed 100 billion coins for themselves initially.

Charlie Shrem
Yes.

Charlie Lee
They argue that they didn't do it, and someone else printed the coins and gave it to them, but... I mean, you were there.

Charlie Shrem
Is that what they're saying? Is that what they're saying? No, that's not what they're saying.

Charlie Lee
That's what they're saying today.

Charlie Shrem
Oh my god. No, that's not... I was there. That's definitely not true. I have emails... I should release it. I have emails where they were offering me tens of millions of dollars' worth of XRP at today's valuation if I had added Ripple to BitInstant, and I sent a scathing... oh my god, dude. I sent... I should release those email. I sent a response back and on the side... so, I like Jed a lot. This is when he was there, and I Arthur Britto a lot. I think they're two brilliant people. Same thing with David Schwartz. I sent them a side email. I'm like, "This is not towards you. This emails is towards Chris Larson," but I sent an email to them. I think, actually, want to hear something funny? I think Erik Voorhees wrote the email because he was my director of marketing at the time. He wrote the email and I sent it from my own account because I was the CEO.

Charlie Lee
Yeah.

Charlie Shrem
I was like, "I don't think Ripple has any feasibility. I'm not taking your bribe. Have a nice day."

Charlie Lee
Yes.

Charlie Shrem
My investors are like, "What are you doing?" It was so funny. I should have... I don't know what I should have done, but it's a lot of money.

Charlie Lee
Well, it wasn't a lot back then. It became a lot of money.

Charlie Shrem
No, it was like 10 grand back then or something like that.

Charlie Lee
Yeah, but...

Charlie Shrem
It was just supposed to cover developer costs.

Charlie Lee
Yeah. I mean, Ripple is... These days, they're really trying to change history by claiming that they didn't create the coins. I mean, just try to not be labeled as a security. They're saying that whatever, whoever... whatever the... I think they're saying Jed, as a separate entity, created the coins and then donated it to the Ripple company today, and now they're managing the coins. Whatever the story is, what happened was that they created 100 billion coins out of thin air and basically using those coins effectively to bribe people, to give away the coins. I mean, they did a lot of giveaways, if I remember correctly.

Charlie Shrem
What's the demand then? Why is there even a price? How did they... how did Ripple get to a point... Let's look at Litecoin. Litecoin has been around for almost 10 years, dude. It's almost...

Charlie Lee
Almost eight years. Yeah.

Charlie Shrem
Was it that? I thought it was 2011. It's 2019, 2020. Okay, yeah, almost nine years.

Charlie Lee
Yeah.

Charlie Shrem
Or almost eight. It doesn't matter. The point is that it's there. It's growing. It's chugging along. You're getting your highs. You're getting your lows, but it's nice, it's growth. You're going through some growing pains which you've been helping out with the Litecoin Foundation, but that's understandable. You'll see cycles, ebbs and flows. How did X... Ripple, that is fairly new... and when I mean fairly new, you're talking two thousand... two years later, after you maybe. 2013, I forget of it the bottom-

Charlie Lee
Something like that, yeah.

Charlie Shrem
... numeration of it. How did it get such a craziness to it? Where did the Ripple army come from? Okay, you answer that first.

Charlie Lee
Yeah, so what...

Charlie Shrem
I wanted to say one more thing.

Charlie Lee
What... from... if you've been around back then, you've noticed that Ripple has always been the number two or number three coin. The strategy that they did was they own the majority of the coins. Initially that may be 99% of the coins, so only a small amount is out there as float. They have effective control of the price, but as long as they don't sell their coins, they can push the price up, and create... and market cap is... coin market cap uses the total number of coins out there.

Charlie Shrem
Yes.

Charlie Lee
They kept themselves in the... up there, number two and number three coins by doing that. It kept people thinking about them and then they basically... I consider fake it until you make it strategy, where they would claim that they're using the coin XRP for these projects, and then convince banks or other companies to support them, and they would give away their XRP in a way that's locked up. Whoever is receiving the XRP can't sell it for X number of years. That's a pretty smart strategy, and then people who actually get the XRP would partner with them and they would release press release about how they're going to use XRP, but they may eventually not use XRP at all. What matters is the marketing effect it had. People would buy XRP, the price would go up and then... and meanwhile, the company, Ripple, is selling billion dollars' worth of XRP every year and they're just using that money to fund their company. It's been quite successful.

Charlie Shrem
Why is it that some coins have their armies and others don't? You don't see a Bitcoin army. Yeah, there are some toxic people, but I feel it's more fun. At times it does flare up. You definitely don't see a Litecoin army. The Litecoin community is huge. You don't see... you used to see more of a Dash army. You don't see that anymore. You see the Ripple army. You see the Tron. You know what's worse than the Ripple army? The Tron army. If you say something negative about Tron? They come after you, man. It's like that.

Charlie Lee
I think they just have a lot of money. I don't know if they pay people to do it, but there's also... I mean, also there's a lot of bag holders for all these coins. I mean, Litecoin included. It's people who have a lot of bitcoins and they support the coin. Yeah, the Ripple army is pretty strong. The funny thing is, on Twitter if you, if you create a poll with Ripple as... or Ripple or XRP as one of the answers to your poll, that will more likely not win at the end, no matter what the pole is.

Charlie Shrem
Really?

Charlie Lee
I think they have bots that would just automatically vote for anything that has Ripple in it.

Charlie Shrem
That's so funny. I'm going to create a poll and say, I do not...

Charlie Lee
What's your favorite fruit, apple, orange, pear or Ripple? And then Ripple...

Charlie Shrem
Oh my god, I got to do that. I go to do that. Basically, so you started Litecoin and it grew, and then you did what anyone would do. You got a full-time job and you went to work for Coinbase.

Charlie Lee
Yeah.

Charlie Shrem
Tell me about that. Why did you do that? I mean, Coinbase is fantastic company to probably work for. I mean, probably one of the first companies in the crypto space to offer health insurance and a real office. What was that like?

Charlie Lee
Yeah, so I created Litecoin in 2011. Litecoin really didn't... It's a decentralized currency. It actually just chugs along by itself and there's a healthy set miners mining it. A6 came out and people were mining Litecoin. It was doing fine, so I decided to... I was working at Google at the time, and I decided to shift gears and go all in on cryptocurrency. Litecoin obviously wasn't going to pay my salary, so I was looking for a Bitcoin job and at the time, Coinbase was up and coming. They had a wallet and I just saw Coinbase as a... it had a great potential. It was trying to make Bitcoin easy to use for the mom and dad's, for grandmas or anyone, for that matter, to be able to buy... Sorry about that noise out there right now.

Charlie Shrem
No, no worries.

Charlie Lee
Yeah.

Charlie Shrem
By the way, I created that tweet and I tagged you in it. Let's see what happens.

Charlie Lee
Let's see. Yeah, so the Coinbase made Bitcoin easy to use and I thought that that was very important for the space at the time, that... because storing... the one the whole thing with the Mt. Gox and the... actually, Mt. Gox didn't happen, it happened after I joined Coinbase, but with my bitcoin wallet and stuff. It was... storing coins was really important, was really hard for people and I thought Coinbase... and buying and selling coins was hard. At the time there was local Bitcoin and then... or you can send your money via Douala to Mt. Gox to buy coins. Coinbase just made it so much easier. I thought it was a good company and decided to join them to help make Bitcoin easy to use.

Charlie Shrem
Coinbase has been able to not only last this long... I mean, I don't think people realize that Coinbase, I think, was founded in 2012, it was? I think...

Charlie Lee
Yeah, 2012.

Charlie Shrem
I remember a funny story that, it was me Roger Ver, Tony Gillespie from BitPay, Jered Kenna from Tradehill were invited over to this guy's house for a barbecue. I was like, "Roger, who's this guy that's inviting us to his house?" He goes, "His name is Brian and he works for Airbnb. He's interested in starting a Bitcoin company." I said, "Okay, sounds great." This Brian Armstrong, the CEO of Coinbase, and this was when he was first starting Coinbase. Brian has been able to lead Coinbase for so long. Coinbase has been able to maintain that apple... be the darling of the crypto space, the sexiness and that it works, and its reliability of... that you associate with Apple or MacBooks, right?

Charlie Lee
Yeah.

Charlie Shrem
And that's a fantastic thing. Of course, there... people would say there were some mistakes along the way, but no one's perfect. How does Brian deal with that? How does he go through such immense pressure that people will put on him, especially with things, like what happened with Bitcoin cash? How does he deal with that?

Charlie Lee
I mean, he does a very good job of just ignoring the hate. I mean, Coinbase has definitely gotten a lot of hate from the community over the years and he... I mean, you still have to keep your eyes down and just focus on executing.

Charlie Shrem
So far, our poll has gotten 38 votes in the past a minute and 66% is Ripple, 23% is oranges and 11% is apples. You're right. Your experiment is working so far. I'm curious to see... they're going to see tens of thousands of votes.

Charlie Lee
I'm sure a lot of people are trolling also. Non ripple army is also voting for Ripple.

Charlie Shrem
I didn't really say that it was an experiment. I'm just... I don't... I think some people will catch on, but I don't know. We'll see.

Charlie Lee
Let me see what you...

Charlie Shrem
We'll see what happens.

Charlie Lee
Yeah.

Charlie Shrem
Tell me about the Litecoin Foundation, how that's going and let's... I understand that it's hard to incentivize developers to work, and things like... The Bitcoin Foundation was actually started to do the same thing. It floundered and ended up doing something completely different, but the idea behind that was to raise money to just freely pay developers and do advertise, to continue working on Bitcoin. Thankfully, within Bitcoin, people have been able to get paid separately from companies like…Blockstream or whatever. Can that... can we do that with Litecoin? Can that happen down the road?

Charlie Lee
Yeah, so the cool thing about Litecoin is, I mean, it's... we keep our code base very similar to Bitcoin, very close to Bitcoin. We basically get all the features of Bitcoin for free. We just... whenever a Bitcoin releases new code, we merge it into Litecoin, test it and make sure everything's okay, and we can we can release it. That's the nature of open source software. A lot of times I jokingly say, all the Bitcoin developers work on Litecoin because whether or not they like it or not, they help Litecoin. That's true. Being close to Bitcoin, we can do that and it's also true that it's... over the years, there are not many people interested to actually work on Litecoin itself because Litecoin is boring. It's very similar to Bitcoin. It doesn't do a lot of many different things. It just works.

It's a boring coin. Not... it doesn't really excite developers. I've had hard time finding people working on Litecoin. I think, in the end, that's fine because we don't really need that many developers to keep Litecoin up to date. A lot of people don't know this, but Litecoin Foundation was started in in 2017. It's a fairly new foundation, set up to just support Litecoin in whatever ways we can, whether it's hiring developers or pushing for adoption. We do whatever we can with the limited amount of resources we have, so we make money from donations, a lot of it from donations, from merchandise sales and from partnerships with companies. Then we basically take all that money and just put it back into the community, put it back into the coin, whether it's hiring developers for the core software, whether it's for the mobile wallet…wallet. Or whether it's for pushing things forward with implementing privacy on the coin. And then... yeah.

Charlie Shrem
That's why I don't live in California right there, by the way. You got pianos. You got alarms. I don't know what's going on over there.

Charlie Lee
Give me... okay.

Charlie Shrem
No, don't worry.

Charlie Lee
Yeah, so... and we also do some sponsorships. For example, last year we sponsored The UFC and this year we're working with the Miami...

Charlie Shrem
Miami Dolphins.

Charlie Lee
The Miami Dolphins, yeah. Just trying to get the word out there.

Charlie Shrem
I randomly saw that, by the way. Not even associated with you. I ran... completely separate.

Charlie Lee
Yeah?

Charlie Shrem
Because I'm in Florida so I see advertising.

Charlie Lee
Did you go to the game?

Charlie Shrem
No, I don't... I'm going to be going to Miami in a few weeks for something, and I'll be at the Hard Rock Stadium, but that's a beautiful stadium.

Charlie Lee
Yeah.

Charlie Shrem
We need... you need to do the Litecoin Lounge. That would be fun.

Charlie Lee
Maybe next yea. Yeah. The Dolphins. We pushed for adoption. The Miami Dolphins, their 50-raffle said Litecoin and Bitcoin, I think starting game two. They're still working on it. It'll be cool to be able to actually spend cryptocurrency at a NFL stadium. Everything we do, we all we always push for both Bitcoin and Litecoin. I think that's one of the things about Litecoin is we... Yeah, I think Litecoin is a good complement to Bitcoin, unlike a lot of other coins. A lot of coins actually want to say they're better than Bitcoin. I think that's pretty normal in this space where they think they claim to be better than Bitcoin, but I never see Litecoin as better. Just a good alternative and a good complement to Bitcoin.

Charlie Shrem
I love it. The true altcoin. Right?

Charlie Lee
Yeah.

Charlie Shrem
There doesn't have to only be one, to counter the Lord of the Rings episode.

Charlie Lee
Yeah. I think that... I never thought that Bitcoin would be the only one. I think it's... it'd be more efficient if Bitcoin is only one, but people always want choices.

Charlie Shrem
About a year ago, you posted on Reddit that you were exiting your position, most of your positions of Litecoin, and you were deciding to step away. When I read that, and I know when other people, because it was highly talked about... other people who have been involved early in the space read that, immediately understood why you were doing that, and actually were wondering why it didn't happen sooner because you did it out of love. The question I have is, were you sad by that decision?

Charlie Lee
Yeah. I mean, it was weird to not hold Litecoin. I mean, I still have some that I use for daily purchases for testing the coin. I still have some physical Litecoins, but I'm not really invested in the coin itself, which is a weird feeling to be because it's never been the case. It's also nice to know that what I'm doing right now is just out of wanting the coin to succeed and not... has nothing to do with any... not because I want to make myself more money. By not having been…Litecoin, it's a good feeling where I know what I'm doing is the right thing to do.

Charlie Shrem
When you remove the financial incentive for motivating yourself and you're now incentivized by what, your legacy or you're wanting to do good, and to truly change the world? I mean, what gets you out of bed every day?

Charlie Lee
A little bit...

Charlie Shrem
Your family, obviously.

Charlie Lee
For sure, it's wanting to change the world. Litecoin is my... it's my baby. I want it to succeed, but definitely... I'm still definitely highly motivated. People complain about me not having skin in the game and I think that's pretty silly. Litecoin... if Litecoin succeeds, I gain the most out of it. I mean...

Charlie Shrem
That's true. When Litecoin succeeds.

Charlie Lee
Exactly. Yeah, and I'm putting... I'm working on it full time. Time is worth more to me than money. I mean, you have... yeah. I mean, I definitely have a lot of skin in the game. Yeah, I think it definitely keeps me working hard. It keeps me motivated. I'm working as hard as I've ever done, ever been on Litecoin.

Charlie Shrem
If you look at someone like a federal judge. A federal judge is not a federal judge because they make money doing it. They're a federal judge because they love the world. They love humanity and they want to be able to make the world a better place. They want their part in that. When I was being sentenced, the judge outright asked me, he said, "When your sentence is over, do you plan on getting back into the Bitcoin space?" I was nervous because I thought he was going to put some sort of ban on me being able to work in anything related to crypto when I get out of jail. I realized that honesty is the only answer. I said, "Your Honor," and you can read the transcript. I said, "Your Honor, Bitcoin is my baby. It's my legacy. It's what I was... what I feel I was put on this earth to do and I can't really see myself doing anything else.

I hope to teach people the mistakes that I made and prevent them from doing that." You know what was interesting? Charlie, he understood. He understood completely and he said, "I don't..." You know what he said? He said, "You're a visionary and I don't doubt you'll be very successful in the future." I was like, "Wow." I remember that every single day when I was in jail, every single day. I never forgot what he said.

Charlie Lee
Yeah, that's cool.

Charlie Shrem
I get what you're saying and I get why. I think now that you're free of the shackles, of being so invested in Litecoin, you're probably working harder and doing a better job without having that stress on you.

Charlie Lee
Also without having to second guess myself. Back in 2017, when the price is going up, I would make some tweets and I would sometimes ask myself, am I doing this to try to help the price go higher for my own personal benefit or is this actually good for Litecoin? Or sometimes I would post... tweet some good news about Litecoin and maybe do it, and wonder if that's actually good for Litecoin to preannounce stuff, or if it's just for a good price pump. Then once I'm not invested in it, then I know whatever I'm doing is actually good for Litecoin and not because of any price related reason. That's a different view.

Charlie Shrem
Do you think there will be a coin or a token that comes out in the next few years that will be in the top 10, or that'll have as a mass market... that will be as popular, as used, something Bitcoin or Litecoin? Do you think something that or we're past that stage now?

Charlie Lee
You're saying, do you think there'll be a new coin that would creep up the top five of the space in market cap?

Charlie Shrem
Or even just be so... even be so novel and so different, and so extraordinary, and play on any shortcomings of all the other coins, that it would just be the number one.

Charlie Lee
I don't think so. I mean, I don't think anything... Bitcoin was such an innovative thing. I don't think anything would be able to innovate on top of Bitcoin that much, to make it able to replace Bitcoin. I think Bitcoin itself can innovate, will innovate and will be able to fend off any attacks from any other coins. I think one of the most innovative thing that came out recently is Mimblewimble.

Charlie Shrem
Yes.

Charlie Lee
It's basically privacy done the right way where it can scale. It's very innovative. Mimblewimble coins aren't really doing that well in the marketplace these days. It's tough, but I think the technology is really cool and that's why I'm looking forward to adding it to Litecoin.

Charlie Shrem
I think what you're saying is you won't see new coins, but you'll see new technologies being invented or new things that could potentially make Bitcoin and Litecoin better, and then you see those... you see these coins eventually adopting these... like a Chinese buffet or a Golden Corral, or something that.

Charlie Lee
Yeah, but in a conservative and safe way. You're not going to start adding...

Charlie Shrem
How conservative and safe do you need to be?

Charlie Lee
Well, I mean, Bitcoin is a hundred, $200 billion market cap. If you screw it up, you can... the price can tank and you can lose a lot of money. You don't want Bitcoin to be... to move fast and break things.

Charlie Shrem
Not anymore at least.

Charlie Lee
Not anymore. You don't... you wouldn't want to introduce a... you wouldn't just introduce Mimblewimble onto Bitcoin and hope that it just works flawlessly. It's not something that's easy for you to change, and for good reason. We don't want Bitcoin to be...

Charlie Shrem
I agree.

Charlie Lee
Yeah, it's fine that it moves really slowly.

Charlie Shrem
Are you working on anything now that my listeners can follow you?

Charlie Lee
Well, like I said, I'm working on trying to add Mimblewimble to Litecoin, trying to make Litecoin more private and more fungible. I think fungibility is one of the main properties of money that is missing from Bitcoin and Litecoin. That's something that we need to improve.

Charlie Shrem
I agree. You're continuing to work on developing technologies to be implemented on Litecoin, and that's really amazing. I think a lot of people don't know that and that's really great. Thank you for doing that.

Charlie Lee
Yeah.

Charlie Shrem
Thank you for now being a Bitcoin developer, too, by virtue of.

Charlie Lee
Well we'll see if Bitcoin actually does something with Mimblewimble in the future. I hope it does. I think we will slowly, but surely add more fungibility to Bitcoin over time. I think that's really needed. Trying something different with Litecoin and see how it works.

Charlie Shrem
We are at over 500 votes now. You'll see a lot more, I guarantee it, because it's... this just came out a few minutes ago, but Ripple still at almost 50% of everyone's favorite food.

Charlie Lee
Yeah. I mean, Ripple is... tastes great.

Charlie Shrem
It's great. Yeah. Ripple tastes great. Charlie Lee, thank you so much for coming on the show. Everyone can follow you on Twitter at Satoshi Lite, L-I-T-E. Satoshi, the way it's spelled. Thank you so much again for taking the time and I look forward to releasing this episode.

Charlie Lee
Sure. It was great talking to you, Charlie.

Charlie Shrem
Hey, everyone. Thanks for listening. This episode of Untold Stories is sponsored by Scott Offord, the creator of crypto mining. Scott's a broker of ASIC mining gear, that helps people buy and sell their miners. He created a Bitcoin mining profitability calculator and an interactive ASIC hardware comparison chart that you can find at cryptomining.tools. It's the only free online tool for calculating profitability and days to ROI. That includes the impact of the Bitcoin block reward having. The calculator lets you put in your estimated uptime to give you a more realistic profit projections. Check it out and find Scott on Telegram and Twitter at O-F-F-O-R-D S-C-O-T-T. New episodes go live every Tuesday at 7:00 AM EST. Links to our Apple and Spotify channels or in the show notes. You can also follow me on Twitter. Charlie Shrem to continue the conversation. See you next week.