If future generations buy their coffee with cryptocurrency, they will have globetrotting programmer Charlie Lee to thank for it.
Lee was born in the Ivory Coast, West Africa, immigrated to the United States at 13 and now lives in the Bay Area. He read a Wired article about the Silk Road black market back in 2011, when Lee was still a Google software engineer who dabbled in gold trading on the side. Intrigued, he immediately reached out to Bitcoin Core developer Mike Hearn and bought a bitcoin from Hearn. Soon Lee was mining bitcoin and buying computer equipment off the darknet.
“That was when bitcoin was $30,” Lee told International Business Times. “I fell in love with bitcoin, seeing it as really good money, better than gold.” It wasn’t long until Lee started playing around with the idea of his own blockchain cryptocurrency, inspired by bitcoin. His code copied bitcoin’s features and mechanisms in almost every way. The biggest difference was to make the tokens work faster than bitcoin and be more cost-effective.
“I really didn’t expect it to become what it is today,” he said. “Just for fun… I wanted to create silver to bitcoin’s gold.” Lee left Google and worked at the world’s most popular bitcoin exchange, Coinbase, before dedicating himself completely to his brainchild “litecoin” in the summer of 2015.
“Silver is cheaper and lighter, so the idea is people will use it more as a currency, were as gold would not be used for daily spending,” Lee said. “Over the years, you see how bitcoin transactions are costing more in fees, and litecoin transactions are still relatively cheap. In fact, that’s kind of the whole idea behind the comparison.”
Because bitcoin operates on a decentralized network run by contributors around the world, transactions are slow and users pay a portion of their tokens to use the network’s computing power. The price goes up when demand rises, just like it does with Ethereum’s gas system. Litecoin transactions cost a pittance compared to its bulkier predecessors.
Today, most people use litecoin for trading and currency exchanges. Most users still can’t pay for services with it or use it for business transactions like Ripple’s XRP. Even so, some websites like Yours.org are switching from bitcoin to litecoin payments because it’s easier. “If you have a site ready for bitcoin, it’s just like one or two code changes and you can start running it on litecoin,” Lee said. Overstock.com recently started accepting litecoin, and where that megastore site goes other retailers often follow.
There are now reportedly 50 cryptocurrency ATMs around the world that use litecoin, which reached a peak price of $56 in July. “Bitcoin, being the most secure and most decentralized, will handle the most expensive transactions,” he said. “Litecoin will be used for more everyday transactions, like buying food and coffee.”
Lee just hired two full-time employees, meaning the whole litecoin operation is run by three people, including Lee himself. Most unpaid contributors are hobbyists participating through open source communities. “We’re not really based anywhere, we’re all working remotely. Communicating online. The developers are all over the world,” Lee said. “The whole purpose of the [Litecoin] foundation is so we can raise money to hire more developers.”
Given how limited their resources are, the litecoin team has already accomplished some incredible feats. Litecoin is now one of the world’s top 10 cryptocurrencies, with a market cap well over $2 billion. The technology behind it is much more cutting edge and flexible than bitcoin itself, thanks to scaling solutions called SegWit and Lightning.
Bitcoin is like a highway, where developers argue over how to add extra lanes as traffic piles up. Meanwhile, nimble little litecoin is much closer to adding new metaphorical roads and ramps altogether, so people can hop on and off the highway whenever they need to.
“The vision is that you can easily convert between the two [bitcoin and litecoin], via Lightning networks. So you can store most of your money in bitcoin and, if you ever need to spend it, you can easily convert to litecoin and spend it,” Lee said. “Bitcoin’s fees will still be high. So if you are spending five dollars, and the fee is five dollars, it won’t be worth it.”
Lee isn’t trying to dethrone bitcoin. He just thinks it is better suited to high value transactions. “The thing about a decentralized network is, it is by nature inefficient. Every node in the network needs to process every transaction and hold a copy of every transaction,” he said. “We need to split up the work between various different currencies.”
All of this wouldn’t be possible without the work of people like Elizabeth Stark, the CEO of Lightning Labs. She’s working to implement her blockchain solution for multiple currencies including both bitcoin and litecoin. Despite her no-nonsense approach, revamping a headless infrastructure is inherently tricky. While Lee jokes on Twitter about how the bitcoin community debates updates, Stark is already working with blockchain companies like Bitfury to test network capacities.
It’s still hard to say when either currency will graduate from testing to full implementation with the Lightning Network, although litecoin has laid more groundwork so far. “Litecoin has Segregated Witness [SegWit] activated,” Stark told IBT. “It’ll be working on litecoin when we feel the software has reached a point where we feel comfortable with people using amounts of real currency. Which we will be soon.”
What if, in order to send an email, you first had to download every email that anyone ever sent? That would take forever, right? Stark and Lee want to make it possible for blockchain networks to retain some of bitcoin’s security features without all of its bulk.
Lightning is like an added layer on top of everything, which changes the way the blockchain network itself works while simultaneously making it easier to build on that network. “It enables instant clearing,” Stark said. “So you can instantly withdraw or deposit or send it to your friend or build apps.”
She told IBT litecoin is better positioned to adapt to technological advancements than many other virtual tokens. “It’s implementing a lot of things that folks in bitcoin have wanted to do, but it takes them longer to get the community on board in a kind of consensus,” Stark said. “While litecoin can be iterative, put all these cool new technologies onto it without changing the direction in which it’s heading.”
One of the coolest features the Lightning Network offers is the ability to transfer value between blockchain networks without needing an exchange or a trusted central party. Imagine handing a dollar to a cashier to buy coffee in Italy. As your hand moves, the bill magically shifts and becomes a euro. It’s not a perfect metaphor, but it illustrates what cross-network compatibility can do. “That is a new technology we haven’t seen yet,” Stark said. In the future, Lee also wants to add more privacy features to litecoin.
Many experts believe cryptocurrency will continue to spread until it reaches widespread, global adoption for daily transactions. If that dream comes true within the next decade, litecoin will have paved the way.