Most Influential in Blockchain 2017 #3: Charlie Lee
This is an entry in CoinDesk’s Most Influential in Blockchain 2017 series.
Strange as it might seem, Charlie Lee stills pays for parking.
On the sun-streaked streets of San Mateo, California, the man affectionately known as “Satoshi lite” feeds the meter before walking up to the front of the famed early-stage startup incubator Boost VC. The locked glass doors seem not to care they’re reflecting the face of litecoin, the $12 billion cryptocurrency that’s now one of the world’s oldest, largest and most well-known.
Once inside, though, the reception to Lee is much different.
There, venture capitalist, comic book junkie and occasional podcast host Adam Draper is quick to begin picking Lee’s brain on everything from virtual reality’s potential to the success of the viral ethereum app CryptoKitties.
“It’s one of the most impressive products I’ve seen,” Draper gushes.
Leaning back in one of the many chairs that dot the complex, Lee is slower to respond, at last referring to a tweet in which he lauded “crypto collectibles” as a worthy blockchain use case.
It’s the beginning of a pattern with Lee, whose every real-life comment seems to have a digital analog. Over the course of two interviews during the day (one with CoinDesk, the other with Draper), he’ll continue to refer often to social media, where his nearly 500,000 followers have made him one of the most beloved figures in crypto.
But his digital fandom has been all the more remarkable as its grown during a time when the technology’s pantheon of early adopters has largely been torn down, tarred and feathered, or if nothing else, exited the year all the worse for engaging in such public tactics themselves.
Even during the thick of 2017’s scaling debate, with bitcoin supporters at arms in a daily message board war over the technology’s roadmap, Lee seemed to rise above the fray.
That’s not to say he demurred or watered down his opinions – far from it.
Whether he was arguing Ripple isn’t a cryptocurrency, trolling bitcoin’s rival blockchain bitcoin cash or speaking out against speculation in the litecoin market (he would go on to sell all of his holdings), Lee appeared to walk some unseen tightrope of taste.
But if there’s some magic combination, some code of blockchain ethics he’s tapped into, Lee isn’t forthcoming with his secret. Asked just how he gets away with such an outspoken persona, he still seems to have the right answer.
“I get a lot of abuse, too,” he says.
Spend some time with Lee, though, and it’s clear what’s endeared him to so many – his clarity of expression, his modesty and his belief in the virtue of work.
Walking past walls lined with Draper’s favorite superhero slogans, it’s perhaps easy to think of these attributes as Lee’s own superpowers. And if that’s the case, Lee’s origin story begins at the end of 2016, when he finally found a purpose for litecoin, a project he seems to have started absentmindedly in 2011 and later, almost abandoned.
Created while he was working as a software engineer at Google, Lee made litecoin by simply copying bitcoin’s code (with some slight modifications designed for merchants).
But if litecoin caught on in those early days, it wasn’t for its tech. Widely heralded as the “silver to bitcoin’s gold,” it was largely the marketing that cemented both litecoin and Lee, as the slogan arguably succeeded better than any targeted toward promoting cryptocurrency (at once defining both the project and its relation to bitcoin).
So, as bitcoin rose to $1,000 at the height of its inaugural mega-bubble in 2013, litecoin followed suit, closely tracking the movement with its own rise to near-$50 a pop.
From there, though, Lee’s magic touch was largely allocated to other projects. Soon after, he would join San Francisco-based bitcoin startup Coinbase, a business that would become so consistent as to have gained recognition as the “blue chip” of the world’s most volatile market.
By mid-2015, litecoin’s future was unclear, and its market, almost inactive.
“I definitely wasn’t paying a lot of attention to [litecoin] during the time I was at Coinbase,” he recalls, believing the decision was due to the nascent state of the market at the time.
Looking back, however, he says that litecoin “wasn’t ready” to grow, and that the most crucial thing he could do for the crypto ecosystem was to help bitcoin succeed.
“I thought the most important thing was to let people own bitcoin and hold bitcoin,” he says.
But like all heroes, Lee was called into action by a foe, and in the world of bitcoin, there perhaps hadn’t been one more sinister than the technology’s struggle over its technical roadmap.
By the start of 2017, the fight that had split the developer community since 2015 had gone from bad to bleak. Almost daily, conspiracy theories seemed to emerge in which industry figures were accused of undermining the cryptocurrency for personal gain.
New funding was non-existent and development was languishing, with the market’s leading solution, a code update called Segregated Witness (SegWit), stuck in a political gridlock and unable to garner consensus.
A somewhat complex and poorly understood concept, SegWit required bitcoin users, businesses and miners to update their software to boost transaction capacity. And despite fits and starts toward approval (due to how the proposal was coded, it required a certain percentage of miners to lead the way in the software change), by the start of 2017, any consensus on the matter was beginning to seem unlikely.
“I saw bitcoin was having this scaling debate and there was all this FUD against SegWit, and I thought it was unfair and that I could do something about it,” Lee recalls.
Step one in that pursuit was quitting Coinbase. What needed to happen next was more difficult – convincing the litecoin community that SegWit was “the path forward” that could boost its market and spark a revival. And there’s reason to believe the community was persuaded.
On the news that litecoin would push through the scaling proposal, the markets responded, breaking out of the sub-$5 doldrums the cryptocurrency had been locked in since 2014 and rising back to $50.
“People bought into that and traders bought into that,” Lee says.
But despite the community buy-in, Lee wasn’t able to convince litecoin’s miners (many of whom were also large bitcoin miners) to embrace SegWit quite so easily. Most notably, the final agreement required what was effectively an eight-hour Skype call with litecoin’s developers and miners.
But in the end, the tactics worked, and within a month litecoin’s code had upgraded to SegWit.
With great power…
But it’s what happened next that appears to have had the largest and most lasting effect on Lee.
With litecoin’s efforts as an example, leading stakeholders soon sought to change bitcoin’s code through a similar effort, with investor Digital Currency Group gathering industry luminaries in New York to strike a deal. What emerged from the meeting of some 50 startups and miners was the controversial “New York Agreement,” an attempt to strike a compromise that would both pass SegWit and upgrade the protocol to allow for 2 MB blocks.
What’s perhaps been undersold about the event, though, is how much it was modeled after Lee’s own approach to scaling litecoin, a fact that’s not lost on Lee given the results in both instances were far from analogous.
While litecoin’s meeting helped galvanize a small and growing community, the New York Agreement divided and angered bitcoin’s user base. The technology’s developers not only boycotted the proceedings, but soon began speaking out against its branding as a kind of coercion.
Like many other developers, Lee describes the attempt in retrospect as tone-deaf to the core philosophies of the bitcoin movement, even if it was well-intentioned.
“They did have a meeting with most of the miners and the businesses, but that is just kind of part of the community. A lot of users follow developers, since developers are doing the job of keeping the network secure and everything. So, it failed because of that,” Lee says.
And as he did on Twitter, in interview, Lee advocates that the meeting exposed bitcoin to a new kind of attack vector, one that could be corrupted as the industry grows (and attracts even more powerful enemies).
“If governments can tell all the miners to change bitcoin into something different and that just works, then bitcoin is too fragile,” he says.
A great responsibility
As a side effect, it appears Lee is now acutely aware of the impact of his work and words. Indeed, during the interview he routinely references past statements, seldom treading on new ground.
Sharpening his chopsticks in a nearby noodle shop, Lee admits he’s erred in judgment in his public statements in the past. He’s been thinking a lot as of late about one particular tweet. Made just before the news China’s regulators had moved to take domestic exchanges offline, he quickly pulled a remark attesting it was true.
However, before the Chinese government made that news public, Lee’s statement led to a stir that some believe pushed down the bitcoin price.
“I was telling the truth, but the truth caused the market to correct. People found out the truth from me first, and they sold,” he says. “A lot of people got hurt.”
As the conversation continues, we settle into a somber pace.
Question. A pause. An answer. A drink of tea, the sound of a cup set down and onto the next. In between, Lee is as careful with his noodles (hovering them cautiously over his spoon before each bite) as he is with the conversation.
But when Lee finally asserts, the topic of choice is compelling – a recent Reddit post in which an unknown user told the story of a man who allegedly committed suicide after selling 10,000 bitcoin too early.
“That’s pretty sad,” Lee says, and, while he’s not sure if it’s true, he seems to find a larger truth in what the story is seeking to convey.
Unlike past topics, he seems to linger on the point.
“I can totally see that though,” he says. “You had, what, 10,000 bitcoin, and you just sold them for whatever reason. Now that’s like $100 million.”
At first, I don’t think much of the remark, although later it occurs to me Lee is finally letting his guard down, at least providing the answer to a question that’s long plagued the interview – namely, why he’s so unwilling to break his constructed narrative.
The answer, revealed then, is that for Lee, cryptocurrency is a serious matter, an issue of life, liberty and death.
“It will always bug you, the fact that you had $100 million and you made the wrong move,” he continues.
In no time at all, though, Lee is back at it again, this time in a Boost VC backroom that seems to double as part storage closet, part recording studio.
Like much of the Draper establishment, the room feels not unlike any friend’s basement you had in college, kegerator in the corner and the floor strewn with Nintendo cartridge games.
Now answering questions for a Boost VC podcast, Lee is back on script, with the conversation retreading again – Lee is concerned about ICO incentives; believes bitcoin is the most important cryptocurrency; and is overall optimistic about the state of the industry.
That said, the conversation isn’t without its new moments. Of note is the tinge of nostalgia now that the bitcoin price is up above $10,000. Although, Draper does most of the talking on the subject.
“Five years ago that wouldn’t be a conversation, it was, ‘My friends might be interested in purchasing some of this.’ This conversation is being well received now, and it’s being had by every crypto person and high net worth person and presidents and prime ministers,” Draper says.
“It’s fascinating,” he continues, as Lee passed an opportunity for response.
Somehow even a conversation about superpowers doesn’t turn up much interest. Lee’s answer? The ability to go back in time to buy more bitcoin.
With the podcast wrapped, the conversation spills into the hall. Lee lingers with Draper, myself and our cameraman for a few moments, just long enough to seem polite.
We’re on the steps when he turns and declares, “I need to go now.” Back sheathed in sunlight and heightened on the stairs, there’s a certainty gravity to the statement.
Quite simply, when Lee turns to leave, you believe he’s needed elsewhere.
Want more? Charlie Lee talks his philosophy toward cryptocurrency.