Charlie Lee, the creator of Litecoin, one of the earliest Bitcoin derivatives, is best known as a highly successful entrepreneur in the emerging cryptocurrency industry. Under his leadership, Litecoin has remained one of the top cryptocurrencies in an exceptionally volatile market—unlike many other altcoins (cryptocurrencies other than Bitcoin) that launched in the early 2010s and have since disappeared.
Lee developed and launched Litecoin (LTC) in 2011 (two years after Bitcoin), while he was still a software engineer at Google. In 2013, he left Google to serve as Engineering Manager (2013-2015) and Director of Engineering (2015-2017) at Coinbase, a digital currency exchange start-up. In 2017, he left Coinbase to focus full-time on the Litecoin Foundation, a non-profit he founded in 2016. As of March 2022, he continues to serve as Managing Director at the Litecoin Foundation, where his primary focus is the promotion of the awareness and adoption of Litecoin.
- Charlie Lee, the creator of Litecoin (LTC), one of the earliest altcoins, is best known as a highly successful entrepreneur in the emerging cryptocurrency industry.
- Lee has always described Litecoin as a complement—not a competitor—to Bitcoin: as “silver to Bitcoin’s gold.”
- Although based on Bitcoin’s code, Lee designed Litecoin with a few significant differences that would not only differentiate his currency in the market but also correct certain flaws he had identified with Bitcoin.
- Under his leadership, Litecoin has remained one of the top cryptocurrencies in an exceptionally volatile market—unlike many other altcoins that launched in the early 2010s and have since disappeared.
Education and Early Career
Charlie Lee was born in 1977 to Chinese parents in the West African nation of Ivory Coast, where his parents had lived since the 1960s. When he was thirteen, the family moved to the United States. After graduating from the Lawrenceville School, a prep school in New Jersey, in 1995, Lee earned both a B.S. (1999) and a M.Eng. (2000) in Computer Science from the Massachusetts Institute of Technology (MIT). Lee’s father was also an MIT graduate, and his brother Bobby Lee, another crypto entrepreneur, later became the Founder and CEO of BTC China, Bitcoin’s cryptocurrency exchange in China.
Before joining Google in 2007, Lee spent seven years as a software engineer at leading tech companies in California: KANA Communications (2000-2003) and Guidewire Software (2003-2007).
Google Career and Development of Litecoin (2007 to 2013)
In 2008, during Lee’s six-year tenure (2007-2013) at Google as a Software Engineer working on iconic products (YouTube Mobile, Chrome OS, Play Games), the world’s first cryptocurrency, Bitcoin (BTC), was invented by an anonymous programmer (or programmers) under the pseudonym Satoshi Nakamoto.
Lee has said that he was first introduced to the cryptocurrency space in 2011, when he read an article about Silk Road, an online marketplace that accepted only Bitcoin as payment. His personal economic philosophy had already made him skeptical of the Federal Reserve System, and in these pre-Litecoin years, he was exploring various investment strategies that would be less reliant on central banks, including the trading of gold. Given his expertise in computer technology and his keen interest in alternative investments, this article focused all his attention on cryptocurrency and supporting blockchain technology as the ideal avenue to attain his goals.
Lee’s subsequent correspondence with Mike Hearn, one of the developers of the core blockchain for Bitcoin, galvanized his resolve. While he was still at Google, he bought his first Bitcoin from Hearn and started mining to prepare himself to develop his own digital currency.
From Miner to Developer: Fairbix and Litecoin (2011)
Like many other developers eager to copy Bitcoin, Lee failed at his first cryptocurrency attempt. Unlike most of those other developers, he succeeded in his second attempt.
Fairbix, a blockchain payment system he and his team developed by cloning the source code from Tenebix (another early cryptocurrency), crashed within a few weeks of release in September 2011, primarily due to negative press around excessive premining—the creation of blockchain tokens before a cryptocurrency is released to the public.
Premining is a way to reward developers and early investors, but the practice can create distrust among outside investors due to the lack of transparency. To make matters worse, software bugs that left Fairbix susceptible to a 51% attack gave control of the network to miners who destroyed the value of the currency by blocking the confirmation of new transactions, halting payments between users, and reversing any transactions completed while they were in control.
Within a few weeks of the failed launch of Fairbix, Charlie Lee had incorporated the proof-of-work (PoW) protocol from Fairbix—as well as several lessons learned from that unsuccessful attempt—into Litecoin (LTC), an altcoin he released on Oct. 7, 2011.
Litecoin vs. Bitcoin
Charlie Lee has always described Litecoin as a complement—not a competitor—to Bitcoin: as “silver to Bitcoin’s gold.” Ever since the 2011 release, he has positioned Litecoin as the ideal cryptocurrency for lightweight transactions, such as online shopping, and Bitcoin as the cryptocurrency for heavyweight transactions, such as international payments. Toward that end, Lee built LTC with several similarities to Bitcoin as well as several modifications designed to help it scale more effectively.
Both Litecoin and Bitcoin are decentralized, peer-to-peer (P2P) cryptocurrencies that enable instant, minimal-cost payments anywhere in the world without a third party. Like the other altcoins that existed at launch in October 2011, Litecoin is a Bitcoin fork: a currency that took the Bitcoin source code and made a few minor changes that diverged into a separate path with a distinct coin.
However, Lee also built into Litecoin a few important differences that would not only differentiate his currency from Bitcoin in the crypto-asset market but also correct certain flaws he had identified with Bitcoin: accessibility, speed, volume, and cost.
Different Mining Algorithm: By choosing a different mining algorithm (Scrypt algorithm vs. Bitcoin’s SHA-256), Charlie Lee sought to make mining accessible to anyone with a basic computer's central processing unit (CPU)—unlike Bitcoin, which required the greater processing power of a graphics processing unit (GPU). Initially, Lee’s choice of Scrypt did allow Litecoin to be mined on CPUs, but that advantage proved to be short-lived. When mining software and application-specific integrated circuits (ASICs) for the Scrypt algorithm were developed, Litecoin miners moved to GPUs as well, and it was no longer profitable to mine Litecoin without a more powerful mining rig.
Once ASICs were developed for Scrypt, it became close to impossible to mine Litecoin profitably without an ASIC mining rig. However, Lee gives partial credit for his currency’s success to the fact that Litecoin’s transition from CPU to GPU coincided with Bitcoin’s transition from GPU to ASIC: “When bitcoin mining went from GPUs to ASIC, all the bitcoin GPUs were looking for a coin to mine, and Litecoin just happened to have transitioned from CPU to GPU at that time."
Faster Blocks, Higher Maximum Supply, Lower Fees: Frequently cited advantages of Litecoin vis-à-vis Bitcoin were designed by Lee specifically to make LTC more "spendable" than BTC: faster block creation, higher maximum circulating supply, and lower transaction fees. Not only did Lee design Litecoin to produce blocks four times faster (average interval of 2.5 minutes vs. Bitcoin’s 10 minutes) but he also built Litecoin to have four times the maximum circulating supply (Litecoin maximum of 84 million LTC; Bitcoin maximum of 21 million BTC) and much lower average transaction fees than Bitcoin.
Coinbase (2013 to 2017)
In 2013, two years after the Litecoin release, Lee left Google to accept a role that allowed him more time to work on his digital currency: Engineering Manager at Coinbase, a recently created digital currency exchange. Within two years, he was promoted to Director of Engineering.
Litecoin Foundation (Since 2016)
By 2017, Lee was ready to work full-time on Litecoin. He left Coinbase to focus exclusively on his role as Managing Director of the Litecoin Foundation, a non-profit founded “to advance Litecoin for the good of society, by developing and promoting state-of-the-art blockchain technologies.”
The Future of Litecoin
At a conference in 2019, Lee stated that his primary goal is to “create sound money.” Ever since he first heard of Bitcoin, he has believed that cryptocurrency is “a better form of money than … human civilization has ever seen.”
When asked if he foresaw central banks eventually issuing cryptocurrency, he saw no advantage in that scenario. A major benefit of digital money is decentralization, so government control would make cryptocurrency “effectively no different than a digital version of a U.S. dollar.”
He believes that eventually there be only a few cryptocurrencies (likely Bitcoin, Litecoin, and a few others) left in the market. At that point, those surviving currencies could “actually represent real value” and even become interchangeable: someone could send Litecoin and the recipient could send Bitcoin that would be converted automatically.
He anticipates that, as merchant adoption builds and user experience improves, consumers will trust cryptocurrency, mass adoption will follow, and it will be used like traditional money everywhere. “Things will get simpler, and that is when things will take off.”
How Does Charlie Lee Promote Litecoin?
Although Litecoin (LTC) has been cited as an underrated cryptocurrency and Lee is not as famous as certain other digital entrepreneurs (such as Bitcoin’s Satoshi Nakamoto and Ethereum’s Vitalik Buterin), he has demonstrated impressive staying power in a highly competitive space. His strong track record is due not only to his technical expertise but also to his status as a highly respected social media influencer with one million followers within the cryptocurrency and blockchain technology community. From his current username (@SatoshiLite) to his initial description of Litecoin as the “lite version of Bitcoin” in his 2011 announcement of the release on a Bitcoin forum—he has successfully cultivated Litecoin’s image as Bitcoin’s “little brother” to promote belief in the long-term price appreciation of the currency.
Where Can Litecoin Be Used?
One of Lee’s long-term ambitions is to make LTC as spendable as fiat currency anywhere in the world—and he and his team have made significant progress toward that goal.
In April 2021, PayPal's Venmo payment app listed Litecoin as one of the digital currencies users would be able to “buy, sell, and hold” in their personal Venmo profiles.
In November 2021, the Litecoin Foundation issued a VISA debit card that converts LTC into US dollars in real-time to allow “users to make payments anywhere VISA is accepted”— from online shopping and digital services to retailers and restaurants.
How Is Litecoin (LTC) Issued?
Historically, only governments and central banks have been trusted to issue money. Like bitcoin and other cryptocurrencies, Litecoin is a decentralized, peer-to-peer (P2P) virtual currency on an open-source global payment network, which means that it is not issued by—or even regulated by—a government.
Instead, the only way to release new LTCs into circulation is through a process known as mining. To “mint” new coins, miners in a mining pool download special software and compete with other miners to solve complex mathematic equations. The first miner with sufficient computing power to crack the code is rewarded with a block of litecoins, plus any transaction fees present in the block. Every time a new block is generated, it is validated by all the competing miners, a new mathematic equation is introduced, and another mining process begins.
How Volatile Is Litecoin?
At release, Litecoin was a strong competitor to Bitcoin. Since then, as the market became more crowded and more competitive, Litecoin’s price has waxed and waned—but LTC remains one of the most durable of the original contenders to BTC.
Litecoin (LTC) hit an all-time high of $412.96 on May 10, 2021, and an all-time low of $1.15 on Jan. 14, 2015.
On March 22, 2022, one litecoin was trading at $121.48 with a market capitalization of $8.6 billion—which put LTC in the No. 20 spot on the list of largest digital currencies by market cap.
Why Did Charlie Lee Sell All His Litecoin?
In December 2017, Lee posted on Reddit that he had sold or donated all his Litecoin holdings (except for a few physical coins to keep as collectibles) to avoid any possible conflict of interest from his position as a social media influencer. He stated that a strong motivation to get out of the currency was that whenever (and whatever) he tweeted about Litecoin, he would be “accused of doing it for personal benefit.” He claimed that even though he had “always refrained from buying/selling LTC before or after...major tweets…there will always be a doubt” about whether his posts were intended to put his “own personal wealth above the success of Litecoin.”
To avoid even the appearance of price manipulation, he decided that no longer owning "even a single LTC that’s not stored in a physical Litecoin” was the best path forward. He assured followers that he was “not quitting Litecoin” and that he would continue to “spend all (his) time working on Litecoin.” Although he declined to say how many LTC he sold or what price he received, he did state that it was “a small percentage of GDAX’s daily volume and it did not crash the market.”
The Bottom Line
Unlike many other cryptocurrency developers eager to copy Bitcoin, Charlie Lee has demonstrated impressive staying power in a highly competitive space. His strong track record is due not only to his technical expertise but also to his status as a key social media influencer with one million followers in the crypto and blockchain community.
As Managing Director at the Litecoin Foundation, Lee's primary focus is the promotion of the awareness and adoption of Litecoin. Lee believes that cryptocurrency is “a better form of money than … human civilization has ever seen.”
As merchant adoption builds and user experience improves, Lee predicts that average consumers will trust cryptocurrency, mass adoption will follow, and it will be used like traditional money everywhere.
Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns cryptocurrency.