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Charlie Lee of the Litecoin Foundation – Cointelegraph Magazine

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“It was kind of crazy to leave Google.”

Charlie Lee was a software engineer for YouTube, which had become part of the world’s dominant technology company. He loved the start-up feel. “You get to work on really cool, new stuff, except that it’s a start-up that’s guaranteed to succeed.” Anything Google launches, he explains, gets millions of users on day one.

The Google campus was just a five-minute drive from Lee’s home, and the company offered a phenomenal salary, top-notch benefits, and a hefty stock incentive scheme to round out the compensation package.

But the possibilities of joining a young crypto exchange in San Francisco caught Lee’s interest. It was more than an hour commute one-way, with a salary and benefits nowhere close to matching what Google offered. Despite this, Lee decided that after six years of working for the massive company, it was time to try something new.

“I decided to do it because I was excited about working on crypto full-time.”

Getting in at the top

While he has since gained some notoriety for selling his Litecoin holdings at the peak of the 2017 crypto market frenzy, Lee had first-hand experience of buying at the top. He caught the crypto bug when he encountered Bitcoin and its characteristic volatility in 2011. Lee purchased some Bitcoins at the then-peak price of $30 and worked at learning everything he could about crypto. 

Soon after his initial investment, he watched the price plummet to just two dollars, but he persisted with his newfound passion. 

While working at Google, Lee spent much of his spare time on Bitcoin forums exploring crypto. Tinkering with the technology, he helped develop an altcoin dubbed Fairbrix. The tech was based on Tenebrix, a cryptocurrency which used the Scrypt algorithm for mining with a CPU. Powerful GPUs had rendered CPU mining of Bitcoin unprofitable, so Tenebrix became an attractive alternative for miners.

But Tenebrix had an all-too-familiar problem. Seven million coins were pre-mined and held by its anonymous creator, whose explanation for the pre-mine was that the coins would essentially serve as a money-laundering tool. 

“You would send him coins and then he would send you clean coins from those seven million clean coins. It was supposed to be a service to clean your coins, but who knows if that’s what’s going to happen. He basically had seven million coins he could just dump on the market and exit scam whenever he felt like it.”

The justification for the pre-mine is preserved for posterity on the Bitcointalk forum.

Lee pushed to relaunch Tenebrix with no pre-mine, calling the new solution Fairbrix. It was based on a complicated fork with numerous bugs and tons of issues at launch, he says. “Fairbrix sputtered out of the gate and didn’t do well.”

Following the failure of Fairbrix, Lee decided to create another coin, but to “do it the right way.” He branched off the proven Bitcoin codebase instead, aspiring to keep everything as close to Bitcoin as possible.

The newly launched Litecoin changed a few parameters, improving functionality and speed along with adding in Scrypt mining.

It wasn’t clear that the new coin would succeed, Lee says, as it was just one among dozens of new coins. But the “silver to Bitcoin’s gold” tagline resonated strongly with the community. The fact that it was CPU-mineable helped kickstart the network. Just about anyone could get involved with CPU mining, he says, which bolstered initial adoption.

When Bitcoin ASICs later emerged as the preferred mining tool for the dominant network, the timing was again fortuitous for Litecoin, Lee says. Just as miners were switching to using ASICs for Bitcoin, “all the GPUs that were previously mining Bitcoin switched to Litecoin.” Thus, many former Bitcoin miners migrated over to the alternative network. “It was in the right place at the right time.”

By 2013, Lee found himself fully immersed in crypto, shifting from what was once merely an open-source passion project to building solutions in a rapidly growing industry. “So, I decided to try to figure out what I wanted to do in the crypto space.”

Lee wrote a letter to Coinbase asking if they would support the growing Litecoin network. The company replied with an insistence that the focus would remain on Bitcoin for the time being, with possible support for Litecoin in the future. The conversation was fruitful nonetheless, as they expressed a need for engineers and soon hired Lee.

And crazy as it may have been, Lee left Google for something… more interesting.

Always on the move

Lee’s willingness to “go with the flow” seems to stem from events he experienced at a young age. An unstable political situation in the Ivory Coast compelled his parents to send Charlie, thirteen years old at the time, and his brother Bobby (now also an active member of the crypto community) to boarding school in America.

At the time he left, Lee was well ahead of his classmates. In his first day of grade one mathematics, his teacher sent him to the second grade, deeming him too advanced for first grade. He then spent one day in second grade, after which the teacher sent him on to third grade. 

“I basically jumped two grades in math. So a really small first-grader was taking math class with third graders. It must have looked really weird.” By seventh grade, Lee had exhausted the available curriculum.

Starting in New Jersey as an eighth grade student, Lee acknowledges, was “a big shock. My brother was there, so that helped a little bit, but still I was kinda by myself, separated from my parents.” 

During this period, Lee learned a great deal about controlling his own finances. His parents sent him an allowance enabling him to get used to budgeting and financial planning at a relatively young age. “As a thirteen year old, I learned to save for things in the future.”

He first learned about the value of sound money from his grandfather, who left China with gold bars sewn into his clothes. “It was the only way he was able to take his wealth out of China to Hong Kong.” This understanding of money enabled Lee to make a connection between gold and Bitcoin when he first encountered it.

It’s a natural progression, Lee explains. Before crypto technology’s inception, gold was the best form of money. “It’s sound money. It’s inflation-proof. Governments can’t just create more gold out of thin air like they do with fiat.”

“With crypto, people call Bitcoin digital gold and Litecoin digital silver because of the fact that it’s very similar to gold and silver in terms of its monetary properties. But it’s better than gold and silver because it’s digital. There’s no or low cost for storage compared to gold and low cost for transport. It’s next to impossible to move a lot of gold cross-country. But with Bitcoin, Litecoin, and cryptocurrencies, you can.”

Dot.com is hiring

After completing his studies at MIT in computer software and electrical engineering, Lee graduated at the peak of the dot.com boom. He was a hot commodity. “Companies were hiring like crazy back then… Offers were pretty incredible for college grads.”

Lee soon decided to join a startup, Kana, a company pegged at a “crazy” valuation of $4 billion, Lee says. “The offer was kind of incredible. If the stock price had stayed the same, the stock value that they gave would be worth a million dollars, a million and a half.” But a year later, internet companies were plummeting. Many companies fell in value by 90% or collapsed entirely. “I got in at the top, so to speak,” Lee laughs.

Kana sputtered along after the crash while a number of Lee’s colleagues started Guidewire, an automated insurance software company. Lee joined them for three years before opting for Google.

Exploring Litecoin

Following his departure from Google and subsequent stint at Coinbase as Director of Engineering, Lee returned to exploring possibilities with Litecoin. The enthusiastic community was delighted with the news. At first easing back on his hours at Coinbase, he eventually shifted to focusing full-time on his brainchild, eventually leaving the exchange to dedicate himself to the activation of the controversial SegWit scaling solution. “There was a lot of FUD around SegWit. My theory is that it came from Jihan Wu and miners trying to block SegWit because it hurt their income.”

Many in the community were unsure of the technology’s implementation, but Lee felt Litecoin was the perfect network for testing its efficacy and security. 

“No one’s going to attack a testnet because even if you succeed you can’t make money from it. You need real value to test the game theory.” 

Lee realized that if they could activate SegWit successfully on Litecoin, they could show the legitimacy of the scaling solution. “In reality, SegWit was actually very good technology that would help Bitcoin… with very little downside.”

It wasn’t easy, Lee says, but eventually he convinced Litecoin miners to activate SegWit in April of 2017, to great success. He believes this innovation led to SegWit’s eventual implementation on Bitcoin. “It made it clear-cut that there was nothing wrong with it and they should just activate it.”

About selling Litecoin at the peak…

The 2017 market peak put Lee in a no-win situation. His Twitter follower count had exploded during the market surge, and his tweets appeared to exert considerable influence on the value of Litecoin. 

Lee explained that a simple “announcement of an announcement” à la Justin Sun could cause prices to spike. “I didn’t want to have incentives to do that, to just care about the price and pump the price.”

The conflict of interest troubled Lee and he decided it would be best to divest himself of his holdings in Litecoin, much to the bitter disappointment (and vocal criticism) of the community, who questioned his commitment to the cause and wondered if he contributed to the subsequent price crash. He explains that he did not have a lot of coins to begin with, certainly not enough to crash the market, unlike some other creators who held on to pre-mined large sums of their own created coins. “I bought and mined the coins just like everyone else. The only difference is that I was early.” 

“There were thousands of people there at the beginning, probably thousands who owned more coins than I did. But being the creator and central figure of Litecoin, I figured not owning coins and still pushing for adoption, still working on it, was the better way of doing things.”

 

 

Lee admits that, in hindsight, the timing created bad optics. But, he points out, he was already financially secure by this time in his career. “I was early in Bitcoin so I was already very well off. Being relatively early at Google, Guidewire and also Bitcoin, it’s not like I needed the money.” Now, Lee says, he only cares about the price of Litecoin because he cares about its adoption.

Lee warned of the cyclical nature of the crypto market well before his sell-off, he adds. Even before selling, he tweeted that the market was very volatile and warned that prices could easily drop 90%. 

New people come in and buy near the top during hype phases, Lee says, but they’re not ready for the crashes. These same people will sell when prices plummet. “They’ll be buying high and selling low, which is quite unfortunate. If I could help it, I’d rather the price not pump that much because the fall would be devastating for most people.”

It’s hard whenever people are critical toward Lee on social media, he admits, “I probably shouldn’t engage…” He figures the best thing to do is to put his head down and just keep working on Litecoin.

Why does privacy matter if you’re not doing anything bad?

Bitcoin, Lee says, is the best form of money that humans have ever seen. “It’s gold, but better than gold.” But one property of sound money that Bitcoin is not good at, he explains, is fungibility.

Lee explains fungibility and privacy are key priorities for cryptocurrency development. For many, the issue of privacy seems irrelevant. Why, some might ask, does privacy matter if you’re not doing anything illegal? 

He offers an example to illustrate the problem:

Someone buys 20 bitcoins on an exchange and withdraws the funds to a wallet. The next time they use Bitcoin for something from that address, the original 20 Bitcoin input remains visible. “You could see on a block explorer that I sent, whatever, 0.1 BTC to someone and it came from an input that has 20 Bitcoins. So the guy who received it saw that I have 20 Bitcoins. They can go back and look at my transactions and try to figure out exactly how many I have and it wouldn’t be too hard to figure out…” 

This lack of privacy is not good for money, he explains. “You want money to be fungible. You don’t want to give someone twenty dollars and for the merchant to know you have $100,000 in your bank account. Or that your paycheck was whatever amount.” Financial privacy is important, he says, “even if you’re not doing anything bad.”

More fungibility, Lee says, is always good for money.

Lee is on a mission to make transactions more private with MimbleWimble. The technology is not perfect, he says, but it’s “good enough.” The key characteristic, Lee says, is that it is scalable, an important consideration for blockchains. 

MimbleWimble will be implemented on Litecoin using extension blocks, like a sidechain that is attached to the main chain. Every block has an extension block that holds MimbleWimble transactions. Users can move coins between the two chains with everything remaining private on the sidechain. The funds can then be withdrawn back to the main chain where transparent transactions take place.

Unlike SegWit, Lee is doubtful that MimbleWimble technology will ever come to Bitcoin. Unless it works perfectly on Litecoin and shows that it is, indeed, the future. “I don’t think it will come to Bitcoin in that form, but we’ll see. It’s good to be able to experiment on it.”  

Lee plans to continue working on Litecoin, but says he will eventually step away when the time is right. Having him around is both good and bad for Litecoin, he says. Being a central influence for the cause of the Litecoin network, Lee can push to get things done more easily and efficiently than the more decentralized Bitcoin development community could ever do. But this also makes Litecoin more vulnerable.

“Let’s say the government wanted influence on Litecoin, they can put pressure on me. Or if I start doing something bad, I can really hurt Litecoin. Eventually, when Litecoin doesn’t need me anymore, when it’s more mature and decentralized, it will be best for me to step away, but until then I’ll do whatever I can to help it succeed.”

The king of crypto

Bitcoin is still the king of crypto, Lee insists:

“I try to help Bitcoin when I can.” 

The next big thing for Bitcoin? An ETF, Lee says. “You need to make it easy for anyone to have exposure to Bitcoin… There’s a lot of money out there that can’t get exposure to Bitcoin because there’s no easy way.” Lee figures it’s only a matter of time. “Even the gold ETF took a while. It will take some time, but it will happen eventually… We just need more history and more, bigger exchanges you can trust.”

Even with the mass adoption of Bitcoin, Lee believes there’s still plenty of space in the market for Litecoin. It offers cheap, fast transactions, Lightning Network compatibility, and the ability to perform atomic swaps between Litecoin and Bitcoin.

“In the future, I think people will use money without even knowing what the underlying technology is. Whether it’s the Bitcoin network, whether it’s Lightning, whether it’s Liquid, whether it’s the Litecoin network or anything else. In the end, that’s going to be abstracted away from the user. All they care about is sending value.”

 



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Tesla buys BTC, Mastercard supports crypto, DOGE founder speaks out

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Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.

Top Stories This Week

Bitcoin hits all-time highs as Tesla invests $1.5 billion

The past week is going to go down as one of the best in Bitcoin’s history. It all began when an SEC filing revealed Tesla has invested $1.5 billion in BTC and planned to start accepting crypto as a payment method.

BTC’s price immediately leaped to record highs on the news, surging by 20% in 24 hours. The announcement came weeks after Elon Musk added #bitcoin to his bio and revealed he supported the cryptocurrency.

Tesla’s Bitcoin exposure represents about 7.7% of its gross cash position, and the news has sparked hopes that other major corporations will follow suit. Galaxy Digital’s Michael Novogratz predicted that “every company in America” will emulate the electric vehicle maker by allocating part of its balance sheets to BTC.

But some treasury experts have been left scratching their heads over the change in Tesla’s investment strategy, with critics describing the move as “unusual” and “risky.” JPMorgan also piled in and said the purchase might not trigger a ton of similar investments.

 

Mastercard announces support for crypto on its network in big week for adoption

Tesla was just the tip of the iceberg, with a flurry of announcements proving that Bitcoin is now firmly in the mainstream.

Mastercard unveiled plans to start supporting crypto this year, paving the way for almost 1 billion people to spend digital assets at more than 30 million merchants. The company said the move was about giving its customers choice.

Elsewhere, PayPal revealed that its crypto service is going to be rolled out in the U.K., making it the first international market since a successful launch in the U.S. last fall.

Twitter, home to crypto-friendly CEO Jack Dorsey, confirmed it is looking into how it might pay employees who wish to be compensated in Bitcoin. Chief financial officer Ned Segal added that the social network is exploring whether it needs to have BTC on its balance sheet.

There was more to come. BNY Mellon, America’s oldest bank, announced that it will offer crypto custody services for institutional clients. Its chief executive, Roman Regelman, told the WSJ: “Digital assets are becoming part of the mainstream.” Other major banks, such as JPMorgan, now believe they’ll eventually have to get involved in BTC.

Speculation is now growing that Apple will be one of the next companies to embrace Bitcoin. The cherry on top of the cake came when the crypto-focused fintech platform BitPay revealed that card owners can now pay for goods and services using Apple Pay.

Key Bitcoin price metric signals traders are positioned for $50,000 

BTC surged beyond $43,000 without breaking a sweat on Monday, besting last month’s all-time high of $42,000. As the week progressed, Bitcoin managed to hit $48,900.

Many high-profile analysts openly predicted last year that $50,000 was a realistic price target for 2021. Just six weeks into the year, BTC has come tantalizingly close to this level.

Despite Bitcoin’s value trebling in the space of just three months, several crypto traders believe that the scene remains exceedingly bullish… and those looking for a local top might end up being disappointed.

One analyst, Cheds, told Cointelegraph: “In my view, bulls are still in complete control, and every day, we get more news of institutional adoption and demand and that, more than anything, will be the driving force.”

Another, CryptoWendyO, described $50,000 as “inevitable,” adding that a Bitcoin tweet from Musk could send BTC to $54,000.

Ethereum hits a new all-time high as CME futures go live

ETH broke $1,800 this week, setting new records several times along the way. All of this came as Ether futures made their long-awaited debut on CME.

It’s also been a very lucrative few days in the altcoin markets. Cardano has surged 71% over the past seven days, and Polkadot is up 49%, with Binance Coin crushing the competition after clocking gains of 103% in the space of a week. Even XRP managed to break $0.60 once again, which has the Sword of Damocles hanging over its head.

BNB’s gains are undoubtedly linked to the record levels of traffic coming to the Binance exchange, with the platform suffering an outage on Thursday as it went down for maintenance.

The total value locked in decentralized finance also managed to crack $40 billion this week. However, much of this surge is likely down to the soaring value of Ether rather than a dramatic explosion in activity.

 

Founder of Dogecoin sold everything in 2015 for “a used Honda Civic”

Not everyone is rolling around in $100 bills as a result of the crypto bull run. Dogecoin founder Billy Markus has revealed that he sold off his DOGE stash in 2015 for an amount equivalent to a used Honda Civic.

All of that means that he missed out on the Dogecoin mania that has helped the joke cryptocurrency gain 900% since late January, fueled by tweets from Elon Musk.

Writing on Reddit, Markus said that he can’t comprehend the prospect of DOGE ever reaching $1, writing: “That would make the ‘market cap’ larger than actual companies that provide services to millions, such as Boeing, Starbucks, American Express, IBM.”

Musk recently revealed that he had bought some DOGE for his nine-month-old son so he can be a “toddler hodler,” but there are fears that his days of tweeting about crypto could be numbered. Legal advisors have warned the billionaire that his social media activity and public statements could come under scrutiny from the SEC.

 

Winners and Losers

 

At the end of the week, Bitcoin is at $47,592.20, Ether at $1,836.68 and XRP at $0.60. The total market cap is at $1,477,578,548,979.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Avalanche, BitTorrent and The Graph. There’s just one altcoin loser in the top 100 this week: Ampleforth.

For more info on crypto prices, make sure to read Cointelegraph’s market analysis

 

Most Memorable Quotations

“Cryptocurrency has become a worldwide transaction of which you cannot even identify who owns what. The technology is so strong that I don’t see the kind of regulation that we can do. Bitcoin has made our currency almost useless or valueless.”

Sani Musa, Nigerian senator

 

“Elon Musk has exposed Tesla to immense mark-to-market risk.”

Peter Garnry, Saxo Bank head of equity strategy

 

“I see the promise of these new technologies, but I also see the reality: cryptocurrencies have been used to launder the profits of online drug traffickers; they’ve been a tool to finance terrorism.”

Janet Yellen, U.S. Treasury Secretary

 

“New account registrations are still open, not sure for how long. Also seeing ATH on this. Better get an account soon.”

Changpeng Zhao, Binance CEO

 

“It would not be surprising — given the focus on the chief executive’s tweets, Bitcoin pricing and recent dramatic market moves — for the SEC to ask questions about the facts and circumstances here.”

Doug Davison, former SEC enforcement official

 

“Digital assets are becoming a more important part of the payments world. We are here to enable customers, merchants and businesses to move digital value — traditional or crypto — however they want. It should be your choice, it’s your money.”

Mastercard

 

“Bought some Dogecoin for lil X, so he can be a toddler hodler.”

Elon Musk, Tesla CEO

 

“The main issue with the idea that mainstream corporate treasurers will follow the example of Tesla is the volatility of Bitcoin.”

JPMorgan

 

“We’ve done a lot of the upfront thinking to consider how we might pay employees should they ask to be paid in Bitcoin, how we might pay a vendor should they ask to be paid in Bitcoin, and whether we need to have Bitcoin on our balance sheet.”

Ned Segal, Twitter chief financial officer

 

“Markets are going up heavily, but we’ll be seeing some downwards momentum as well. Nothing goes up in a straight line.”

Michaël van de Poppe, Cointelegraph Markets analyst

 

“I wouldn’t be surprised to see there being almost some sort of a race now — you have Elon Musk, you have Michael Saylor, Jack Dorsey. You’re gonna see a lot of other visionary leaders in disruptive companies actually realizing that it’s really moved from ‘why’ to ‘why not.’”

Michael Sonnenshein, Grayscale CEO

 

“The target for consolidation is near $52k, where I’m expecting a bit of a correction but the measured move overall should take us towards $63,000.”

filbfilb, Cointelegraph Markets analyst

 

“Any wallet that won’t give you your private keys should be avoided at all costs.”

Elon Musk, Tesla CEO

 

“Central banks should ban the trading of it, and force anyone who holds Bitcoin and wants to use it in any transaction, to exchange it for another currency that does not have such a damaging side effect.”

Nick Boles, former British MP

 

“ETH futures go live on the CME today. This is huge. This is a bridge to institutions. This is a green light from U.S. regulators. ETH is becoming globally accepted commodity money.”

Ryan Sean Adams, Ethereum researcher

 

“If [Apple] decides to enter into the crypto exchange business, we think the firm could immediately gain market share and disrupt the industry.”

Paul Steves, Royal Bank of Canada Dominion Securities

 

“We expect to begin accepting bitcoin as a form of payment for our products in the near future.”

Tesla

 

Prediction of the Week

Bitcoin price poised to hit $63,000, says trader filbfilb

The popular analyst filbfilb has declared that “the game has changed” for Bitcoin — and has revealed what he thinks will come next for the world’s biggest cryptocurrency.

The Cointelegraph Markets contributor has said that he’s anticipating “a bit of a correction” once BTC hits $52,000 but believes “the measured move overall should take us towards $63,000.”

And on the matter of corporate adoption, he wrote: “I really don’t think people understand that S&P 500 companies owning Bitcoin means that by default people’s pensions are exposed to Bitcoin. The % of people invested in Bitcoin has already reached the masses, they just don’t even know it.

 

FUD of the Week 

Ethereum-based social media project shuts down as ETH fees approach new highs

An Ethereum-based project has ceased development due to rising gas prices, as the cost of transacting on the blockchain continues to push new highs.

Unite, which aimed to offer social media tokens, said the original idea for the project has been rendered unfeasible by the recent spike in fees, with the average cost of using Ethereum rising by a staggering 35,600% since last January.

The startup intended to allow social media users on sites such as Twitter and Discord to distribute Ethereum ERC-20 tokens to their audience and community. Developers also confirmed that they have decided against building the platform on a layer-two solution.

FTX CEO claims competitor responsible for racist messages delivered to Blockfolio users

Blockfolio’s Signal feed was briefly compromised this week, with some users receiving racist messages within the company’s app.

Now, FTX CEO Sam Bankman-Fried, who acquired Blockfolio for $150 million last August, has shed light on what happened following a security review.

He claimed that the offensive content was produced and published by a competitor exchange that maliciously gained access to someone’s account.

Bankman-Fried didn’t name the culprit but stressed that funds were not jeopardized at any time. He also confirmed that Blockfolio has now fixed the vulnerability that led to this situation.

The executive has been praised for his handling of the situation, and he has apparently added $10 to the trading accounts of affected users, as well as donating to organizations dedicated to fighting racial and societal injustice.

India’s crypto ban is coming, hodlers to be given transition period: Bloomberg

An unnamed senior finance ministry official has claimed that India will soon completely ban crypto assets.

It’s reported that the use of cryptocurrency in all forms will be prohibited under the new law — meaning transacting through foreign exchanges won’t be allowed either.

Crypto exchanges have reacted with dismay to the news. Unocoin co-founder Sathvik Vishwanath said: “If government goes ahead with banning all cryptocurrencies, except the one backed by the state, it will not make sense to continue our business in India. But we’ll have to wait and watch.”

The Indian government has been determined to clamp down on crypto use after the supreme court overturned the RBI’s blanket ban on local banks providing services to businesses dealing with crypto.

 

Best Cointelegraph Features

Moment of truth? Tesla purchase is the moment Bitcoin has been waiting for

Despite some expected near-term volatility, Tesla’s exploration of the crypto realm will likely help the industry scale up to new heights.

Coincidence? Company stocks rise after they buy Bitcoin as a reserve

The market caps of most companies that bought Bitcoin have increased recently, but is that solely thanks to BTC?

A new trend? Non-crypto CEOs and celebrities embrace Bitcoin on Twitter

Are business leaders signaling the technological future they believe is coming to pass — an international and decentralized one?





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Necessity is the mother of adoption – Cointelegraph Magazine

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Binance’s Changpeng Zhao describes the Philippines as “one of the most active crypto communities in Asia” and it’s the perfect way to sum up the country’s blend of high adoption amid relatively low affluence.

With GDP spending power of less than $10,000 per head each year, this nation of 7,100 islands is far from a major contributor to worldwide exchange volumes. But in terms of day to day use and enthusiasm, a significant proportion of Filipinos appear to be leapfrogging directly from a cash-based economy to the future of fintech.

The country boasts 17 licensed digital currency exchanges, and tens of thousands of pawn shops and convenience stores happily accept cash deposits and withdrawals for various crypto exchanges and apps. You can buy Bitcoin with cash at any of the 3,000 7/Elevens in the land via Abra, and one in seven adults use the blockchain-based crypto and digital payments app Coins.ph. That’s a level of market penetration comparable to some of the most well-known payments apps in the world.

Crypto regulations are clearly defined and broadly favorable, and special economic zones such as the ‘Crypto Valley of Asia’ in Cagayan, and the Clark Freeport Zone, compete to attract international blockchain projects. In fact, the International Monetary Fund named the Philippines one of the ten best countries in the world in which to develop a blockchain or cryptocurrency project. Widespread high-level English language skills and relatively low wages have also seen Filipino workers become a favored choice as remote staff for blockchain projects.

Swapping cash for crypto

The growing embrace of fintech and blockchain comes as much from a pressing need to modernize as anything else. It’s still a cash-based society where 71% of adults don’t have a bank account. Even before the pandemic, one in five people lived below the poverty line, with many relying on cash in hand jobs and living from day to day.

But with more active cell phone connections than people, there are big opportunities to change the game. By 2019, 10% of the population was already using cryptocurrencies to make payments. Leah Callon-Butler, the director of Emfarsis Consulting in Clark, says fintech can dramatically change lives in the country:

“People are just like, ‘Whoa, mind blown — this is going to save me half a day because I don’t have to go all the way to the bank during business hours and take three journeys on public transport and then wait in line for an hour and cash the damn thing and then go all the way home. I could do this on my phone.’”

Callon-Butler was herself unbanked when she arrived in the Philippines in 2018 to work with the local staff for an international crypto project. Like many, she turned to the blockchain based Coins.ph platform. “Coins.ph changed my life,” she says, adding: “I realized I could use it to deposit Bitcoin or Ethereum and I could buy mobile load, I could pay bills, transfer money to other people, it was just a lifesaver. It’s very easy to use and very customer centric.”

Crypto makes life easier

In the past two years alone, Coins.ph claims to have doubled its user base to 10 million people, out of a total adult population of 72 million. Founded in 2014, it seeks to make digital transactions easy, with users able to sign up quickly with a mobile phone, email address and ID selfie and then withdraw or deposit cash at 33,000 retail partners. The app offers banking, bill payments, remittances and online shopping, all using either pesos or cryptocurrency.

A spokesperson for the company told Magazine that more people had started using the platform since the beginning of the pandemic: “We’re starting to see a positive shift as digital payments gain traction – a trend accelerated by the global pandemic,” they added: “More people are adapting to crypto, online banking and more.”

Blockchain is also helping undercut the high cost of remittances. Around 10% of the GDP of the Philippines comes from the 10 million expatriate Filipinos who work overseas and send money back home to support their families. But wiring money via traditional routes comes with high fees — an average of 6.9% for a $200 transfer — leaving a big market opportunity for companies including PDAX, BloomX, SendFriend, Rebit and Coins.ph to transfer funds for a fraction of the cost using crypto, that can be withdrawn as cash at thousands of shops. The spokesperson says:

“We’re seeing growing interest amongst users in using crypto as a convenient option to transact – particularly cross-border. We see digital remittances – including blockchain-based remittance – as a significant opportunity. COVID-19 is a key driver of the growth we’re seeing, but we expect this trend will continue beyond the pandemic.”

Coins.ph would not provide a breakdown on the number of users who transact in cryptocurrencies, versus those who use fiat. But Mike Mislos, founder of the local Bitpinas crypto news website, estimates that it’s a significant proportion. “I’m also part of some groups on Facebook and like half the people are using it for normal financial transactions and half the people are also using it for cryptocurrencies,” he told Magazine.

2023 goals you can bank on

The increase in user numbers at Coins.ph comes in the context of a wider drive to overhaul the economy. Realizing how inefficient the current cash-based, unbanked economy is, the Bangko Sentral ng Pilipinas has unveiled an ambitious roadmap with a goal for 2023 of getting 70% of citizens a bank account, and switching 50% of retail payments to digital.

The pandemic has accelerated progress on this front, due to the “general community quarantine” and “enhanced community quarantine” restrictions that have kept many people at home since March. Around 14 million people in Manila have been under strict rules for almost eleven months now with the latest deadline due to expire, and likely extended once again, on January 31. The Philippines has seen half a million cases and just under 10,000 deaths. 

“It appears the target has been accelerated because of the pandemic because there’s absolutely no choice but to do the transactions online because of lockdown,” as Mislos explained.

Bigger than payments

The local blockchain industry isn’t just confined to exchanges and remittances though. There’s payroll service Paylance, real estate transaction platform Qwikwire, and a coworking space BlockchainSpace, that also offers industry events and training. Manila gaming company Altitude Games is fast becoming a local leader in blockchain-based virtual worlds, creating the NFT-powered Battle Racers game for Decentraland and has Mushroom Mania for The Sandbox in development.

One of the most well-known companies is Satoshi Citadel Industries which has been developing its blockchain ecosystem since 2014. Services include remittances (Rebit) crypto purchases and a wallet (Buy Bitcoin, BTC Wallet) and international stock purchasing platform (Keza).

Even Binance is making a push into the Philippines, having hired Coins.ph’s former head of cryptocurrency Colin Goltra as country director, and launching P2P Bitcoin trading with pesos in the summer of 2020. Binance also acquired a local payments company Swipe, to launch crypto to fiat credit cards in various regions around the world.

Mislos says there was probably more interest in crypto in the Philippines than elsewhere in the region, with the exception Singapore and Vietnam. He cites favorable regulations, including a regulatory sandbox for emerging companies, as part of the reason. “I think more people are interested in cryptocurrencies than other countries here in South East Asia,” he says, adding:

“The regulations from the central bank are more welcoming. I don’t think there are many more countries in the world who have as much potential and regulatory clarity at the moment as the Philippines.”

In July, Union Bank teamed up with exchange PDAX to enable everyone, including the unbanked, to invest in retail Treasury bonds with as little as $100 via blockchain at Bonds.ph. The government is also in the process of fine turning regulations with the Blockchain Digital Technology Act.

But not everything is full speed ahead for cryptocurrency in the Philippines. While the central bank has seriously examined a CBDC or ‘digital peso’ it recently shelved plans to launch one until at least 2023. 

There was also considerable excitement in 2018 over a partnership between a developer and the Cagayan Economic Zone Authority to build the ‘Crypto Valley of Asia‘, situated about 400km north of Manila. While dozens of international blockchain and fintech companies have reportedly received licenses, and an $80 million airport was announced in early 2020, things have gone quiet in recent months.

“During this pandemic, I don’t think they are able to focus on that,” Mislos says. “But the last time I checked they were still on.” So it seems this will be a long term project, with three phases planned to roll out over ten years.

What does this year hold?

With 2021 already upon us, will this year see an improvement in the country’s fortunes? Sadly, the signs don’t appear that promising with Moody’s Analytics predicting that due to “deep recession and uncertain fiscal support of policy makers”, the Philippines will be the last country in the Asia Pacific to recover from the pandemic’s economic effects. 

Adding to their woes, the Philippines is pinning its Covid-19 relief hopes on 50 million doses of the Chinese made Sinovac, which is reportedly not only less effective than other vaccines, but only a third of Filipinos are willing to take it. So for the time being, the shift to remote work and digital transactions seems to be a necessity rather than a choice.

Part Two of our ‘Crypto in the Philippines’ special report lands next week and looks at the ethics of hiring offshore Filipino employees for international blockchain projects.



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BTC crash, DOT crushes XRP, man risks losing $262M: Hodler’s Digest, Jan. 10–16

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Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.

Top Stories This Week

Bulls buy Bitcoin’s $35,000 support retest as altcoins push higher

Scream if you want to go faster. The crypto markets have been a rollercoaster ride this week — with Bitcoin’s price falling by more than $10,000 to lows of $30,549.60 on Monday.

Analysts maintained that the correction was “healthy and necessary,” with the sharp sell-offs prompting the total crypto market cap to fall by more than $200 billion

ExoAlpha CIO David Lifchitz said the crash “would purge the excessive growth of the past 10 days, allowing Bitcoin to build a new base toward $50,000 and above.”

And indeed, Bitcoin refused to die. Just three days after the sudden downturn, BTC reached $40,000 on Coinbase once again, amid fresh evidence of new large buys on exchanges. Tyler Winklevoss had a clear message: “Don’t listen to the noise, stay focused.”

Alas, it seems like $40,000 is now shaping up to be a tough nut to crack. Despite Joe Biden unveiling an eye-watering stimulus package worth $1.9 trillion, there was not a surge to be seen in Bitcoin’s price. Indeed, BTC actually fell under $35,000 at one point.

 

eToro warns users it is running out of crypto to trade due to unprecedented demand

An email sent out by eToro suggests that the exchange is struggling to keep up with users who are clamoring to snap up Bitcoin.

In a message to customers, it warned that “unprecedented demand for crypto coupled with limited liquidity” meant limits on crypto buy orders may need to be enforced over the weekend.

It seems the company has been a victim of its own success. The email came a day after eToro marketing manager Brad Michelson revealed that 380,000 users had opened accounts in the first 11 days of January — with crypto trading volumes running 25 times higher than they were last year.

Quantum Economics founder Mati Greenspan — formerly a market analyst for eToro — told Cointelegraph that the warning notice was “a symptom of a potential upcoming liquidity crunch” and advised users against trying to move funds off the platform.

An eToro spokesperson told Cointelegraph: “Our experience of the 2017 crypto rally means that we understand the possible consequences of extreme volatility in crypto markets. We want to ensure that our clients fully understand the possible risks.”

DOT flip: Polkadot overtakes XRP to become the fourth-largest cryptocurrency

There have been some big movers as the crypto market rally resumes and Polkadot’s DOT token is among them.

DOT has flipped Ripple’s XRP in terms of market capitalization following a massive gain of 29% over the past 24 hours. This makes it the new fourth-largest cryptocurrency, with a market cap of $15.6 billion at the time of writing. Over the past week, DOT has surged by an impressive 83.26%.

Polkadot is a fully interoperable platform that allows other blockchains to connect to the network, and it has been described as an “Ethereum killer” because of how it can process thousands of transactions per second.

The most recent update, which may be driving momentum, was the launch of its Rococo parachain testnet, which went live in late December.

Other factors driving momentum include the issues with DeFi on Ethereum as demand for scaling intensifies.

 

Programmer has two password guesses left to avoid losing $262 million in Bitcoin

Two gut-wrenching stories emerged this week — both with a similar theme.

One man told The New York Times that he has forgotten the password to a hard drive holding 7,002 BTC — a crypto haul that’s worth a jaw-dropping $262 million at the time of writing.

Stefan Thomas has just 10 guesses before the hard drive is encrypted forever… and so far, he has used eight of these attempts to no avail.

Meanwhile, on the other side of the Atlantic, a Welshman is offering the city of Newport a staggering $72 million for help in tracking down a hard drive storing 7,500 BTC. There’s just one problem: It was thrown away several years ago and is languishing in a landfill. Unfortunately for James Howells, the council has said it isn’t prepared to help over concerns that the search would be damaging for the environment. That means he’s going to miss out on a $280-million fortune.

Thankfully, it isn’t all bad news. A student has claimed that they have found private keys that they accidentally Hodled as early as 2011, unlocking $4 million in the process.

 

ECB president Lagarde renews calls for global regulation of Bitcoin

The president of the European Central Bank has doubled down on calls for Bitcoin to be regulated globally.

Speaking at the Reuters Next conference, Christine Lagarde said: “[Bitcoin] is a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity.”

During the interview, Lagarde did not reportedly refer to any specific instances of money laundering involving Bitcoin but alluded to her awareness of criminal investigations into illegal activities connected with its use. 

She told reporters: “There has to be regulation. This has to be applied and agreed upon […] at a global level because if there is an escape that escape will be used.”

 

Winners and Losers

 

At the end of the week, Bitcoin is at $37,271.25, Ether at $1,255.16 and XRP at $0.28. The total market cap is at $1,038,320,969,138.

Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are HedgeTrade, Voyager Token and IOST. The top three altcoin losers of the week are Bitcoin SV, EOS and Verge.

For more info on crypto prices, make sure to read Cointelegraph’s market analysis

 

Most Memorable Quotations

“They said #Bitcoin died on Monday, but now it’s above 37k. Don’t listen to the noise, stay focused.”

Tyler Winklevoss, Gemini co-founder

 

“Did nocoiners really think #Bitcoin wouldn’t bounce back? This is the year of the Metal Bull. $100k is inevitable.”

Samson Mow, Blockstream CSO

 

“This whole idea of being your own bank — let me put it this way: Do you make your own shoes? The reason we have banks is that we don’t want to deal with all those things that banks do.”

Stefan Thomas, locked out of 7,002 BTC 

 

“The unprecedented demand for crypto, coupled with limited liquidity, presents challenges to our ability to support BUY orders over the weekend.”

eToro

 

“[Bitcoin] is a highly speculative asset, which has conducted some funny business and some interesting and totally reprehensible money laundering activity.”

Christine Lagarde, European Central Bank president

 

“I look at the asset value of Bitcoin versus the asset value of all things traded and Bitcoin is still a nothing burger — a giant nothing burger.”

Kevin O’Leary, businessman

 

 

Prediction of the Week

Pantera Capital CEO doubles down on $115,000 Bitcoin prediction for 2021

Dan Morehead has maintained his bullish prediction for 2021, with the Pantera Capital CEO claiming that Bitcoin is on track to have surged 800% by August and hit $115,000.

The exec initially made this prediction in August 2020, when Bitcoin was trading at about $11,600. At the time of writing, it is now worth $37,000.

Setting out why Bitcoin has plenty of room for growth, he added: “Is Bitcoin overvalued? I would say no. […] Bitcoin has spent three years well below its long-term compound annual growth trend line, it’s still below it, and although Bitcoin has rallied a great deal over the last six months, I think it is fairly valued.”

 

FUD of the Week 

 

British financial adviser calls on the government to ban crypto transactions

A veteran financial advisor has called on the British government to ban crypto transactions.

Neil Liversidge started a petition urging local financial authorities to stop Bitcoin payments in the United Kingdom.

He argued that digital assets have no intrinsic value, adding they can have a “destabilizing influence on society, and are often used for criminal activity.”

In an interview with Professional Adviser, Liversidge urged retail investors to cash out immediately, adding: “If the UK government takes a lead by banning transactions on cryptos as my petition requests, that will set off a chain reaction, crashing cryptos overnight.”

Liversidge needs 10,000 signatures for a response from the government. At the time of writing, he’s got just 112.

Ledger owners report chilling threats after 20,000 more records leaked

Ledger users are receiving threatening emails in the wake of the hardware wallet manufacturer reporting that 20,000 more of its customers have been affected by another massive data breach.

One Reddit user said his father, who owns a Ledger wallet, received a message including his name, home address and phone number. The extortionist demanded 0.3 BTC or 10 ETH, worth roughly $12,000, or he would face physical violence.

The Redditor wrote: “I know that those scammers sending emails by hundreds are just trying their luck by creating fear, but when it comes to the safety of your family it’s another story.”

In another email, the scammer wrote: “Are you able to imagine all the possible consequences that can occur to you and your loved ones? I hope you do not ruin every little thing for yourself by making the wrong choice.”

Bitcoin payments are the “second stupidest idea I’ve heard,” says Stephen Colbert

Stephen Colbert, the charismatic host of CBS’ The Late Show, isn’t holding back his punches or his jokes when it comes to Bitcoin.

He referenced a recent Vice report that revealed how hackers had taken control of internet-connected chastity cages — devices worn by men to prevent them from engaging in any sort of sexual activity — and demanded Bitcoin to unlock them.

With a wry smile, he said: “Getting paid in Bitcoin? That’s the second stupidest idea I’ve heard.”

Colbert first covered Bitcoin on his show in April 2014 when Bitcoin was fluctuating between $50 and $300. Since then, BTC has risen by more than 40,000%.

 

Best Cointelegraph Features

Bitcoin has become nothing but the new Che Guevara T-shirt

Cassio Gusson argues Bitcoin promised to create a new normal in finance, but it turned out to be nothing but the old normal with a new face.

Here’s how institutional investors ignited Bitcoin’s rally to $40,000

In this article by Benjamin Pirus, experts weigh in on the main events from 2020 that impacted Bitcoin’s price the most.

Strap in: New institutions wait for Bitcoin price rollercoaster to end

Bitcoin market volatility is scaring off new institutional investors, but meanwhile, old ones continue to buy up the BTC dips. Here’s Shiraz Jagati.



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