In a recent talk with Litecoin founder, Charlie Lee, and NewsBTC, they discussed why the bear market is good for the crypto space, how this bear market compares to past bear markets, and where Litecoin and the greater crypto markets are headed.
According to Charlie Lee in his interview with NewsBTC, bear markets are good for people and projects to work on their products instead of constantly looking at the price action. Litecoin specifically is working on fungibility, privacy, and using their influence with WEG Bank to help with both merchant and user adoption of cryptocurrency (the Litecoin Foundation owns 9.9% stake in the bank) for the Litecoin ecosystem. His vision of where cryptocurrencies are headed, with banks, is to allow both fiat and cryptocurrencies to be held by banks in the same accounts.
“Next is supporting crypto companies with bank accounts. Then, lastly, you want to add crypto wallets, along with storing fiat in normal accounts for crypto companies. What would be cool is allowing people to store U.S. dollars at a bank and cryptocurrencies too. But eventually, there will be merchant processing and other crypto solutions. It’s going slowly because banks move slowly due to regulations. That was to be expected, but it’s going well. I don’t have anything really to announce right now, but I’m excited about what is to come in the future.” – Charlie Lee
Charlie Lee then goes to talk about his two biggest reasons for why cryptocurrency adoption is being held back, volatility and storage. I think he is right in his assessment too. It is hard to use something as a currency if the price is constantly changing.
The volatility part is the whole, ‘which came first, the chicken or the egg?’ argument, but if this space is able to gain adoption, volatility will decrease which will further help with adoption.
The storage part is the harder of the two because “there will always be a tradeoff between security and usability.” We create decentralized cryptocurrencies, yet the first thing we do in is creating centralized exchanges. From there, some of those exchanges get hacked and further hamper adoption. Once that gets figured out, it’s extremely hard to solve, adoption will follow.
“I’ll tell you two things. One thing is volatility. Because crypto prices are so volatile, it’s hard for people to actually use it, meaning adoption is hampered. Volatility is kind of a chicken and the egg type scenario. Once there is adoption, volatility will decrease, meaning more adoption. So it’s a slow process for that to work for us to overcome that. The second thing that’s kind of preventing us from getting a lot of adoption is user experience of storing your own money. Securing your own money is hard. There’s always a tradeoff between security and usability. So people are using exchanges to store their coins because they can’t do it themselves. It’s easy, but then you hear all the stories about exchanges getting hacked. And that really hurts adoption. So probably, we just need to work on having better, easier solutions that allow people to store their own money. That’s the whole problem really. So I think usability and user experience is really important, albeit it’s something that is hard to solve.” – Charlie Lee
When asked about comparing this bear market to past, he actually believes that this isn’t as bad as past bear markets. His reasoning is that even though price drops have been the same, in the last bear market, people actually believed the price would never recover (spoiler it did).
“The drop is similar percentage-wise. But during the last bear market, I remember it got to a point where people just didn’t think that it was going to come back. People just weren’t optimistic about the price at the time. Now, I think we haven’t gotten to that point yet, and maybe we might not go there this time, which will be great.” – Charlie Lee
Just to throw in my own two satoshis on an old topic of discussion, Charlie Lee took a lot of heat back in December 2017 and January 2018 for selling his entire portfolio of Litecoin. While on the surface it looks really bad, like he doesn’t believe in his own project, it was extremely smart and probably one of the best decisions for the project. Looking around at many projects in the space, many (even if they were legitimate projects) haven’t been able to stay afloat during the cliff dive of 2018 and have either gone out of operation or lost their momentum.
When Charlie Lee sold his Litecoin, he solidified the future of Litecoin as a mainstay. If he had kept all of his Litecoin, he wouldn’t be able to continue pushing this project to its potential with many coins dropping 80%-90% (or more). Yes, he has made a lot of money with his decision, but he has solidified Litecoin as a top project going into the future.
“Don’t worry. I’m not quitting Litecoin. I will still spend all my time working on Litecoin. When Litecoin succeeds, I will still be rewarded in lots of different ways, just not directly via ownership of coins. I now believe this is the best way for me to continue to oversee Litecoin’s growth.” – Charlie Lee.