The latest Litecoin news has stirred a hornet’s nest in the crypto world and the media. There is a never-ending barrage of comments on social media and especially Reddit, where Charlie Lee posted an elaborate explanation of why he sold and donated all his holdings in LTC.
Lee explained that he had to resort to this move as it was a conflict of interest for him to hold LTC and tweet about it because he had so much influence. People keep suspecting that his actions benefited him financially and this is something which he disagrees with completely. (Source: “Litecoin price, tweets, and conflict of interest,” Reddit, December 20, 2017.)
Although Charlie Lee’s net worth may not have been much impacted by this move, it really does not matter as he himself says that he is in a comfortable cash position. What matters is what this means for Litecoin and other cryptocurrencies like Bitcoin.
The answer to the question “Will Litecoin crash?” remains the same: Nobody knows. The Litecoin price did not crash following Lee selling off his holdings. In future, if there is a sudden loss of value, it will be due to the impact of the cryptocurrency space as a whole and not because of Lee’s actions. The Litecoin price has been going up and down in line with the volatility surrounding cryptocurrencies and this shall hold true in future as well.
The most important thing to remember about the Bitcoin price or the price of any other cryptocurrency is that it will continue gaining as long as there are more buyers than sellers. But when the sentiments turn sour, there will be more people jumping in to sell their holdings. That would be the time when prices will come down or may even crash.
One of the most important aspects influencing the value of a cryptocurrency is the quality of the development team. So, it should be taken as a big positive that Lee wants to focus on this and not the Litecoin prices and the talks surrounding them, which seem to be distracting him. And he has a point when he says that this cannot be compared to a CEO selling shares of his company. He has gained enough financially and now he wants to focus on the intangible benefits that would accrue from seeing Litecoin grow in the coming years.
For those founders who are actually invested in their coins, it makes more sense to think that they could take actions that would benefit their financial position. And that’s why there would be a particular class of investors who would be very comfortable with what Lee has done and about the future of Litecoin in general.
This can be better understood in light of the comment that Charlie Lee posted on Reddit about three years back, where he said that Litecoin was one of the fairest currencies around.
And he may have a valid point. Because in contrast, the teams behind most of the other cryptocurrencies could release any number of coins at any time that they want.
When asked how many Litecoins he holds, this is what he replied:
“I have some. More than most (I’m guessing) but a lot less than some of the wealthy Litecoin holders out there. I want to think that litecoins are very fairly distributed.” (Source: “How many litecoins does the creator of Litecoin, Charles Lee, hold?,” Reddit, March 19, 2014.)
About his holdings, this is what he had to say:
“At one point, when the price was around $0.007, I considered plopping down $7000 to buy a million litecoins just to have a million. For some reason, I didn’t. Oh boy do I regret that. Why did I not believe in my own creation?!? 🙂 When the price hit 20 cents, I thought it was overpriced, so I sold about 3/4 of my coins trying to play the market and thinking I can get them back cheaper. Silly me.”
This clarifies that Charlie Lee is not very good at playing the markets and he does not want to make his wealth this way. So it is understandable that he can better focus on his work on Litecoin, now that the pressure of rising or falling Litecoin prices is no longer there.
It is difficult to talk about Charlie Lee’s net worth as he did not disclose the number of tokens he sold but we can believe him when he says it was a “small percentage” of daily volume on the cryptocurrency exchange GDAX.
But for those who doubt his motives and would rather stay with coins where founders have so-called “skin in the game,” they may move on and invest in other cryptos. But this would not be the reason for the rising Bitcoin price and falling Litecoin price.
Litecoin shall succeed depending upon the quality of its ecosystem, which is what Charlie Lee wants to do. And as he says, when Litecoin succeeds, he will be rewarded in lots of different ways.
Although Lee tweets with all good intentions, he keeps providing enough fodder for his critics. To all those who feel that he should just stop tweeting, here is why that is not possible.
Tweeting is addictive! Just ask all those who can’t stop themselves from tweeting and posting their valuable comments on social media and forums like Reddit. If Lee thinks that tweeting and sharing his ideas with the world is more important than holding on to his Litecoins, then he deserves a big round of applause! Let’s just accept that he has crossed all the lower layers of Maslow’s hierarchy of needs and is now sitting right at the top of the pyramid!
And this is rather comforting because he does not have the motive of making himself rich here. He does not want to make money trading LTCs but rather is more interested in building Litecoin into something bigger and more important. Investors would do better with developers like that.