Litecoin founder Charlie Lee has taken to Reddit to clarify some of the issues surrounding the Litecoin Foundation’s partnership with TokenPay. This arrangement, which includes a stake in German bank WEG Bank AG, has been criticised by some Litecoin investors who believe they are subsidising a risky venture.
Lee points out that Litecoin and the Litecoin Foundation (LF) are very different things. The first is a “decentralized network and currency” while the second is a “centralized non-profit organization” with a mission of furthering the “development, adoption, and usage” of LTC. As Lee is the Managing Director of the LF, as well as the creator of Litecoin, the two are often confused. In fact, as Lee says, addressing the coin’s investors, “LF is working for you for free to help increase the value of your investment.”
Under the terms of the deal with TokenPay the LF will receive TokenPay’s existing 9.9% stake in WEG Bank. Lee stresses that the Foundation did not pay for this share, rather it is part of a trade with the LF offering in return, “technical work and marketing support for TokenPay, eFin decentralized exchange, and integration with the bank.”
Lee admits that though he has been highly critical of ICOs as many are either “outright scams” or “set up to fail because of bad incentive structures,” he respects TokenPay for delivering on its promises. He is also impressed with TokenPay’s CEO Derek Capo, seeing in him “sincerity and real desire to increase crypto adoption.”
All deals carry risks, and Lee outlined the best and worst case scenarios. If all goes well then the partnership will deliver “crypto solutions like debit cards, merchant processing, and other innovative solutions.” However, there are still significant challenges in integrating with the existing financial system, though “we definitely have a much higher chance of succeeding now that we own a stake in a bank with bank licenses.”
In the worst case the partnership fails, though the main costs to this would be reputational. For Lee, “the potential gains far outweigh the risks.”
Image From Shutterstock