Creator of Litecoin, Charlie Lee, Does Not Believe in DeFi

News / 17.02.2020

DeFi is expected to run on blockchain without depending on anything or centralized institutions’ intervention. DeFi can help in processing massive sums of value by running code and smart contracts on blockchain platforms.

However, Charlie Lee, who created Litecoin (LTC), said it is possible for a centralized party to close down the majority of DeFi. He continued that additional centralization is required against a hack or an exploit.

Money decentralization notion and the financial system are not the same concepts. The purpose of Bitcoin (BTC) and other payment currencies was to transact through a secure medium of contact supply.

The concept of decentralized money grew to the extent of revolutionizing the whole financial system after the outbreak of Ethereum in 2014.

Furthermore, within the previous 5 to 6 years, the smart contract platforms have been trying to change the operations of traditional finance, especially when it comes to credit and borrowing

The operations of Cryptos are based on the notion of decentralization and security via distributed consensus. Proof of Work (PoW) or Proof of Stake (PoS) are the facilitators of the system.

The aim of DeFi is to utilize this feature in developing a financing system for lending, exchange, payments and more. Further, it will take time and effort to achieve such a vision. Despite the high hopes of the individuals in the DeFi domain, Lee remains unsure:

Decentralization is not the only feature that cryptos are based on. Additional features undergoing experimentation include privacy and ease of access.

Lee noted that the notion of DeFi brings forth numerous complexities as well as players into the mix and that real decentralization is not achievable.

Source: Cryptopress.

Born in Bucharest, Marius is the founder of Crypto Adventure. Since his first contact with Bitcoin and cryptocurrencies, he never stopped believing that they are one of the most important innovations of our time, which will forever change the way business is done.