The founder of the major cryptocurrency Litecoin, Charlie Lee, was interviewed on CNBC following the USD 31 million Bithumb cryptocurrency exchange hack. He said that the Bithumb hack, and any other particular cryptocurrency exchange hack, does not affect the fundamentals of the market. He uses the example that if thieves rob a bank, that doesn’t change the fundamentals of fiat and gold.
He says that the Bitcoin Lightning Network, which allows Bitcoin transactions to scale to the magnitudes of credit card processors like Visa, is a major advancement that should have led to a price increase. He says that Bitcoin’s price has become disjointed from advancements in its protocol. He says he expects Bitcoin’s price to catch up to the advances in development eventually, and the price might rebound “fairly soon”. However, he says that he’s seen bear markets last 3-4 years and doesn’t know for sure when this bear market will end.
After the Bithumb hack, the market dropped slightly when the news broke, but overall Bitcoin’s price moved up on the day. Charlie Lee says there’s usually a 5% or greater price drop after a major cryptocurrency exchange gets hacked, but positive news that Tether Limited has USD reserves to back up all of its coins overshadowed the bad Bithumb news. The market had previously gone down significantly after a study alleged that Tether was fraudulently printing money to drive up Bitcoin’s price.
Charlie Lee says cryptocurrency is still in its early days, and exchanges have a long way to go to become completely secure. He says cryptocurrency users “must protect their coins much better than traditional financing”, and that they need to understand that they are fully responsible for their money unlike classical financial instruments like credit cards and banks.
Cryptocurrency can actually be more secure than any other form of money if a user controls and protects their private key properly, but many new users are ignorant when it comes to this crucially important information.
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