Charlie Lee, the creator of Litecoin [LTC] gave his opinion on AsicBoost and the SegWit User Activated Soft Fork recently. Speaking at the CoinsBank Blockchain Cruise, he offered his opinions on the intrinsic value of Bitcoin Cash [BCH].
The cost of production of Proof-of-Work cryptocurrencies such as Bitcoin is considered by many to be the bottom of the price of that coin. It provides a resistance level upon which the price builds, thus making it an important part of the intrinsic value of the currency. Charlie Lee said on Twitter:
“Production cost (i.e. mining) does not equate to intrinsic value. Production cost being non-zero is one of several factors that make Bitcoin and Litecoin sound money. “
On the Bitcoin Cash network, Bitmain’s AsicBoost technology is still allowed to function covertly. As it is an optimization of mining, miners who utilize AsicBoost to mine blocks on the network will result in a much cheaper cost for the coin. This, according to Lee, was one of the reasons for switching to SegWit on the Bitcoin blockchain was such a “heated debate”.
SegWit stands for Segregated Witness, and, as the name suggests, segregates the “witness” part of the transaction, thus making more room for transactions in a block. The implementation of the SegWit method killed off the option of using AsicBoost, as it does not function with SegWit enabled.
Moreover, the use of AsicBoost before SegWit was covert, thus resulting in an unfair advantage for miners using the technology. Lee stated that this “destroys” some of the properties of Bitcoin. He went on to say:
“On Bitcoin, we did a user-activated soft fork and we added Segwit and that killed covert AsicBoost, and that makes mining fair. Having unfair mining causes a lot of problems. With Bitcoin Cash its happening right now and we don’t know it. Some miners are creating Bitcoin Cash for a lot cheaper price than a lot of other miners.”
Lee’s next talking point was about the fixed money supply factor of intrinsic value. If cryptocurrencies don’t have a fixed money supply which cannot be changed, miners will be tempted to mint more coins as block rewards. Moreover, Bitcoin Cash has a specific “miners matter” policy. Lee stated on this:
“If there’s any issue, miners will decide and fork and hashrate is all that matters. That means that if miners in some point in the future decide they want to keep the mining rewards high, they don’t want it to halve every four years, because that’s going to happen. People are greedy. When that happens with Bitcoin Cash, it’s just going to go through because there’s no one whos going to stand up against that.”
However, with Bitcoin and Litecoin, such a decision will face backlash from non-miner nodes. This will provide resistance against the change, thus making it a more secure option. Lee’s closing remarks included a statement on decentralization. The last part of his presentation stated:
“Decentralization is what gives cryptocurrencies inherent value. Without decentralization cryptocurrencies don’t have long term value.”
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