Charlie Lee, the creator of Litecoin [LTC] recently spoke at the CoinsBank Blockchain Cruise, where he elaborated upon the intrinsic value of Bitcoin [BTC]. While the price of the cryptocurrency is determined mainly by speculative trading, the intrinsic value of the coin is a different story.
Lee aimed to narrow down the intrinsic value of the coin by breaking down the four fundamental factors towards it. He began by offering background on quotes made by individuals such as the current Chairman of the United States Federal Reserve, and prominent stockbroker Peter Schiff. These quotes stated that the cryptocurrency does not really have intrinsic value, with Schiff calling it “digital fool’s gold”.
Lee, however, offered a contrast to this point, stating that he had 4 points that made Bitcoin intrinsically valuable. He began by speaking about how Bitcoin was not censorable, as it cannot be changed by one person, company or government.
To illustrate what censorship resistance meant, he offered an anecdote from his own life.
Lee stated that he used to play online poker in the years 2010 and 2011 when the online gambling industry was at its peak. However, he related an instance wherein the United States Government came down on the three biggest online poker marketplaces at the time over accusations of wire fraud, bank fraud, and money laundering.
“All the payments to poker sites were blocked. Visa payments, Mastercard payments and any payment processors. Online poker was effectively censored. It’s my money, why can’t I use it to play poker online when poker is legal, its a game of skill. A couple of months after that I found out about Bitcoin. It’s not controlled by any governments, it’s not controlled by corporations, You can play online poker and no one can stop you.”
He went on to state that the intrinsic value of Bitcoin comes from the fact that it cannot be blocked from spending, like fiat money can by the government.
The second point Lee brought up was that transactions on the Bitcoin blockchain were immutable. Due to the general design of the blockchain and the Proof-of-Work algorithm, one transaction in a previous block cannot be changed without doing the work and changing the block header of every block in the blockchain.
Lee likened it to the miners pushing the chain deeper and deeper into the ground with every block added to the chain, with the maximum amount of work to be done when trying to change transactions in the first block of the blockchain. He stated:
“If you send someone a million dollars that person will want to wait for one hour or one day because once it’s in the blockchain and there are a lot of blocks on top of it, it’s effectively immutable. For all intents and purposes, its not cost-effective to change a transaction.”
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