The creator of Litecoin [LTC], Charlie Lee aka Satoshi Lite, addressed the crowd at World Crypto Conference and gave his thoughts on what gives cryptocurrencies like Bitcoin [BTC] and Litecoin their value.
He started by saying how he or most people never spoke about what gives cryptocurrencies their inherent value.
Lee explained how cows or chickens were used for trading back in the day because of their utility, but we moved on to feasible monetary concepts like paper money or gold. Explaining the reason why gold holds value, he said that it was because of its scarce nature and physical property, and not just because ‘it looked pretty’.
Bitcoin, on the other hand, doesn’t have any physical form and it can’t really be owned as it is virtually on the blockchain. All one can really do is get the private key to access it and maybe send it to a different address. Conferring with the above point, Charlie Lee continued that it was the same with all cryptocurrencies, be it Bitcoin or Litecoin. He said:
“It’s actually the ‘sound money property’ that gives Bitcoin its value and that’s why Bitcoin is called digital gold.”
Charlie Lee then went on to explain the four fundamental properties that give Bitcoin its value. He said that fiat money is centralized as the government has full control over it and can do what they wish with it. He continued saying that, with Bitcoin, it was possible to send money to anybody with the Bitcoin address in any part of the world and the government can’t stop or block it since Bitcoin is decentralized.
He then proceeded to explain that the transactions happening on the Bitcoin’s blockchain are immutable, which is the second property of Bitcoin that gives it value, and that the transactions that happen cannot be further modified or reversed. The government can rescind fiat money transactions if they wish to do so and proceed to illustrate it with ‘Poker Black Friday.’
Charlie Lee continued to explain the third point saying:
“Proof-of-work and competitive mining is the result of Bitcoin’s production, hence the value of Bitcoin is not zero, as it costs money to mine. And if it didn’t cost money, you could make more and counterfeit it.”
Lee explained that the value of fiat currency has decreased exponentially over time. He explained the fourth point stating:
“Fiat money has been tremendously devalued by the Federal Reserve and it putting out fancy names for devaluation like ‘quantitative easing’ but what it’s actually doing is printing money and devaluating everyone’s currency.”
He continued to explain that this would not happen with Bitcoin because the schedule for Bitcoin’s inflation is set in the code. He further added:
“It is known ahead of time that we will reach 21 million and the supply of Bitcoin can’t ever be more than that. And it cannot be changed without consensus so, everyone has to agree to change it.”
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