As previously reported, leading South Korean cryptocurrency exchange Bithumb was hacked on June 20. According to data from CryptoCompare, the price of Bitcoin wasn’t really affected and has maintained a strong resistance point around the $6,570 mark, yet this is still bad news for the entire market. The unfortunate event serves as a reminder that coins should not be held on centralized and potentially-vulnerable exchanges.
Since such events can really make a difference on the market and investors definitely feel worried whenever bad news spreads in the space, Melissa Lee of CNBC's “Fast Money” has prioritized the topic as part of their latest edition of the show. In order to find an explanation for the phenomena and get a savvy prediction on the evolution of the market, she reached to Litecoin founder Charlie Lee for a telephonic explanation.
Unsurprisingly, the former Coinbase engineer reiterated that cryptocurrencies should not be held through means that are reminiscent to traditional finances. Trusting an exchange with funds is a bad idea due to the fact that it creates a “honey bag” effect to hackers who seek to break into the system for the sole purpose of seizing the digital assets. That’s why Charlie Lee mentioned that people should get used to the idea of responsibility for their own finances, or being their own bank.
Furthermore, Mr. Lee explained that the situation resembles a bank robbery where thieves steal gold. One cannot have the scarce precious metals insured just because each piece is unique and irreplaceable in nature, and the fact that a robbery has taken place has to do with the security of the bank, not the nature of the valuable object. Conversely, cryptocurrencies shouldn’t be regarded as flawed inventions which can get hacked: that’s not how blockchain technology works, and in this particular case it’s all about private keys being stolen from the databases of the centralized exchange.
If the exchange does not protect the coins well enough and gets hacked, it doesn’t really change the fundamentals of the coin they are protecting.
Charlie Lee on the Lightning Network
As a believer and proponent of second layer scalability, Mr. SatoshiLite didn’t hesitate to present the virtues and advantages of the Lightning Network – which is currently available on the main nets of both Bitcoin and Litecoin. He praised the technology and its development, pointed to a good record of reliability, and expressed high hopes for the future.
In relation to this major leap in technical terms, Charlie suggested that the price is disjointed and the market is not acting in response to the developments. Nevertheless, he assessed that the bear market will end and prices will readjust, stating:
I have faith that the price will rebound and be back up… fairly soon, actually!
Melissa Lee went on to ask the question about “when” the market is expected to recover from the bear market, and the Litecoin founder has decided to take a more diplomatic stance and distance himself from price predictions. In a nutshell, he mentioned that we might be looking at another 3-4 bearish years, or that the price can recover tomorrow.
Since this statement came just seconds after the “fairly soon, actually” part and a couple of minutes after the enthusiasm in regards to the Lightning Network, it’s presumed Charlie Lee is bullish on the crypto market and believes in a quick recovery, but simply wants to avoid shilling.
In order to explain the price recovery of Bitcoin, Magical Crypto Friends’ Chikun has pointed to the good news coming from the Tether affair, whose audit appears to go well and without major incidents. The existence of enough USD to back the crypto reserves of the cryptocurrency pegged to the fiat currency 1:1 on an even scale is great enough to counter yet another possible price correction, and more good news will definitely bring the prices up once again.
At press time, Bitcoin is valued at $6,759, after gaiing 1.22 percent in the last 24 hours. The Bithumb incident doesn’t seem to have affected the price too much, but as Charlie has mentioned, 5 percent corrections are very common in this space and should no longer surprise us.
The interview can be seen here:
— CNBC's Fast Money (@CNBCFastMoney) June 20, 2018