Exchange hacks do not alter bitcoin fundamentals, says Litecoin’s Lee
Hacks on cryptocurrency exchanges do not change the fundamentals of bitcoin, said Charlie Lee, the founder of Litecoin in an interview with CNBC on Wednesday night.
Price drops that follow news of major hacks are a typical reaction and often affect the whole cryptocurrency sector, because people are afraid that they will be affected and sell down their holdings.
But likening bitcoin to more traditional exchanges of wealth, Lee said that just in the same way as a bank robbery has no impact on the price of gold, nor should cyber crime affect the fundamentals behind the price of bitcoin.
Bithumb hack aftermath
Speaking in the aftermath of this week’s $30m hack on South Korea’s Bithumb exchange, Lee said: “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.”
He said that investors in cryptocurrencies would have to come to terms with protecting their cyber assets “much better than traditional finances”, but added the exchanges were learning how to better protect their clients’ funds – “although there’s still a lot to improve”, he said.
The price of bitcoin is down nearly 10% so far in June following news of hacks at two South Korean exchanges: Coinrail, in which an estimated $40m in a number or ethereum ERC20-based tokens, and Bithumb, where $32m worth of digital coins, including ripple, were taken.
Estimated $1.1bn global losses
An estimated $1.1bn worth of cryptocurrency has been stolen so far this year, according to cybersecurity firm Carbon Black.
The biggest so far was the $530m attack on South Korea’s Coincheck in January. At that time the price of bitcoin was already falling from its peak, but subsequently lost nearly 50% over the next month.