Charlie Lee, the creator of Litecoin [LTC], recently spoke at CoinsBank Blockchain Cruise about the intrinsic values of altcoins such as Litecoin, Ethereum [ETH] and Bitcoin Cash [BCH]. He evaluated this using four factors, which are censorship resistance, transaction immutability, cost of production and fixed money supply.
On Bitcoin Cash, Lee began by asking the question of censorship resistance. He went on to say that even though it is resistant to censorship currently, it has a problem in the form of utilizing the same algorithm as Bitcoin. This opens it up to an attack by hashpower, as it only has 6% of the total hashrate of the Bitcoin network. Lee explained the consequences of this, stating:
“So even a small pool, or even a small mining farm, can effectively censor all of the transactions if they wanted to. So an effective attack would be they would shift to Bitcoin Cash and they just mine Bcash solely and deny any other miners blocks. Once that happens, all the miners will quit mining Bitcoin Cash because all their blocks will be orphaned, and they will be losing money, so they will go back to mining Bitcoin.”
The aftermath of this, according to Lee, will be a crash in the price of Bitcoin Cash, and the miner making a lot of money. Moreover, there is no financial incentive to continue mining a broken chain, as they can shift to mining Bitcoin with the same equipment, he stated. This will also not cause a loss to their miner hardware investment, as it can be used to mine Bitcoin.
However, with Bitcoin and Litecoin, it is a different scenario. Charlie elaborated on this, stating:
“If you look at Litecoin and Bitcoin, these two coins dominate their respective mining algorithms. If Litecoin had a miner’s attack, they’ve basically effectively destroyed their miner hardware profitability, because they’re killing their own coin.”
On transaction immutability in the Bitcoin Cash network, Lee quoted statistics regarding the hashpower of Bitcoin in comparison with Bitcoin Cash. As the hashrate is so low, the hashrate of the Bitcoin blockchain could effectively “wipe Bitcoin Cash out of existence” in 20 days. He said:
“It takes 20 days for the Bitcoin hashrate to effectively wipe Bitcoin Cash out of existence. It can start from when Bitcoin Cash was created, mine all the blocks that Bitcoin Cash has, effectively removes Bitcoin Cash from history.”
However, Lee clarified that it was unlikely to happen as “Bitcoin miners are not going to waste their time” doing so. This illustrated his point regarding the reversing of transactions in the Bitcoin Cash blockchain.
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