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Blockstream CEO Adam Back: Hold On to Your Mt. Gox Bitcoin

Last Updated January 24, 2024 2:00 PM
Teuta Franjkovic
Last Updated January 24, 2024 2:00 PM

Key Takeaways

  • Adam Back advises Mt. Gox creditors to hold onto their Bitcoin rather than sell it at the current price of $40,000.
  • Back commends Mt. Gox for its decision to pay out creditors in Bitcoin rather than in US dollars.
  • Back compares Bitcoin to digital gold, emphasizing its long-term store of value potential.

Adam Back, a central figure in the early 2000s cypherpunk movement, who played a significant role in shaping the digital currency landscape, addressed the fears surrounding the recent Mt. Gox situation.

Back’s contributions to the development of digital cash , proof of work mechanisms, and online anonymity have been foundational to the cryptocurrency space.

Mt. Gox Creditors Should Hold Bitcoin, Not Sell at $40,000

Back pointed out  the illogical nature of selling Bitcoin, which has been held for a decade since its value was around $450, at the current price of $40,000. He highlights  the potential growth ahead, citing the upcoming Bitcoin ETF tailwind and the approaching halving event in the crypto market. Back suggests that waiting another year could see values soaring to $400,000 and beyond.

In a follow-up tweet , Back noted the distinct approach Mt. Gox has taken in its bankruptcy proceedings compared to FTX.

Mt. Gox is paying out creditors in Bitcoin rather than converting it to USD for legal expenses. This strategy, he points out, is more favorable for creditors, who would have been much worse off with a payout based on the original $450 valuation. This decision to pay in Bitcoin ensures that creditors receive a significant portion of their Bitcoin balance, rather than a depreciated dollar value, highlighting a unique aspect of cryptocurrency in bankruptcy scenarios.

In another tweet, Back mentioned the presence of institutional claim buyers , who he believes were primarily interested in purchasing and holding discounted Bitcoin. He noted that out of the 200,000 BTC discovered by the ex-CEO of Mt.Gox, Mark Karpeles, a total of 142,000 BTC remained, while bankruptcy lawyers utilized the remaining 56,000 BTC over ten years.

Back Compares Bitcoin to Gold

In a recent interview at a cryptocurrency event in Lugano , Switzerland, the co-founder and CEO of Blockstream shared his insights into the nature of Satoshi Nakamoto’s cryptocurrency. He emphasized that Bitcoin primarily serves as digital gold, a characteristic he considers more significant than its role as a medium of exchange.

Expanding on this analogy, Back likened physical gold to a form of technology, requiring specific techniques for its discovery, extraction, and processing. He drew a parallel between these technological aspects of gold and Bitcoin, suggesting that Bitcoin effectively acts as a digital counterpart to gold.

Back implied that gold’s status as a financial asset is largely due to its scarcity, a trait that inherently involves high costs for extraction. Similarly, despite Bitcoin’s fixed supply, the digital world typically allows for scalability and replication.

This raises the question: how can the element of scarcity be replicated for a digital asset in the real world?

Back provides a solution:

“Through the high costs, the high energy work, necessary to carry out the validation of transactions. In other words: mining. This is why Bitcoin is digital gold. An asset characterized by scarcity, immutable and authentic thanks to the blockchain, which can also be transferred over long distances and stored at little expense.”

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