A commodity doesn't promise a return for holding it, a security does. If I buy a gold bar, in a year I have a gold bar, same with a bushel of wheat, or 1million yen.
Securities use resources to try and generate a return -- companies try to sell a product, bonds generate interest, etc.
This is actually the only answer that is pertinent in this context, it should be up voted.
Securities generate returns, commodities do not.
The regulation proposals for tokens include a number of different categories: utilities (governance), securities (returns), commodities (holding), etc.
The categorization of tokens influence the amount of regulation they have to undergo: Exchanges, KYC, AML, etc.
For instance if a token is categorized as a security, then it is an investment product. You will need a SEC licence to sell it, perform KYC & AML on clients, have audits, etc.
> What’s the difference between a security and a commodity?
Securities: Stocks and Bonds
Commodities: Metals, Grains, and Oil
A commodity's defining feature is its interchangeability. One unit is essentially the same as another unit. To an orange juice company oranges are oranges, to an apple juice company apples are apples, and to an oil refinery one barrel of oil is a lot like any other barrel of oil. Commodities must meet certain minimum quality standards and markets do distinguish between different types of the same commodity. But for the most part it's about quantity.
A commodity is a basic good used in commerce that is interchangeable with other goods of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers.
A commodity is (traditionally) a standardized physical good. A security is a tradable contract. It could for example give you the right to a certain sum of money per year, or partial ownership of a company, or the right to buy something at a certain price.
Some stable coins fit the security definition pretty well since they come with a right to redeem for dollars. Other cryptos don't really fit either.
Bitcoin has less foundation- or team-based leadership that have plagued other crypto projects. This leadership (eg Ethereum foundation) gives crypto projects the air of legitimacy, but also the impression, as Hinman put it, that some managerial work and direction is expected, tipping the scale towards security. If the network becomes decentralized to the point where no one party has sway over its direction (even a good one eg the move to proof of stake), only then can you consider it a commodity, at least in Hinman’s view.
Not only does this make sense but it also further speaks to the strength of the bitcoin project, specifically Satoshi’s decision to not be a public figure/BDFL. I doubt this security-commodity issue factored in specifically, but it was really a brilliant and largely unprecedented move that aligns with bitcoin’s political philosophy as well: no leaders.
The idea that Bitcoin has no leaders is a big lie that these regulators should be able to see through. You can take look at any of the well-known whales to see obvious evidence against that claim. They make the claim because it allows them to maintain plausible deniability while manipulating the market as much as they possibly can. I wouldn't trust anyone in finance who says they're not doing managerial work and direction; that work is required to make the stated goals work. It's about as big a red flag as when recruiters say "our company has no bosses and no management". It might fool some naive people, but those who are observant can see who's really in charge.
You might as well be talking about the boogieman. Who are these whales who control the market? Why were so many mega-whales selling at $27K and lower this year, when they could have sold at the top? Michael Saylor is one of, if not the biggest crypto holder right now, and the dude is clueless and currently underwater in his position.
Talking about whales is just superstition for people who can't find any alpha in the markets. It's an excuse for why you didn't know the price was going to go in a certain direction. You see it a lot in amateur trading Discords and subreddits.
>Talking about whales is just superstition for people who can't find any alpha in the markets. It's an excuse for why you didn't know the price was going to go in a certain direction.
Ah yes, the price predictoor, even more common in amateur trading Discords and subreddits.
Project direction controlled entirely by core devs and the centralised exchanges that bless their output as "bitcoin" regardless of the fact it directly contradicts the original consensus mechanism for the project and the changes implemented by said devs fundamentally broke the utility of the project.
SEC and similar are likely granting BTC "commodity" status purely because it is so utterly controlled and unthreatening, completely divorced from its original intent of addressing the central banking charade, that any energy they can push into it is energy they won't have to deal with being directed to a legitimate decentralised cryptocurrency that actually works and over which no such control exists.
> Project direction controlled entirely by core devs and the centralised exchanges that bless their output as "bitcoin" regardless of the fact it directly contradicts the original consensus mechanism for the project and the changes implemented by said devs fundamentally broke the utility of the project.
Core devs and exchanges do not entirely control the project direction. Non-backwards compatible changes cannot be made to Bitcoin without the miners AND node operators adopting the new client. It takes the cooperation of the devs, miners, and node operators to make a hard fork. "The Blocksize War" by Jonathan Bier documents a bunch of failed hard fork attempts that were backed by a good number of devs, large miners, and large exchanges. They failed because the node operators were not on board.
I am aware of the official cover story. You appear to be unaware that it is a lie.
Look up the historical record. By what metric was the BTC chain allocated to the present by bitfinex? I'll give you a hint, hash power not only had nothing to do with it, it was explicitly said that it would be ignored in the announcement.
And reality flies in the face of what you just claimed, node operators had nothing to do with the metric. It's all just outright rigged.
> it was explicitly said that it would be ignored in the announcement
Can you elaborate or give references to how Bitfinex controls the Bitcoin blockchain in such a way that the gridlock between miners and core devs isn't what keeps Bitcoin conservative?
How is the network rigged in such a way that node operators have nothing to say? You're not referring to miner centralisation?
Special notice to "The incumbent implementation (based on the existing Bitcoin consensus protocol) will continue to trade as BTC even if the B2X chain has more hashing power."
This is exactly the opposite of the way it is supposed to work according to the white paper. Before this announcement the majority of exchange volume was firmly in the camp of allocating the BTC ticker to whichever chain ended up having the most hashing power after the fork. If you work through the game theory afterwards, this means that;
1) if you want to be able to liquidate tokens to cover mining costs as what had heretofore been recognised as bitcoin, you will need to mine what is being rubber-stamped by the bitcoin core node client software as bitcoin, regardless of what the majority of hashpower is mining. What you rationally believe is the correct path is absolutely irrelevant. Want to pay your bills? Rubber-stamp BTC.
2) This is completely the opposite of what was outlined in the white paper and had been the status quo until this point.
3) This allocates absolute power to define the canonical chain tip to the people who have merge access to the official bitcoin core repo, a group no larger than seven people. Disagree with these people about what bitcoin is? You're wrong. It doesn't matter how many nodes you operate nor how much hashpower you have. They choose. You follow or gtfo.
4) A large part of these people had a direct fiscal interest in keeping Bitcoin uselessly crippled in order to promote their own commercial products which relied on that crippling to maintain competitive advantage.
5) Leaked emails from others highlighted the role intelligence agencies played in the campaign to keep bitcoin uselessly crippled. These emails contained unsubtle threats.
6) the power to define what BTC canonically is according to the supermajority of exchange volume was from this point on allocated by fiat to the core devs. Futures in the competitive chain were shorted into the ground on bitfinex and in the sabotaged chain pumped enormously using USDT.
7) Tether who is responsible for the issuance of USDT is just corporate dress for bitfinex. They're the same party.
8) USDT is acknowledged as fake fiat, official court documents highlight that it has nowhere near full backing in actual USD. Prior to the sabotage of 2017 daily exchange volumes of USDT were nearly irrelevant to even just BTC volume letalone the total, roughly five percent was regular. These days it is approaching three hundred percent of BTC trade volume on a regular basis. Just blatant outright wash trading to control the price of BTC using indisputably counterfeit USD.
9) Even with all the above, when BCH forked away from the sabotaged chain it pumped to 0.5 BTC. Plenty of people knew what was going on and how badly broken BTC had been. But in the face of widespread and constant market manipulation, BTC presently maintains a relatively dominant position. Nothing like the 95 percent plus it used to have before the sabotage, but still frequently 45 percent plus. Given it is utterly broken and sabotaged, this is completely ridiculous.
And last but not least bitfinex the party responsible for the above situation across the supermajority of centralised exchange volume is invested in blockstream the party responsible for the sabotage and hijack of the bitcoin core codebase and the forcible implementation upon it of the pants on head retarded idea that the chain ought to be permanently limited to roughly the throughput of a fax machine when the original plan was always for it to be competitive with large traditional payment providers like Visa and Mastercard and the exact mathematics for how this could be accomplished were published in 2009 and unsurprisingly check out just fine and these methods are now active on practically every other non sabotaged and broken blockchain in production usage.
The above isn't even a close to complete record of just how crooked the BTC situation is or its impact on the broader cryptosphere, but it highlights the core problem of fiat allocation of the title to whoever spits out the most counterfeit at the rotten heart of this horrid little saga that most people either aren't aware of or desperately try to ignore.
What makes Bitcoin a commodity is that nobody can issue more Bitcoin, other then from mining, just like with physical commodities. The market can still be manipulated by the big players but that is besides the point. When more of an asset can be issued (created from thin air) then it is a security.
i'm not sure why people keep thinking that there is a hard limit to number of bitcoins that can be mined when the network can be updated to allow more coins to be mined.
Money buys you voting rights in some proof-of-stake implementations that give governance rights to stakers. Ethereum's doesn't do that. Its stakers have no more governance rights than miners.
They were talking specifically about the Proof of Stake model that Ethereum is working on moving to. They were saying that, while some proof of stake chains may use stake for governance, that the protocol for proof of stake intended for use in Ethereum, does not grant any governance roles.
Especially because mining is a business that you can fail at if you don't balance costs and income properly.
That's much preferable to proof of stake where early investors can just squat on their coins indefinitely with almost zero cost to maintain their authority percentage forever.
Except if the community at large doesn't like how a particular staker/validator is doing their job, the staker's assets can be burned in a hard fork that enjoys sufficient broad legitimacy. The capital can be outright destroyed. In contrast, there is no way a community in a proof of work system can burn a particular miners hardware if that miner becomes able to abuse the network. At most they could change the mining algo, but that wipes all miners out, and such a change can really only happen once.
In PoW miners buy physical capital and electricity, in PoS miners buy digital tokens. It's exactly the same, except PoS is less detrimental to the environment.
I'm saying they have massively different risk profiles.
If you want a different example that might be more obvious, "put it all on a single number on a roulette spin" and "invest in a big stock index" both have unknown rewards but they're entirely different ballparks too. (And no, those aren't supposed to map 1:1 to the coin scenario.)
I don't think I follow you. As far as I can tell, PoS is as much of a lottery as PoW. In PoW a player increases their chances of winning the lottery by spending real money on electricity. In PoS a player increases their chances of winning the lottery by spending real money on virtual tokens. The outcome should be the same, except that no electricity is wasted in the case of PoS.
At any point you can turn your tokens back into something else. And in theory the price is sufficiently stable or you wouldn't be doing anything with crypto.
Mining machines deprecate and electricity cannot be refunded. It's a production business, and that money is spent.
What is the equivalent of electricity being burnt in a PoS system? I am not seeing that cost. Not opportunity cost -- which also exists for mining Bitcoin -- but direct cost.
It depends on how it's implemented. PoS works by offering a randomly selected stakeholder the authority to update the blockchain. [1] One way this can be done is by requiring stakeholders to deposit a stake with a smart contract that charges negative interest. I don't know how current implementations of PoS work, but this doesn't look like rocket science.
It's true that in every field known to man, money buys influence, at least in some broad and hazily-defined sense of the word.
But the form of influence that can be bought in btc is not voting rights for what happens with the asset, not in any direct way. The distinction matters here.
Mining BTC doesn't get you voting rights at all. The core devs will still make pants on head retarded changes and the centralised exchanges will dutifully trade their trash output as if it were really bitcoin, mining just gets you the right to maybe profit on rubber stamping their trash depending on market conditions.
About five years ago they permanently restricted transaction volume to about 4 per second. After that I stopped paying attention because you couldn't ask for a clearer demonstration of their complete control than the fundamental destruction of the entire purpose of the project even existing.
You can always fork it and start your own teeny-tiny forked Bitcoin network and pretend like the Network Effect is irrelevant to liquidity, right?
Who needs liquidity?
The truth is cryptocurrencies are like anything else that is a network: The people who control how people connect to and participate in a network will effectively exert some amount of control over the network.
I’m sorry, but there is nothing magical about crypto-coin networks and blockchains.
If there’s one thing you can learn throughout history, it’s that power in networks have a tendency to consolidate and that networks have a tendency to break down and be replaced with new networks.
There is nothing inherently special about the Bitcoin network or any other crypto network that makes it immune from being controlled by either internal or external influence.
If you think there is: I’d appreciate you sharing what you believe are effective safeguards.
And bitfinex backs blockstream and the rest follow because they don't want to add to the confusion and tether prints billions into existence to signal fake assent to fundamentally idiotic changes like permanently limiting chain throughput to a fax machine or so whilst censoring any venue which dares point out the abject stupidity, insanity and corruption implicit in all of the above.
But yeah, sure, whatever. Definitely don't throw Brer rabbit in that there briar patch. Stick it to the man, use the obviously captured and sabotaged trojan horse.
What could possibly go wrong? Laser eye me up.
I cannot believe how far bitcoin has fallen. Utter clown world madness.
Bitcoin has a single popular client. There are people who work on that client.
Ethereum has five execution clients, developed by independent teams, and another five proof-of-stake clients, also developed by independent teams, plus an open community of researchers where anyone can participate. The Ethereum Foundation funds some of this, but not all of it.
If the various teams don't agree to do something, it won't get done. You can verify for yourself that no one party is in charge, simply by listening to the public dev calls.
Not really. If one of the clients interpreted a part of the spec in a different way, event if they are right, they would have change it to follow an officially approved code because that's the consensus.
"Officially approved" specs are talked about amongst the devs in all client teams on the Ethereum calls, with proposals having to go through the EIP process, which are then implemented by each team.
Right, maybe it's less visible now and Parity is not in use anymore. But it doesn't change the fact and the link proves that it indeed happens. I guess it's a hard truth nobody wants to talk about.
It isn't a competition. Some are more suitable for certain use cases, and all those listed are actively in use with real funds on the mainnet network.
The site you linked is interesting, but it can only show public nodes.
Edit: not to mention that a single node can serve huge numbers of light clients, e.g. one of those public btcd instances could be serving hundreds of neutrino clients
What I'm trying to say is that anybody who wants to implement new features not accepted by the Core maintainers will never catch on, precisely because the share of other clients being used is so low.
A more distributed, equal % amongst all of the different clients would not only decrease the chance of critical issues with the main client implementation, but should also increase innovation, and make it easy for others to signal their support for that. Which is precisely why Core maintainers will likely see that as an "attack" on Bitcoin.
Bitcoin-core is currently about 97% of bitcoin nodes.
Geth is about 80% of ethereum execution layer nodes.
But the bigger difference is cultural - alternative clients are a core part of ethereum's development culture and is actively supported and nurtured. This is complete with social campaigns to get folks to switch away from majority clients to prevent situations where a bug in one client could cause big issues in the network. The same kind of environment is not present in bitcoin land.
Exactly this. There was a recent community push for consensus layer clients to be more decentralized, which seemed to have worked. Next is the execution layer clients to have better % in use.
> Although there are many different implementations, the original implementation, Bitcoin Core, is by far the most popular, and it is used as the reference implementation
> Bitcoin has less foundation- or team-based leadership that have plagued other crypto projects.
It's designed that way, but it has been attempted before: under the guise of that name, no less. I just saw Charlie Schrem on a live stream a while ago, and he strikes me as the person who best represents those conmen. Many have falled by teh way side, others in to utter irrelevance, and then imbeciles like Bruce Fenton refuse to go away and still clings onto his 'foundation status' as though that gave him any legitimacy as he runs for office.
I'll just say this: Bitcoiners, especially early adopters, don't have any tolerance for these pseudo-thought leader BS, and nothing irks us more when someone tries to speak on behalf of the community. We vote with our hashing power and our nodes, nothing else matters. We may disagree about specific things, like LukeJRs refusal to let go of his smaller block idea, but the truth is this is a cohesive unit it that is bound by self-interest as much as is its about a central ethos: it's the most resilient community I've ever been a part of and I value it most because of it's refusal to be co-opted despite its MANY attempts, even by people who calling themselves a 'chief scientist' and was 2nd only to Satoshi--who I will remind you appealed to the community to not 'kick the hornet's nest' and then did exactly that in regards to using BTC to fund Wikileaks.
while it may be smart from a securities/legal/tax persepctive it also dooms bitcoin to be a useless coin. Transaction speeds abysmal and the energy usage is absurd. These could never be changed
Lightning Network is a layer 2 network on top of Bitcoin that is governed by smart contracts at the base layer and has transaction speed of seconds. It's increasingly used in place of base layer transactions for small to medium sized amounts (e.g. US$1 - $1000). Anything on the order of US$10k+ can reasonably transacted on the base layer, and when I am spending that much I don't mind a 10 minute confirmation time.
Oh, so totally not centralized if there is a central plan. Totally no central group of committers so no centralization, totally no lead developers speaking at conferences providing direction and leadership.
The SEC and Wallstreet have been locked in an eternal cat and mouse game for decades. And given that Wallstreet has the money and hence the talent and options it tends to be a step ahead of the SEC.
I expect this will be even more true for crypto. While I believe that some regulation might be a good thing as it makes crypto safer for the wider public I am genuinely doubtful that the SEC has the capabilities or the right incentives to be that regulator.
In this case the tension is not between SEC and Wall Street but between the SEC (which regulates stocks and bonds) and the CFTC (which regulates commodities and derivatives).
Most people in Wall Street and the crypto community want clearer regulations so they know what the rules are for specific coins/tokens and transactions. What we have now is a very slow Government trying to catch up with technology coupled with infighting between different regulators defending their own turf.
Fortunately there was a bill introduced in the US Senate (referenced in the article) that would clear up much of this, along with various taxation issues.
It's the same problem that the ATF has with regulating guns or the FDA with regulating drugs; classifications are inherently limited and once you define one I can now make something that doesn't fit your existing classifications.
Which is good, we don't want to give the government over-reaching powers, but we also want them to do something.
I think it boils down to public adoption, right? Like, everyone, even the bell-hop, was telling me to buy. It was beyound insane. But they said that because they all saw the graphs. It made the news, etc. But I rarely meet people who will happily take BTC or what have you. Now, is this because it's still in geeksville, or because it's harder to pay taxes, or because its slow? Where do you draw the line on usability? We know why it was made.
> Ether is a product, NOT a security or investment offering. Ether is simply a token useful for paying transaction fees or building or purchasing decentralized application services on the Ethereum platform; it does not give you voting rights over anything, and we make no guarantees of its future value.
Ah yes, the "this ROM is legal as long as you delete it before 24 hours after you download it!" clause. Everyone knows it's not a crime as long as you loudly yell THIS IS NOT A CRIME while doing it. After all why would someone say that if it's not true?!
The SEC can threaten, but they may have blown up their opportunity to regulate cryptocurrency. If they lose the Ripple vs SEC lawsuit (and, according to observers, it's not been going as well for the SEC as they would wish), they could permanently lose almost all ability to regulate cryptocurrency by their lack of timely action and because of one speech by an SEC official four years ago.
The SEC is basically trying to argue that the speech was personal opinion (and the speech said that ETH was not a security), but Ripple alleges that the speech, though perhaps not an official statement, was much more than a personal opinion. We now know the SEC lawyers were involved in writing the speech, which is making life difficult for the SEC. This is also why the SEC is being far more careful now and is saying only BTC is not a security, but that ship may have sailed.
It's being called the Crypto Trial of the Century. A win for Ripple on the SEC's slip-up could mean the SEC is powerless to intervene in most crypto markets. A win for the SEC would result in mass regulation.
No lawyers familiar with how administrative agencies work agree with that assessment. And that is, importantly, not how rulemaking works at administrative agencies.
EDIT: Administrative agency "rulemaking" is constrained by a fixed set of procedures that an agency must follow in order to "promulgate" a rule. First, they must publish a draft of the proposed rules, allow for several weeks or months of public comment, spend several weeks or months reviewing those comments, revise the rules as needed based on the comments received (or explain why no revisions are necessary), and then finally publish the finalized rules in the Federal Register.
Comments made by a single employee do not convey, or constrain, an agency's position on matters within its scope (unless those comments are made in, and pursuant to, a legal proceeding, in which case they are binding only for the limited scope of that legal proceeding).
The closest this article comes to your claim is when it says the case “could settle the turf war between regulatory agencies like the Commodities Futures Trading Commission, the Consumer Financial Protection Bureau and the SEC, all vying for jurisdiction in the space” [1].
A Ripple win would apply to the facts and circumstances of Ripple and XRP, and isn’t expected by anyone informed to set a broad precedent constraining the SEC’s powers.
The saying in Washington is that no one is safe when Congress is in session. And that's pretty much true. Aside from some constitutionally guaranteed activities like petitioning for redress of grievances, they can pretty much legislate anything they can agree upon. (Assuming they can ever agree on anything.)
For instance, the duly elected Democrats who control the House, Senate and White House like to point the finger at the Supreme Court, but they could easily pass whatever law they want about abortion. There would be no more arguing about original intent or penumbrae etc.
The problem with legislature affirming your right to body autonomy is that the next legislature can take it away.
Rights need a stronger foundation than being a bi-annual political yo-yo.
Procedural and executive questions, on the other hand, are the kind of thing the legislature should either take a direct hand in through legislature, or delegate to the executive (When they do the latter, there is actually more public accountability than the former, thanks to the required public processes behind executive rule-making.)
They technically could but it doesn’t appear they are going to try which means they either don’t have the votes or think that it’s better to try and wait until after the midterms
They don't have the votes to break a filibuster in the Senate (on nearly anything; Republican party discipline is really strong) or to break the filibuster itself (a handful of Democrats refuse). So almost all votes are just messaging at this point.
I also wouldn't assume a federal Act guaranteeing abortion access would survive the supreme court. There's a colourable claim that both healthcare and homicide regulation are the purview of the states, and I'd expect five votes for that with the current Court on this issue regardless of its legal merits.
Of course in order to reject that healthcare qualifies under interstate commerce, they would need to either reject Wickard v. Filburn and Gonzalez v. Raich, or jump through some crazy hoops to justify upholding those, while stricking this law down. (Although I'd not be shocked if this court tried).
Actions regulating healthcare within one state have at least as much impact on interstate commerce as growing pot or wheat for personal use. Healthcare is not strictly limited to state lines. My insurance does cover visiting doctors in a neighboring state for example.
Reopening Filburn would raise a crazy amount of questions. USDOT regulation of commercial trucking could falter if Filburn was struck down. Until some new clear line on what the limit was, there would be widespread uncertainly about the federal government's ability to regulate things like commercial trucking, flights, drugs, etc, at least for transactions that don't cross state lines.
I doubt they would actually go that far, as the republican party are not actually anti-federalists, despite often pretending to be that way.
My perspective is perhaps coloured by being a political scientist: we have always (unlike the law professors) seen the supreme court in particular as a deeply political institution.
The present incumbents have made clear that they're open to reopening settled questions, and to a results-focused jurisprudence. Given that New York State Rifle and Pistol Association has just undercut state power in favour of constitutional interpretation while Dobbs goes entirely the other way, my presumption is that there are no major strictly federalist principles at play and results will be case-by-case. And, as with Bush v. Gore, they can always publish an opinion saying "this decision is confined to its own facts" if they want to signal that they're not intending to displace post-Lochner understandings of the commerce clause.
Would you mind sharing more of your thoughts on what might play out if the SEC loses? And then also, if you don't mind, what would happen if the SEC wins?
If the SEC loses, unless Congress were to pass a law to grant more authority, the SEC would have almost no ability to regulate cryptocurrency as they would have no ability to define cryptocurrency as a form of "security" (which is the purview they are granted legal authority over, even in their name, the Securities and Exchange Commission).
If the SEC wins, they can define some cryptocurrencies as "securities" which then automatically becomes part of their regulatory authority.
This is why they are being careful to say only Bitcoin isn't a security now. That speech in 2018, centerpiece of the lawsuit, said Ethereum also was not a security. If that speech is found a legally binding statement, it's really hard to find anything smart-contract-powered from Ethereum to XRP as a security.
> This is why they are being careful to say only Bitcoin isn't a security now. That speech in 2018, centerpiece of the lawsuit, said Ethereum also was not a security. If that speech is found a legally binding statement, it's really hard to find anything smart-contract-powered from Ethereum to XRP as a security.
That seems like a leap. Paper is a commodity, but a stock certificate is (or represents, whatever) a security. A contract may be written on paper, but create a security. A database isn't a security but an entry in the right database, in the right place, might be. It seems to me all it would do is keep smart contracts from being securities simply because they use Ethereum—if they are, or create, securities, I see no reason why those would be any harder to regulate than any others.
> unless Congress were to pass a law to grant more authority, the SEC would have almost no ability to regulate cryptocurrency as they would have no ability to define cryptocurrency as a form of "security"
This is a fringe theory no administrative lawyer backs. Neither, based on crypto’s lobbying of the Congress, do those with influence in crypto.
Ripple’s case is narrow. This legal theory sounds like it’s being pitched by someone making a “times are about to change” pitch.
The SEC is in tough position. Either elon musk can tweet random stuff as personal opinion, or a speech given by the SEC chair has legal standing. I'm watching with popcorn.
Bitcoin is a tool first, and a commodity second. I never "hold" bitcoin, or if I do is for an extremely short while. I've used it plenty of times for almost a decade in this fashion:
1. Get paid in BTC for a service or a product (or buy BTC with offshore money)
2. Sell to someone for an agreed on price
3. Get cash/local currency/supplies/whatever
Two thoughts:
- Lower hype on bitcoin is a good thing for me, as it will bring less attention to it from goverments. I just need a critical mass of people there are enough buyers/sellers/miners.
- The two things that worry me are: governance of the project, and the fact that bitcoin mining traffic can be detected (somewhat like torrents). So, if govts want, they could force the ISPs to check for traffic that may indicate mining, raid, and eventually kill all mining operations (China probably will). Most likely, some countries will be more lax on that.
A commodity must be fungible -- i.e. that would imply BTC and BCH/LTC were economically interchangeable.
They aren't. Bitcoin's blockchain has a longer proof-of-work than BCH. Honest nodes will only mine the longest blockchain (per Satoshi). Therefore any blockchain shorter than Bitcoin's will ultimately collapse in the long term, making them unsuitable to be considered commodities.
Exactly, so BTC and BCH would be considered different commodities. But BCH can never win provably in the long-term, so therefore would not be able to qualify as a functioning commodity.
Finance newbie here, but what is a 'security'? I looked it up, but can't grok it despite people's best attempt to describe it. All the articles can't sum it up in an ELI5 way. What's the TL;DR way of describing a security, and how does BTC fare in this? Is BTC a security?
Most cryptocurrency promotors claim that they have this brilliant team and a great roadmap and in the future all the activity they're going to promote is what will make the token worth something, etc. Which is actually what does make them a security.
The claim in the article is that Bitcoin is mostly not like that. There's a protocol and a bunch of users, but there's no one who's leading the enterprise and causing the value to do something. Not sure I buy that claim, but it's not totally crazy.
There are some projects run by corporations who create and sell tokens, and whose founders have made claims promising returns derived from ongoing operations and investments.
Probably not in the traditional sense. The difference Bitcoin has to most cryptocurrencies is that it was specifically designed with no "premined" blocks and no preordained rewards. In contrast, a lot of projects sold tokens through an "ICO" with a promise of a future project developed against it. ICOs are basically securities, because you're buying the token without actually any guarantee that the project delivers on what it needs to deliver on for the value to change.
In contrast, again, Bitcoin was just offered as a cryptocurrency, from the start. The first block encoded a current event to distinguish the fact that there aren't any rewards already allocated to creators. It was also launched with the complete product available from the start (sans network upgrades).
Note: I'm not saying that Bitcoin is good or anything. I'm just distinguishing between it and most other tokens. Bitcoin has governance systems in place and other systems that make it "more security like" but clearly the SEC chair doesn't seem to believe it crosses that line.
The other replies give the technical definitions, but the high level picture is that a security is an investment opportunity. The issuer of a security has to follow a bunch of laws to ensure that said issuers don’t go around scamming everyday people
It's always nice to know that such important things are never left in the hands of the ignorant masses and are instead left to the rich aristocracy who know what is best for lesser men.
In the US? It doesn't at all. The SEC chair's opinion on if something is a community vs. a security has no bearing on what the IRS thinks. The distinction only really matters when deciding which agency is responsible for enforcing any regulations.
As far as the IRS is concerned they treat them the same for capital gains.
I only think it only affects who can buy it. Example gold is a commodity and anyone can buy it. And unregulated security would require accredited investors.
> they can't make new categories for new tech and have to shoehorn it into the old
Nobody is doing that. For all the new techiness of crypto, its popular failure modes of pumps and dumps, rug pulls and promoters lying through their teeth is identical to the pre-Securities Act securities landscape. So for those narrow problems these proven solutions should work.
But as we can see from anything else, X when digital becomes completely different, it becomes at the same time possible to scale it, to automate it and it becomes international. I fear regulatory capture that will capture all the innovation and profits for US VCs (again).
Money is already digital, highly automated and internationally scaled. The American payments/settlement system is arguably more decentralised than blockchains. Crypto brings unique attributes to the table. But being digital, automatable and international aren’t major differentiators.
To the degree we’re seeing a persistent class of winners in crypto, it’s not users. And it’s not VCs. It’s Wall Street. Because this is an old, dirty game. Some folks just gave it a new paint job.
There are two companies (Visa, MasterCard) that have a global oligopoly and full control. If you get on a blacklist for one you are done, your internet economic life is over (except crypto). I don't care if Wall Street is profiting by speculation if I'm not excluded myself, the problem is that WS is getting a lot of help with the US regulators that then regulate the global market in a way that excludes poor people.
> two companies (Visa, MasterCard) that have a global oligopoly and full control
For one set of rails. Wires, ACH, and a number of other payment rails exist and outclass Visa + MasterCard. (Also, technically, Visa and MasterCard are analogous to SWIFT. They process payment messages. Not the transfer of dollars per se. If they chose, they could execute transactions in Bitcoin with the issuing bank and merchant bank then settling the trade on the blockchain or whatever offline.)
The only 'new tech' is essentially math-based anti-counterfeit protection. Aside from that, this is all firmly traditional financial footwork; "____, but with computers" doesn't really move the needle.
I agree with this. I have said it's the only crypto worth participating in because it's the only crypto that originated for idealistic reasons.
In that capacity it is similar to gold, which in the Golden Age (something everybody talked about in Antiquity and I decided to believe, but I've never encountered anybody else believing in) was openly swapped around as little inventions (you can make all kinds of shit with gold, it's a miracle material, lubricant, any precision, single isotope, list goes on endlessly) and gifts, but then some assholes decided to start hoarding it and enslaving people to mine it, charging interest using it, weigh one gold gift against another saying they balance out, use it to pay for wars to amass more gold. And it became something we just hoard underground. In other cultures it's this stuff, like Kechwa (Inca) it was about worshipping the sun and sure enough it basically is the sweat from the sun because it only is created by stars in supernovas. Idealistic in its origin.
Except in satellites, in satellites it's used for all kinds of shit, the foil for reentry (silver and gold, but only the gold resisted reentry), as lubricant, for welding (4:1 gold to tin), for the electronics of course, as a conductor in some cases so wire, heat foil. And medicine, so dentistry a huge amount but also implants, gold-titanium alloys. And injections for rheumatism in a chemical composition. And anything that must not rust, the go-to is gold.
So all the other coins? They're shitcoins. There is only Bitcoin, everyone else just wanted to get rich quick. Satoshi never cashed out, I divine he committed suicide in 2015 embarrassed not by its success but in how much he owned by being the first to mine it. It was the only crypto that didn't get pre-mined, but he didn't get other people on board fast enough to avoid owning tons of it. So Lycurgus, too, he made the laws of Sparta so they would never be slaves in response to the end of the Golden Age and the constant threat of conquest--basically successful--but was embarrassed of benefitting by then becoming king, so he said "don't change the laws til I return" and left, and starved himself to die. And many say he never existed. Just like many say Satoshi never existed.
It's ironic for a comment about Bitcoin to call people assholes for hoarding. Cryptocurrency is all about making a system which works because people act in their self-interest. If they wanted people to use it and not hoard it, they should've made it easier to spend, or harder to hoard, i.e. inflationary.
Hoarding is about intent, different from saving. Acaparar in Spanish. To take up all there is for yourself, so others have nothing and suffer in need. Whereas saving is sacrifice, so someday there can be something to give in an exceptional situation. Or in an exceptional opportunity, as in investment, but this is secondary, because the purpose of this secondary interpretation is subjugated to the primary interpretation, to eg invest to get a good return to at some point rescue an orphaned grandchild.
A fixed block subsidy, i.e. purely linear emission, is disinflationary, rather than inflationary, with the yearly supply inflation after n years at 1/n. That is large enough to deter speculation for several decades at least.
Monero had no pre-mine either, and addresses the bitcoin privacy gaps. Most cryptos are obviously get rich quick schemes, I don't think it means you should immediately discard every other token.
Well that speaks well of Monero, perhaps that is exceptional, apparently not...
I was wrong in discarding them. I would, in addition to apologizing, salvage my claim in the following terms: bitcoin is the gold standard, the first and foremost, just as every metal is unique and gold is gold and nothing else identical. But there can also be silver, and platinum, and rhenium, and ruthenium, and rhodium, and copper, and many others. Bitcoin was the first, and is unique, but is not the last.
The dude in charge looks absolutely ridiculous -- but this is why I'm very interested in Richard Heart and his Hex / Pulse stuff.
If you "game theory" him out, I believe he adds up to being in crypto for idealistic reasons as well, despite the appearance of the methods he's using to get there.
Perhaps you should read about fractional reserve banking. The same money can indeed be loaned out against ones will and reappear elsewhere in the economy in two different places at once.
This interpretation seems to require a willful misrepresentation of what the man said. He said it is a speculative asset, is has the basic properties of a security, and people other than himself have labeled it a commodity.
This is huge. Essentially if they find anyone sold crypto to unaccredited investors they would be engaging in illegal sales of a security. This may lead to lawsuits where crypto sellers find they are on the hook for the losses of people they illegally sold to. It may also lead to jail time for a substantial portion of the crypto community.
No, this is just a SEC vs CFTC turf war. Neither is willing to concede the "territory" to the other; the only notable part here is that the SEC still doesn't think ETH is settled. It's a minor TV interview, not something "huge".
The odds of this happening are effectively 0, federal government is working on a regulatory framework for crypto markets and it definitely doesn’t involve jailing anyone for sales that have previously been considered legal by basically everyone
It would probably run afoul of the Constitutional protection against "ex post facto" laws.[0] If something (in this case, selling Bitcoin) was legal when you did it, but is now a crime, it is unconstitutional to prosecute you for it.
Is this ex-post facto? Its not like the law is new or that its suddenly illegal, people just weren't sure before if it was violating the law, which is really different from creating a new law.
I also think it's unlikely, but California did at one point revoke a tax exemption and applied that decision retroactively, expecting interest on unpaid taxes that the law at the time said you didn't owe. As I recall, this wasn't considered ex-post-facto simply because being fined for under paying taxes isn't the same thing as convicting someone as a crime, so the rule of law doesn't have to work the same way. You can take any constitutional protection and someone will come up with an argument in their head for why it doesn't apply to things they don't like.
Agency rules are not laws, and thus are not actually subject to the prohibition against ex post facto laws. Notably, if existing laws or rules would already apply to make activities illegal, and the new rules are simply making that explicit, the courts will upheld (criminal) charges based on the new rules.
Importantly, with agency rules, courts can and have looked at the "intent of the law" authorizing the agency's rules to uphold criminal convictions under newer agency rules that were technically within the scope of the rules at the time the acts were committed.
This happens all the time in the tax world; see for example the Bermudan tax loss harvesting scheme that got a lot of people sent to prison even though the schemes were technically within the rules at the time accounting firms started selling them to clients.
No, this is grossly misleading. Bitcoin is the only one he was prepared to say publicly at that moment was a commodity. That doesn't really say anything about other coins other than he's not willing to take a public stand at that moment.
Essentially if they find anyone sold crypto to unaccredited investors they would be engaging in illegal sales of a security.
Well, yes. That's the Howey test. It's pretty simple. A lot of crypto issuers liked to think it didn't apply to them, but the SEC has been saying consistently that it does. There's argument over whether crypto brokers, exchanges, or miners are subject to regulation. But anybody who created and issued a cryptocurrency is clearly making a public offering of a security.
The crypto community got away with a lot during the "line goes up" phase, because the SEC usually acts only when investors lose money. After a 2 trillion US dollar loss in market cap, that phase is over. There will be more complaints and more enforcement actions.
I’d claim that tax misrepresentation would likely lead to some jail time, particularly for those that don’t have the funds for legal representation. As far as I can tell, the prevailing point of Bitcoin is to make capital gains.
it didn't address explicitly what all others were
“That’s the only one I’m going to say because I’m not going to talk about any one of these tokens”
https://twitter.com/SBF_FTX/status/1541565079992369155?s=20&...