The Venture Capital Working Group isn't claiming they weren't securities at launch. It's claiming that some of these tokens do not qualify as securities any longer.
This is in line with SEC Chairman Clayton's recent statement that tokens can start off as securities but become non-securities and vice versa [1].
In particular, refer to his example:
"If I have a laundry token for washing my clothes, that's not a security. But if I have a set of 10 laundry tokens and the laundromats are to be developed and those are offered to me as something I can use for the future and I'm buying them because I can sell them to next year's incoming class, that's a security. What we find in the regulatory world [is that] the use of a laundry token evolves over time. The use can evolve toward or away from a security."
In general, a solid framework for evaluating tokens that should count as securities vs. non-securities is the one put together by Coincenter, which is available here:
Let me try to make the case for why Bitcoin could be a useful beyond greed.
I can't really think of many reasons why you would use crypto to pay for a coffee or a sandwich if you live in the West (or frankly, even most developing nations).
On the other hand, I can definitely see the utility in a censorship-resistant digital medium to store wealth. To me, this latter use case has much, much more potential to serve the unbanked (as well as the banked).
Some use cases I can think off the top of my head:
(1) You are from Syria and need to flee war and escape into Europe – however bank transfers into Europe are almost impossible if you are a common Syrian. Bitcoin allows you to take your wealth with you, in your brain, as you escape across the border, by just memorising your twelve word private key.
(2) You are from Venezuela or Zimbabwe – The government has issued capital controls and is devaluing currency by the day. You transfer your wealth into Bitcoin in order to offset capital erosion due to hyper-inflation. When the situation stabilises, you transfer your Bitcoin back into fiat.
(3) You are Saudi billionaire Al-Waleed bin Talal. The government freezes all your assets in a political coup. If you have a portion of your wealth in Bitcoin, you could protect them from government expropriation and anonymously transfer them to associates or family members abroad.
(4) You are whistleblower Julian Assance and have been cut off from the financial system as a way to censor your speech. Bitcoin allows you to have an unbreakable digital "Swiss bank account" that the authorities are not able to reach.
This reminds me of Peter Thiel's recent words about Bitcoin [1]: "it's like a reserve form of money, it's like gold, and it's just a store of value. You don't need to use it to make payments."
Is it considered spam because of its substance or because it's repeated verbatim?
E.g. if I take the same exact comment but paraphrase it every time I post it, would that be ok?
The reason I ask is because I see a few accounts post the same tired criticism of bitcoin over and over and see no reprisal for spam.
I would be interested in understanding what the objective rule here is, since I checked the guidelines and could not find references to comment spam definition.
> You are from Venezuela or Zimbabwe – The government has issued capital controls and is devaluing currency by the day. You transfer your wealth into Bitcoin in order to offset capital erosion due to hyper-inflation. When the situation stabilises, you transfer your Bitcoin back into fiat.
How exactly do you transfer your wealth to BTC in this scenario? There aren't many people willing to sell BTC in exchange for a rapidly devaluing third world currency. Realistically, to use any of the large online exchanges, you'll need to convert it to some common currency (like USD or Euro) anyway. But if you can do that, why would you buy BTC, instead of just storing your money in that common currency? It's going to be a lot more stable.
You'd need to get it while you had a chance (see China, Japan, Korea making massive volumes and for a while a lot of the price gains). Once it all freezes up then all you can do is work/trade/exchange for the BTC or USD from those who have it just like it probably always has in situations like that.
Except now they can't literally come take the USD nor can they freeze in-country or off-shore banks so if that's a real scenario for you BTC is a pretty nice deal.
People in Venezuela are actively trading lots of bitcoin every day, in person. You can see this in the LocalBitcoins data: https://coin.dance/volume/localbitcoins
So, okay, some of the fortunate people who do have access to USD/EUR are trading it for Bitcoin on LocalBitcoins, not just storing it. But you're making it sound like this is a graph of ordinary Venezuelans trading their hard-earned bolivar into lucrative Bitcoin, which it almost certainly isn't.
> I can't really think of many reasons why you would use crypto to pay for a coffee or a sandwich if you live in the West (or frankly, even most developing nations).
Until recently that was one of the main utilities of Bitcoin and the mainstream community changed the discourse to "reserve of value". BitPay, Coinbase, Xapo et al were created with the idea of transactions.
This is just one of many observations about how people arguments are not consistent.
I think many organizations behind Bitcoin are responsible for delaying relatively simple innovations to make Bitcoin useful for transactions.
money laundering is legitimising illicit profits but disguising them as legitimate income. none of the examples above fits this definition.actually, it is the opposite - protecting your legitimate gains from illegitimate actions of government.
You are right, I am using money laundering to mean 'anonymous monetary transfer of arbitrary size/value', which most governments don't allow as far as I know.
[1] https://www.investopedia.com/terms/m/moneylaundering.asp
"Money laundering is the process of creating the appearance that large amounts of money obtained from criminal activity, such as drug trafficking or terrorist activity, originated from a legitimate source."
[2] https://www.int-comp.org/careers/a-career-in-aml/what-is-mon... "Money laundering is the generic term used to describe the process by which criminals disguise the original ownership and control of the proceeds of criminal conduct by making such proceeds appear to have derived from a legitimate source."
If i carry a pocket knife, would you call me stabber?
"anonymous monetary transfer of arbitrary size/value" is the knife, money laundering is the stabbing.
There is absolutely nothing that would prevent a government outlawing and criminalizing bitcoin at any point in time. With one stroke of a pen government can outlaw owning bitcoins or performing any transactions in bitcoins. I'd say this is bound to happen eventually with certainty because no government would be willing to lose control on currency (especially ability to pull it out of thin air) and thereby the power they exert on economy as well as other nations. You can count on this. So all those scenarios you mentioned are meaningless because any capital you have in bitcoins is bound to evaporate overnight and reduced to zero at the whim of the government.
Congress may have the power to prohibit virtual currencies (VCs) under its power “[t]o regulate Commerce with foreign Nations, and among the several States”[64] and under its exclusive constitutional power “to coin Money” and “regulate the Value thereof.”[64] In a November 2014 decision, the Court upheld the power of regulators to prosecute a defendant who “designed, created and minted coins called ‘Liberty Dollars,’ coins ‘in resemblance or in similitude’ [or made to look like] of U.S. coins."[65] Although the defendant did not pass the Liberty Dollars currency as a counterfeit, the currency were in close enough “resemblance of coins of the United States or of foreign countries” and consequentially fell under the authority of 18 U.S.C.A. § 486.123 The Court has not decided if § 486 includes the power to prohibit VCs, but if a Court decides that the purpose and intent of VC resembles United States or foreign currency it may fall under § 486. The Stamp Payment Act of 1862 prohibits anyone from “mak[ing], issu[ing], circulat[ing], or pay[ing] out any note, check, memorandum, token, or other obligation for a less sum than $1, intended to circulate as money or to be received or used in lieu of lawful money of the United States.”[66] The Court has not decided if Congress has the power to prohibit VCs under this Act or any other existing regulation or statute.
> If Starbucks accepted Euro in US for its coffee it would be a crime
I don't believe that's true. The US dollar is only mandatory for two things: for settling debts (the lender must accept USD to extinguish debt) and for paying taxes. Otherwise people are free to trade as they please - euros, chickens, whatever.
IANAL, but there have been laws on the book prohibiting bartering in any substantial amount for a while. Of course, the IRS is not going to chase you down for swapping with your neighbor, but large scale "bartering" is definitely frowned upon. What's to stop people bartering a yacht for a house and avoid taxes?
For this to happen there would need to be global heads of governments consensus and look how wonderfully the UN is working... it’s a joke. So the scenario you paint is impossible.
Japan has already embraced cryptos as a legal currency. They won't be the last. As this happens, there will be geopolitical factors at play and it won't be that easy to simply "outlaw cryptocurrencies".
I'm actually taking too a few people in Venezuela who may do some work for me and I'm going to pay them in Bitcoin, it seems a much option than their currency at the moment.
But that's an issue. I agree nobody really knows. But the believers at least have small holdings. Where as skeptics give reasons, which may be true, but only time will tell.
May be search for an Ethereum contract, which allows betting against Bitcoin. Solidity new hack discovery permitting, you can make a small killing. Would be nice way of making a point with some skin in the game.
I respectfully disagree with the idea that Bitcoin's killer-app is to be used as a currency for transactional purposes.
I can't really think of many reasons why you would use crypto to pay for a coffee or a sandwich if you live in the West (or frankly, even most developing nations).
On the other hand, I can definitely see the utility in a censorship-resistant digital medium to store wealth. To me, this latter use case has much, much more potential to serve the unbanked (as well as the banked).
Some use cases I can think off the top of my head:
(1) You are from Syria and need to flee war and escape into Europe – however bank transfers into Europe are almost impossible if you are a common Syrian. Bitcoin allows you to take your wealth with you, in your brain, as you escape across the border, by just memorising your twelve word private key.
(2) You are from Venezuela or Zimbabwe – The government has issued capital controls and is devaluing currency by the day. You transfer your wealth into Bitcoin in order to offset capital erosion due to hyper-inflation. When the situation stabilises, you transfer your Bitcoin back into fiat.
(3) You are Saudi billionaire Al-Waleed bin Talal. The government freezes all your assets in a political coup. If you have a portion of your wealth in Bitcoin, you could protect them from government expropriation and anonymously transfer them to associates or family members abroad.
(4) You are whistleblower Julian Assance and have been cut off from the financial system as a way to censor your speech. Bitcoin allows you to have an unbreakable digital "Swiss bank account" that the authorities are not able to reach.
This reminds me of Peter Thiel's recent words about Bitcoin [1]: "it's like a reserve form of money, it's like gold, and it's just a store of value. You don't need to use it to make payments."
Personally, I disagree with your premise and I do think the killer app for Bitcoin is to be transactional--unlike Ethereum you can't build anything on top of it, it's just "money" or "wealth" which do need to be spent, although you can think of the current incantation of Bitcoin as "wire transfers" (a few hours to a couple of days to get your money) instead of a "debit card" (instantaneous transactions).
However, I do not at all understand why you are apparently being downvoted for a calm and logical counter argument supported with good use cases.
For something to be a store of value you want it to appreciate in value and have enough liquidity for you to cash out.
If you want it to appreciate in value there must be something driving the price. It cannot be others who only want to store their value as then the price is dependent on greater fools entering with new capital. Pure speculation cannot uphold the price long term.
Wanting Bitcoin to be only a store of value or only digital cash misses the point. It should be both.
Gold is only a store of value, even less so than Bitcoin. With Bitcoin I can actually buy things, both via e-commerce and locally if I am motivated enough to.
If I walked around with a bunch of gold coins I would have a harder time.
Cashing out is even more difficult (as someone who grew up in California's gold country and knew many a gold bug, it involves humans and haggling).
The difference, of course, is that gold used to be currency, then was the backing for currency, but then that was abstracted away. Bitcoin essentially replaces rare-earth mining with it's own, in theory "repairing" this abstraction with cryptography.
The total value of gold ever mined is about $8 Trillion, something like 50 times more than Bitcoin. There's probably a lot more value just stored in gold that isn't being exchanged every day for goods and services than the total market cap of Bitcoin.
I don't want to sound condescending, and if I do I apologise, but anyone who has any familiarity with financial markets knows that the industrial applications of gold account for a negligible percentage of its price.
Gold was previously used as and in currencies. It also served as scarcity control for paper money (until abolished). To a lesser extent gold can act as money even today.
Nowadays it is also used in industrial purposes and as decoration.
>I can't really think of many reasons why you would use crypto to pay for a coffee or a sandwich if you live in the West (or frankly, even most developing nations).
Credit card companies/banks sell your transaction data for a lot of money, and plenty of unscrupulous players can garner a lot about your life from such data. While BTC is only pseudonymous, it can provide some shielding from this.
In this sense, Bitcoin is somewhat analogous to Tor. Both technologies try to overcome various artificial restrictions and natural constraints. However, Bitcoin and Tor target different areas: financial services and access to information, respectively.
> (1) You are from Syria and need to flee war and escape into Europe – however bank transfers into Europe are almost impossible if you are a common Syrian. Bitcoin allows you to take your wealth with you, in your brain, as you escape across the border, by just memorising your twelve word private key.
> (2) You are from Venezuela or Zimbabwe – The government has issued capital controls and is devaluing currency by the day. You transfer your wealth into Bitcoin in order to offset capital erosion due to hyper-inflation. When the situation stabilises, you transfer your Bitcoin back into fiat.
Only if you can find someone else willing to exchange Bitcoin for that problematic currency.
> (3) You are Saudi billionaire Al-Waleed bin Talal. The government freezes all your assets in a political coup. If you have a portion of your wealth in Bitcoin, you could protect them from government expropriation and anonymously transfer them to associates or family members abroad.
The FBI was able to seize Bitcoins from the Silk Road. The Saudis could ask them for help.
>Anyone can fork the codebase, or even the blockchain, or one of the many other blockchains out there. There is absolutely nothing provable about BTC as a store of wealth.
Let's rewrite the above as follows:
>Anyone can copy Facebook's model, or even its code, or one of the many other social networks out there. There is absolutely nothing provable about facebook as a good social network.
>> >Anyone can copy Facebook's model, or even its code, or one of the many other social networks out there. There is absolutely nothing provable about facebook as a good social network.
That's a false analogy. You can rewrite it that way if you like, but it doesn't actually show anything.
The OP claimed that "one can provable show it’s a good store of wealth."
That's more akin to saying that facebook will provably continue to be the top social network. You can't prove that, and much like with cryptocurrencies it depends on what else comes along, how facebook continues to perform and whether people lose interest in the whole area of social networking (or cryptocurrency).
BTC has been around a few years. Saying "It has scarcity therefore I can prove it's a good store of wealth" is bollocks, sorry. Lots of things have scarcity.
I see what you mean, let me take back my previous comment, which was typed hastily.
I actually agree with you on the most part, you really can't prove that Bitcoin is a good store of wealth.
I am making an educated guess that a cryptographically secure way to transfer value for very cheap is probably here to stay, but it's far from provable.
In fact, if it were provable, it would become a very crowded trade and the returns would drop to zero immediately. The fact that it's unknown allows for potential greater returns (and greater losses if people who agree with me are wrong).
If Facebook had quit providing any sort of value to the people, had quit providing incentive to store their valuable assets like photos, videos, opinions etc. on their system, then yes, I think if someone copied Facebook %100 and started operating it properly, they'd be a good social network.
Facebook is not just a code or just a network.
ICQ had a network. MSN Messenger had a network. Heck Google actually has a network.
But without providing value, a network is not worth a thing.
The idea that you can value bitcoin via P/E, utilizing mining fees as the "E" is incorrect. It's akin to valuing gold through P/E, by utilising the cost of extraction as the "E".
This is obviously wrong because holding gold doesn't entitle the bearer to a portion of those mining costs, same with Bitcoin.
The reality is that gold cannot be objectively valued because it doesn't have an objective value (beyond its industrial use, which accounts for less than 10% of its actual current price).
As a society, we collectively agree that gold is worth something because we agree that it is worth something.
With Bitcoin, we are doing the same. But if we had centuries to consolidate our appreciation of gold, we are compressing price discovery for Bitcoin in just a few years.
Interestingly, Bitcoin offers several improvements over gold (being digital, lightweight, cheap to move, proven limited supply). It also has drawbacks.
Lastly: the author's contention that you can take value away from Bitcoin by just copying its code is misguided. It would be akin to saying that you can replicate Facebook's valuation by copying its codebase. Facebook's value comes from its network. The same happens with Bitcoin, since its fundamental properties (censorship-resistance, security) are functions of network size and node-dispersion.
Indeed they are, I'm just pointing out that such can be fleeting. Facebook in particular is a good example of a second or third generation product gaining dominance.
I'm not sure "price discovery" is really what we're doing at the moment.
'E' here is really hypothetical future earnings. Some investors think that Amazon can raise prices and become profitable after creating the walled garden. Right now they only make money renting time on servers.
I can definitely see the utility in a censorship-resistant digital medium to store wealth. To me, this latter use case has a lot of potential to serve the unbanked (as well as the banked).
Some use cases I can think off the top of my head:
(1) You are from Syria and need to flee war and escape into Europe – however bank transfers into Europe are almost impossible if you are a common Syrian. Bitcoin allows you to take your wealth with you, in your brain, as you escape across the border, by just memorising your twelve word private key.
(2) You are from Venezuela or Zimbabwe – The government has issued capital controls and is devaluing currency by the day. You transfer your wealth into Bitcoin in order to offset capital erosion due to hyper-inflation. When the situation stabilises, you transfer your Bitcoin back into fiat.
(3) You are Saudi billionaire Al-Waleed bin Talal. The government freezes all your assets in a political coup. If you have a portion of your wealth in Bitcoin, you could protect them from government expropriation and anonymously transfer them to associates or family members abroad.
(4) You are whistleblower Julian Assance and have been cut off from the financial system as a way to censor your speech. Bitcoin allows you to have an unbreakable digital "Swiss bank account" that the authorities are not able to reach.
This reminds me of Peter Thiel's recent words about Bitcoin: "it's like a reserve form of money, it's like gold, and it's just a store of value. You don't need to use it to make payments."
I mean I get that the laws bitcoin evades quotes here are "unjust". They are still the law, however. Some states have unjust laws, and middle eastern muslim states, well the democracies there make dictatorships elsewhere look good ...
Mostly you're complaining that the moral system popular in the US doesn't just apply everywhere. Fact is it doesn't, and imposing it (which is what bitcoin does), is considered not moral.
If you want to allow this, why bother complaining about a 10% tax rate for the ultra rich ? Or highly illegal drug (e.g. GHB, and other rape drugs) ? You can't have one without the other, and ...
I'm going to repeat myself here, but please bear with me if you haven't heard this argument before.
I respectfully disagree with the idea that Bitcoin's killer-app is to be used as a currency for transactional purposes.
I can't really think of many reasons why you would use crypto to pay for a coffee or a sandwich if you live in the West (or frankly, even most developing nations).
On the other hand, I can definitely see the utility in a censorship-resistant digital medium to store wealth. To me, this latter use case has much, much more potential to serve the unbanked (as well as the banked).
Some use cases I can think off the top of my head:
(1) You are from Syria and need to flee war and escape into Europe – however bank transfers into Europe are almost impossible if you are a common Syrian. Bitcoin allows you to take your wealth with you, in your brain, as you escape across the border, by just memorising your twelve word private key.
(2) You are from Venezuela or Zimbabwe – The government has issued capital controls and is devaluing currency by the day. You transfer your wealth into Bitcoin in order to offset capital erosion due to hyper-inflation. When the situation stabilises, you transfer your Bitcoin back into fiat.
(3) You are Saudi billionaire Al-Waleed bin Talal. The government freezes all your assets in a political coup. If you have a portion of your wealth in Bitcoin, you could protect them from government expropriation and anonymously transfer them to associates or family members abroad.
(4) You are whistleblower Julian Assance and have been cut off from the financial system as a way to censor your speech. Bitcoin allows you to have an unbreakable digital "Swiss bank account" that the authorities are not able to reach.
This reminds me of Peter Thiel's recent words about Bitcoin: "it's like a reserve form of money, it's like gold, and it's just a store of value. You don't need to use it to make payments."
All of your proposed use cases depend on the authorities approving your actions. Governments can and will at some point request standard AML procedures when you are depositing large sums of crypto currency into an exchange. If a state decides to introduce capital controls it would also be pretty easy to shutdown access to such an exchange. You can be forced to hand over your private keys or your public addresses could be simply black listed, making them unusable. I would think of bitcoin more like an insurance (like gold) which you need to buy in calm times. Once shit hits the fan it's most likely too late to buy or send bitcoin.
I am sceptical that Bitcoin would be able to hold its value in the absence of state support. If major world governments decided to ban Bitcoin exchanges, then how useful is your "censorship resistant wealth"? People accept its value at the moment because they know they can turn it back into more widely accepted currency if and when they need to. But if that becomes substantially more difficult, I think a lot of people would prefer something more liquid.
You forgot the use case where you're a drug dealer or other shady character and would like a means of transferring money internationally without relying on a regulated payment system. This group was responsible for the most payment-related bitcoin transfers a couple of years ago, at least until that exchange site was shut down. Also, ransomware.
I'm so tired of seeing this trucked out as a response anytime someone talks about how bitcoin is used.
Cash is used for some pretty shitty stuff too, so are credit cards, and checks, and just about every other form of payment.
And funnily enough, Bitcoin is about the dumbest thing to use for illicit things, as it's so easily trackable and records of the money's movement is forever carved into the blockchain (so even if it takes someone 10 years to track the money, or even realize it needs to be tracked, it's still going to be there).
But what about the valid and legal use cases of:
1. paying for goods and services without having to give the company i'm paying access to my account information in a way that they can charge more whenever they want, or lose my information and put my financials at risk
2. Receiving payment for goods and services in a form of money that you don't need to worry about "chargebacks", "reversals", or any kind of way of taking money back after it's been sent
Combine both of those things, and I could see a very real reduction in costs of doing business in just about every area.
>I can't really think of many reasons why you would use crypto to pay for a coffee or a sandwich if you live in the West (or frankly, even most developing nations).
If you had the choice between a form of currency not controlled by a bunch of extremely corrupt entities that is much more convenient and cheaper in terms of storage and transactions, why would you use traditional money? I can't even transfer money to my friend overseas, it is too difficult.
I respectfully disagree with your assertion that "the fundamentals are all wrong".
I can't really think of many reasons why you would use crypto to pay for a coffee or a sandwhich if you live in the West (or frankly, even most developing nations).
On the other hand, I can definitely see the utility in a censorship-resistant digital medium to store wealth. To me, this latter use case has much, much more potential to serve the unbanked (as well as the banked).
Some use cases I can think off the top of my head:
(1) You are from Syria and need to flee war and escape into Europe – however bank transfers into Europe are almost impossible if you are a common Syrian. Bitcoin allows you to take your wealth with you, in your brain, as you escape across the border, by just memorising your twelve word private key.
(2) You are from Venezuela or Zimbabwe – The government has issued capital controls and is devaluing currency by the day. You transfer your wealth into Bitcoin in order to offset capital erosion due to hyper-inflation. When the situation stabilises, you transfer your Bitcoin back into fiat.
(3) You are Saudi billionaire Al-Waleed bin Talal. The government freezes all your assets in a political coup. If you have a portion of your wealth in Bitcoin, you could protect them from government expropriation and anonymously transfer them to associates or family members abroad.
(4) You are whistleblower Julian Assance and have been cut off from the financial system as a way to censor your speech. Bitcoin allows you to have an unbreakable digital "Swiss bank account" that the authorities are not able to reach.
This reminds me of Peter Thiel's recent words about Bitcoin: "it's like a reserve form of money, it's like gold, and it's just a store of value. You don't need to use it to make payments."
This is in line with SEC Chairman Clayton's recent statement that tokens can start off as securities but become non-securities and vice versa [1].
In particular, refer to his example:
"If I have a laundry token for washing my clothes, that's not a security. But if I have a set of 10 laundry tokens and the laundromats are to be developed and those are offered to me as something I can use for the future and I'm buying them because I can sell them to next year's incoming class, that's a security. What we find in the regulatory world [is that] the use of a laundry token evolves over time. The use can evolve toward or away from a security."
In general, a solid framework for evaluating tokens that should count as securities vs. non-securities is the one put together by Coincenter, which is available here:
https://coincenter.org/entry/framework-for-securities-regula...
[1]: https://coincenter.org/entry/sec-s-clayton-use-of-a-token-ca...