Ethereum is not a security?(prestonbyrne.com)
prestonbyrne.com
Ethereum is not a security?
https://prestonbyrne.com/2018/06/14/ether-is-not-a-security/
9 comments
>Time and again it has been proven that major blockchain's hashing/voting powers are in hands of select few.
Incorrect, miners produce blocks that follow users' consensus rules. Users do not follow miners' blocks. No amount of bitcoin hashing can get bcash users to run bitcoin and vice versa.
Incorrect, miners produce blocks that follow users' consensus rules. Users do not follow miners' blocks. No amount of bitcoin hashing can get bcash users to run bitcoin and vice versa.
Pray tell - who are these users and how are they different from miners? And how do these users vote?
>how do these users vote?
Simple, by running which ever client that has the consensus rule set they want.
>how are they different from miners?
Miners use hashing power to produce blocks that meet users' consensus rules. Users verify these blocks meet their own consensus rules.
e.g. HashingCo uses their miners to produce a block with a blockreward of 12.5 bitcoin. In that block they include a transaction to their power supplier. The power supplier receives the block over the p2p network, checks if it is valid for their consensus rules, and then settles their bill. If HashingCo produces a block with a 100 bitcoin coinbase reward, sent that block to their power supplier, no amount of hashing will get their supplier to accept it as valid
Simple, by running which ever client that has the consensus rule set they want.
>how are they different from miners?
Miners use hashing power to produce blocks that meet users' consensus rules. Users verify these blocks meet their own consensus rules.
e.g. HashingCo uses their miners to produce a block with a blockreward of 12.5 bitcoin. In that block they include a transaction to their power supplier. The power supplier receives the block over the p2p network, checks if it is valid for their consensus rules, and then settles their bill. If HashingCo produces a block with a 100 bitcoin coinbase reward, sent that block to their power supplier, no amount of hashing will get their supplier to accept it as valid
The SEC spokesperson probably doesn't understand that Ethereum nodes are so centralized that no end users run them and it's even arduous for production environments to keep them up. Given that Ethereum miners can vote for themselves whether or not they increase the Ethereum blocksize, that reduces their competitors which centralizes nodes+miners even more.
You can make a case that, before Ethereum was built, it is was classifiable as a security under the Howey Test. You can also make the case that, after Ethereum was launched, that the ether produce while mining are not securities. But what you cannot deny is that the Ethereum Foundations 70 million ether that they premined(spun ether from straw) are definitely securities.
The number of people who don't understand that there's a centralized 'foundation' holding >~65% of ethereum and the ethereum devs are trying to shift their ecosystem to rewarding and voting on Ethereum blocks with ether is astounding.
You can make a case that, before Ethereum was built, it is was classifiable as a security under the Howey Test. You can also make the case that, after Ethereum was launched, that the ether produce while mining are not securities. But what you cannot deny is that the Ethereum Foundations 70 million ether that they premined(spun ether from straw) are definitely securities.
The number of people who don't understand that there's a centralized 'foundation' holding >~65% of ethereum and the ethereum devs are trying to shift their ecosystem to rewarding and voting on Ethereum blocks with ether is astounding.
BTC or BCH ?
Even though the print on SEC.gov[2] clearly states:
This speech expresses the author’s views and does not necessarily reflect those of the Commission, the Commissioners or other members of the staff.
And hence, the absurdity follows.
On the question of the word - decentralization. Time and again it has been proven that major blockchain's hashing/voting powers are in hands of select few. Example ghash.io has crossed more than 51% hashing on bitcoin network couple of times. So, it is going to be interesting on what exactly is decentralization and how many people does it take before a blockchain is truly decentralized.
[1]: https://finance.yahoo.com/news/sec-announces-ether-not-secur...
[2]: https://www.sec.gov/news/speech/speech-hinman-061418