‘Ethereum is Not a Security’, Said the Pied Piper of Hamelin

SEC Chairman, Jay Clayton had sent an official letter to the United States Representative, Ted Budd regarding the ‘application of federal securities to …

SEC Chairman, Jay Clayton had sent an official letter to the United States Representative, Ted Budd regarding the ‘application of federal securities to digital assets.’ The uncertainty over cryptocurrencies being classified as investment security has kept the minds at SEC occupied from a long time.

For SEC, Investor’s Security Comes First

Meanwhile, Clayton noted that the SEC has successfully curbed down on the illegal and immoral ICOs that was prevalent during 2016-2017.

The Divisions of Corporation Finance, Investment Management, and Trading and Markets had issued a statement in November 2018

The Commission has brought a number of actions involving offerings of digital asset securities. To date, these actions have principally focused on two important questions.

First, when is a digital asset a “security” for purposes of the federal securities laws? Second, if a digital asset is a security, what Commission registration requirements apply.

Jay Clayton reaffirmed in the letter that thorough analysis of a digital currency or asset will be made by the Departments at the SEC.

—regardless of the terminology used to identify the digital asset—will depend on the facts and circumstances, including the economic realities of the transaction.

Conditions To Not Being Classified As a Security

The necessary and sufficient condition for any digital asset to ‘not’ be classified as ‘security’ is its autonomy and decentralization. The hopes of the token holder must reside with the efforts of the entire community and not with a particular set of people.

Clayton mentioned that digital currency’s definition as a particular asset class could change with time. Therefore, a cryptocurrency released as ‘security’ can later be exempted from the Securities Exchange Act after it achieves autonomy.

In the letter he said,

I agree with Director Hinman’s explanation of how a digital asset transaction may no longer represent an investment contract if, for example, purchasers would no longer reasonably expect a person or group to carry out the essential managerial or entrepreneurial efforts. Under those circumstances, the digital asset may not represent an investment contract under the Howey framework.

Hence, when the conditions are applied on Ethereum, the following can be proposed:

Ethereum has achieved a high level of decentralization through a fair and open distribution of Ether (ETH) tokens. However, the hopes of the Ether (ETH) holder currently reside with the Ethereum Foundation’s successful implementation of the Serenity Update. The expectations of the token holders rest with Vitalik Buterin and the Ethereum Foundation. Therefore, Ethereum might still be classified under ‘security.’

The cryptocurrency media publications have announced that ‘Ethereum is not a security.‘ However, a clarification came from the Executive Director of CoinCenter who clarified that the headline was not appropriate. The publication has confirmed on changing their title.

Some folks interpreted the headline on my post earlier today to mean Clayton said explicitly that ether is not a security. Not what we meant and have changed headline accordingly. He agrees with Hinman’s method of applying Howey (which concluded ether today is not a security).

— Jerry Brito (@jerrybrito) March 12, 2019

Summary
Article Name
‘Ethereum is Not a Security’, Said the Pied Piper of Hamelin
Description
SEC Chairman, Jay Clayton had sent an official letter to the United States Representative, Ted Budd regarding the ‘application of federal securities to digital assets.’ The uncertainty over cryptocurrencies being classified as investment security has kept the minds at SEC occupied from a long time.
Author
Nivesh Rustgi
Publisher Name
Coingape
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The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.

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Tron Founder Justin Sun to Spend USD 20m on New Twitter Followers

He has also paid to promote his profile and was delighted to overtake Ethereum’s co-founder and main political figure Vitalik Buterin, adding to the …
Tron Founder Justin Sun to Spend USD 20m on New Twitter Followers 101
Source: @SolitudeAU, Twitter

If you’re looking to boost your follower number on Twitter and your content just doesn’t cut it anymore, there may be hope for you yet. Take an example from Justin Sun, founder and CEO of blockchain platform Tron, who is bidding for even more recognition from the Twitter world by organizing an airdrop supposedly worth USD 20 million. Of course, that’s not the reason he’s giving publicly.

“To celebrate BitTorrent Token & Tether TRON success, I am planning a USD 20 million free cash airdrop. Good news – it’s coming, bad news – I may decide to give away more! First, I will randomly pick 1 winner for a Tesla up until 3/27! To apply, follow me and RT this tweet! Simple!” tweeted the entrepreneur earlier today and added this picture:

Tron Founder Justin Sun to Spend USD 20m on New Twitter Followers 102

The celebration may be the main reason for the giveaway, but Justin Sun has been on the hunt for more Twitter followers for a while now, having overtaken all the other project leaders from the top 20 coins by market capitalization. He has also paid to promote his profile and was delighted to overtake Ethereum’s co-founder and main political figure Vitalik Buterin, adding to the theory that Tesla cars and millions of dollars mean nothing in the face of Twitter recognition.

Yeah yeah, you just wanted to retweet it to get the Tesla.

— JaminXBT (@JaminXBT) March 12, 2019

And this giveaway may well get him to that one million goal: as of the time of writing, Sun has 948,000 followers, steadily increasing by the minute. The followers don’t even care much about his reasons: “Still not exactly sure how BTT was a success but as long as he gives away money I don’t care what his definition is,” wrote Twitter user @SmokeyXBT.

Interestingly, the rules of the competition are yet to be released. Although many took his tweet to mean that a single winner would take USD 20 million worth in the airdrop, there is also the possibility that the winnings will be divided by some criteria.

____

Tron price chart:

Tron Founder Justin Sun to Spend USD 20m on New Twitter Followers 103

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Ethereum Price Prediction 2019: How High Can Ethereum Price Go in 2019?

Last year was hard for the entire crypto market, even for the world’s number one altcoin, Ethereum, which experienced a fall of 76% from January 2018 …

Last year was hard for the entire crypto market, even for the world’s number one altcoin, Ethereum, which experienced a fall of 76% from January 2018 to November 2018. In spite of positive price predictions for 2018, it seems that ETH let down many investors.

But will 2019 be different? In today’s article, we will be analysing several forecasts and predictions and determine which Ethereum price prediction is most likely to come true in 2019.

Will Ethereum Hit the $ 1.000 mark in 2019?

In the past, Ethereum has seen a fulminating rise in price, and many anticipate this could happen once again. Coinswitch’s Ethereum price predictions for 2019 is that the altcoin will reach a price of $1,400 due to the expansion in the project’s developments.

It has been rumored that ETH co-founders Vitalik Buterin and Joseph Lubin are thinking of implementing with other engineers, storage fees for smart contracts. In the next 2 years, it is also planned that Ethereum will switch to a Proof of Stake consensus algorithm. This will lead to no supply inflation as stakers will not need huge rewards seeing as running a validating node will cost almost nothing.

The proposal for implementing PoS has been positively received by the dev community. This could also lead to a rise in ETH prices.

Ethereum is a platform which is highly utilized in domains such as decentralized control, digital asset storage, decentralized exchange, and gambling. The elimination of Ethereum bottlenecks could be the main reason as to why Ether might reach the $1,000 mark.

On the other hand, there are analysts that believe Ethereum will not be able to climb back to the tree digit threshold.

These predictions are based on the fact that Ether has lost a huge percentage of its value. Out of the top three cryptos, ETH has sustained the most considerable losses. Ethereum’s drop in value has also been influenced by the state of the Initial Coin Offering market as there have been many scams, and new tight regulations are being planned.

Tim Enneking, managing director of Digital Capital Management stated that “There are no drivers to push ETH to 40% above its prior all-time high”.

Factors That Could Influence Ethereum’s Price

There are several factors that could determine in which direction ETH’s price could be going:

  • Ethereum and smart contract adoption by decentralized applications and ICOs.
  • New developments and upgrades being added
  • Support from government and financial organizations.
  • The crypto market recovering.

Ethereum is still the number one blockchain dApp development. In addition to smart contract deployment, it is also constantly adding decentralized software solutions.

But even though the technology is the most useful in the blockchain space, the project is paying the price for the high number of fake projects that were built on its platform. The majority of Initial Coin Offerings used Ethereum’s protocol in 2017 and 2018. Many existing projects are now selling-off their Ether due to the coin’s price drop.

A factor that could positively influence the price is that Ethereum is backed by fortune 500 companies and is integrated into financial organizations.

Top Ethereum Price predictions

There have been several notable figures from the crypto space that have made their own forecasts regarding ETHs evolution for this year:

Joseph Raczynski

The founder of Joe Technologist.com, Joseph Raczynski believes that Ethereum might reach a price of $1200 by the end of 2019.

‘They are one of the most real projects to date. Nearly all large organizations are testing on this platform’, said Raczynski.

Nigel Green

Nigel Green, CEO of deVere Group, a leading financial consulting firm, made an optimistic prediction that Ethereum would see a price of $2500 by 2019.

‘This general upswing will be fueled by three mains drivers. First, more and more platforms are using Ethereum as a means of trading. Second, the increased use of smart contracts by Ethereum. And third, the decentralization of cloud computing’, said DeVere.

‘Another key reason for the rally is that there’s a growing awareness of the need and demand for digital, global currencies in a digitalised, globalised world’, Green said. ‘Ethereum can be expected to solidify its position as the second most valuable and used cryptocurrency token in the world.’

Trading Beasts

The Trading Beasts website made a realistic prediction for Ether, forecasting a price of $908 by the end of 2019, with the average value revolving around $650.

Ian McLeod

The technology expert of Thomas Crown Art predicts that Ethereum’s price will reach $500 in 2019, though the development team might realize incredible implementations. He also believes that BTC will lose nearly 50% of its crypto market share to ETH in the next 5 years.

‘I maintain that we can expect Ethereum to hit $500 by the end of 2018 and go on an overall upward trajectory throughout 2019.’

‘We can expect Bitcoin to lose 50% of its cryptocurrency market share to Ethereum, within five years.’, McLeod explained.

Tom Lee

The head of research at Fundstrat Global Advisors believes that Ethereum will recover in the following year and reach the price of $1,900.

He said that going over the all-time high is improbable: ‘There are no drivers to push ETH to 40% above its prior all-time high’, he added.

Craig Cobb

Craig Cobb, the founder of TraderCobb.com made a very conservative prediction for ETH, estimating a value of $240 by the end of 2019.

Chris McClure

Chris McClure, CMO at cryptocurrency at data provider Svandis, has affirmed that he has faith in the Ethereum project.

‘Whether it’s Sharding, Plasma, or OpenST Mosaic, there are tremendous technological reasons to be bullish on Ethereum and to believe in a speculatively high price moving in 2019.’

‘Ethereum is aggressively oversold and overdue for a rally going into 2019’, said McClure.

Steven Nerayoff

Steven Nerayoff, the CEO & Founder of Alchemist, has predicted that Ethereum should double or triple in price by the end of 2019.

Matthew De Silva

Quartz cryptocurrency journalist Matthew De Silva, made his prediction in early September after ETH dropped to $179.

De Silva’s forecast is the grimmest by far, believing that Ethereum is will reach its true value, which is in his opinion, equal to nothing.

For context, here is what I wrote: pic.twitter.com/nTaY7FAuAZ

— Matthew De Silva (@matthewde_silva) September 12, 2018

Summary

Predicting the price of ETH or any other cryptocurrency is difficult and only time will tell if even one of these forecasts will come true.

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Lost History: Ethereum (ETH) Complete Nodes are Now a Rarity

This also means that in the rare event of a chain reorg, where malicious mining alters the history of the distributed ledger, BlockCyper may be the only …

The Ethereum (ETH) blockchain is not yet four years old, and it is already next to impossible to synchronize a full node containing the complete history of the blockchain. The difficulty of synchronizing nodes has been talked about for months now and even specialized paid node operators are having trouble.

This also means that the immutable-state database of all Ethereum transactions may, in fact, be lost, due to the heavy requirements of keeping a full node. This fact may not be noticed by regular users, although for years synchronizing even a full wallet with a pruned blockchain has taken hours. But to store the complete history of Ethereum is a gigantic task.

Currently, even a full synchronization of the Ethereum blockchain does not contain the entire history. Recently, BlockCypher, a provider of blockchain-related services, attempted to run a node with the entire history, and discovered that no other actor on the network ran the node.

BlockCyper contacted Vitalik Buterin, but he stated that he knew of no entity that ran the complete node with the full history. Not even the Ethereum foundation took the task of running such a node. This also means that in the rare event of a chain reorg, where malicious mining alters the history of the distributed ledger, BlockCyper may be the only entity to hold the entire history of the blockchain for verification.

This, in effect, wipes the opportunity for reliable feedback in case of reorgs, hacks, or other exploits. In the case of audits and blockchain searches, some entities may have to rely on archival states supplied by third parties. Previously, the general understanding was that the Ethereum network had three or four full nodes, on which most other entities relied. However, some of the leading actors within the ecosystem have abandoned the task:

https://twitter.com/giacomozucco/status/1105265671582244869

Other networks face a similar problem. The much newer EOS network also does not have its full state stored on multiple locations, with talks of just two block producers storing the complete blockchain history.

The complete blockchain history is needed if there is a requirement to track the state of an account at any given block height. Hypothetically, a reorg could alter that state, with only very limited recourse to the accepted valid state.

The news of troubles with Ethereum nodes barely affected the price, as ETH markets remain mostly speculative. ETH price remained almost unchanged at $133.90 as of 8:20 UTC on Tuesday.

by Christine Masters, 5 hrs ago

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Bitcoin vs Ethereum: The ideological divide

When Ethereum co-founder Vitalik Buterin tweeted a proposal for a small fee tax that would finance wallet developers, the reactions were mixed in …

When Ethereum co-founder Vitalik Buterin tweeted a proposal for a small fee tax that would finance wallet developers, the reactions were mixed in both the Bitcoin and Ethereum communities. Outside the world of crypto, this sounds fairly reasonable: creating a system to incentivize coders to keep up their good work by virtue of negligible fees is no reason to grab torches and forks to start a riot. 1 gwei/gas is a really small amount that, according to Buterin’s calculations, would grant the developers of the wallet clients about 2 million USD per year.

The idea didn’t seem to be popular among the Ethereum community members, but it didn’t generate much heat either. To some, it’s just a wild thought that one of the central figures has released for testing reasons. To others, it’s evident that these central figures of Ethereum will have it their way if they want, so they choose to entrust their monetary holdings in the hands of the supposedly more knowledgeable elites.

If an influential bitcoiner went on to make such a proposal, they would fall out of grace in a heartbeat. Imposing taxation is anathema to the core beliefs of Bitcoin, and ideologically defeats the purpose of sovereignty for which most enthusiasts have chosen to support Satoshi’s project. This isn’t just a matter of protocol or monetary maximalism, but a clear division between the arbitrarily imposed ways of governments, and the voluntaryist tendencies of the new decentralized world.

This example of trying to impose taxation is only a small example which points out to a greater phenomenon: there is both a sociological and a political difference between supporters of Bitcoin and Ethereum. It goes deeper than liking Turing-completeness, believing in tokenization, and views on immutability. In our situation, we have two distinct groups who don’t really have much in common but share ideals that are integrated into the same movement.

And with the ugly risk of creating generalizations and stereotypes, let us proceed with the analysis.

Case study one: Vitalik Buterin vs Jameson Lopp

In a sense, this comparison is unfair: Vitalik Buterin was one of the founders of the Ethereum protocol, and has remained a prominent figure which benefits from a somewhat unquestionable degree of authority and respect; on the other hand, Jameson Lopp has only joined Bitcoin about 3 years after it got created and probably can’t make a proposal for BTC development without being scrutinized. However, they are both articulate and intelligent individuals who possess both the technical savviness to code and the linguistic skills to write long blog posts. Furthermore, it can be said that they are both parts of the same generation, with Mr. Lopp being about 10 years older.

This is where the similarities between them end and we get into the territory that divides them. First of all, Vitalik Buterin is definitely more open to left-wing ideas and sometimes differentiates between the failure of authoritarian regimes and doctrinary socialism. Conversely, Jameson Lopp never shies away from expressing his libertarian views and goes as far as promoting gun training as a way to protect one’s sovereignty. From the very beginning, we see the kind of ideological divide which further justifies their decisions and motivations.

Neither of them is completely representative of the community he comes from, but they are both esteemed thought leaders whose influence can change opinions and shape mindsets. It’s very likely that both of them would vehemently deny this leadership component and point out to decentralization of ideas and individual agency, but their personal views on fame and power don’t change the fundamental fact that people listen to their opinions.

Yet Vitalik speaks to a crowd that is more likely to embrace socialist ideas and accept concepts such as governance, regulation, taxation, and compliance, while Lopp is the epitome of anarcho-capitalism and sovereignty (at least in his public appearances, that is). It’s no wonder that the Ethereum co-founder is able to blend into the Silicon Valley crowds and impress VCs, while the Bitcoin advocate is more akin to cypherpunks who preceded him (Tim May, Wei Dai, Hal Finney, Nick Szabo, and Satoshi Nakamoto).

Case study two: a conflict between generational ideologies

This last argument presented leads to a more complex discussion about the political affinities of every generation. Technically speaking, Vitalik is a mid-millennial born in the early 1990s, while Mr. Lopp is somewhere in between Generation X and the early millennials. The classification is relevant in terms of defining time periods in which they received their first years of education and the world events surrounding them.

If Jameson Lopp graduated from the University of North Carolina in 2007 (when he was presumably 21 years old), then he must have lived his first years of life during the late Reagan era, when the Cold War was coming to an end. This kind of background can shape one’s worldview and nurture a general feeling of distrust in relation to the government: if the political climate is more tense and uncertain, then it’s more likely for the men who grow in this kind of environment to become self-reliant and autonomous.

Now, the case is not necessarily evident in the case of the two main ideologues of Ethereum, Vitalik Buterin and Vlad Zamfir: while they both have origins in countries that used to be governed by USSR-influenced communist regimes, they don’t seem to share the same amount of enthusiasm for anarchy and radical rejection of the political status. It might be due to the governance model of Ethereum and the expectations implied in being involved in a project that must please an interesting combination of venture capitalists and idealistic angel investors, but the advocates of the Turing-complete blockchain seem to be more concerned about compliance and  negotiation with governments (as opposed to building an entire economy that denies and defies their authority).

The examples may have gone a little too far, and have most likely taken liberties that are based on opinions that have been expressed at one point in time in a given context. However, they are important to introduce the following theory: Bitcoiners are more akin to the political ideas of baby boomers and Gen-X folks, while Ethereum fans are closer to the stereotypical media depiction of the millennial generation.

One camp is highly skeptical of the government’s legitimacy and appreciates freedom more than excessive regulation, while the other is inclined to join the crowd that cheered for Jeremy Corbyn during his stage appearance at 2017’s Glastonbury festival.

The former understands the necessity of sound money as a hedge against an increasingly intrusive government, while the latter has most likely grown in peaceful times, in a democratic regime which guarantees the protection of fundamental human rights, and in a context that doesn’t justify for the replacement of fiat money (unless Austrian economics or more radical ideas get applied to the financial crisis of 2009).

This point has been purposely avoided until now, but it has to be mentioned for the sake of providing more context: it’s very likely that this evident cleavage is rooted in the post-DAO attack hard fork and the transition to Proof of Stake. Both concepts revolve around the idea of establishing institutions of power (the first proves that code is no longer law if financial pressures emerge, and the second contributes to the creation of an oligarchy – the type of regime where the rich only get richer).

Case study three: the economics of Bitcoin and Ethereum

Bitcoiners long for a golden era of sound money when “hold” was the most valuable store of value and means of exchange, while Ethereum fans embrace the complexities of Keynesian economics and global politics. Correspondingly, the protocols follow the underlying ideologies (though it might also be the other way around): Satoshi’s invention has a fixed supply, a predictable monetary policy, and a system of incentives that is more or less easy to understand; on the other hand, Ethereum has an unlimited supply, a roadmap that can be delayed according to the will of a few elites, and a governance model which addresses the needs of the status quo.

Under these circumstances, it’s no surprise that the most influential person in the ETH space makes a proposal to introduce transaction taxes for the sake of financing wallet developers. While it sounds reasonable, it’s a precedent that will lead to many other similar decisions to be made just because the trust system facilitates them. As a project which embraces governance and compliance with laws, Ethereum is bound to make many compromises with the forces that be – just like governments and corporations.

For now, Bitcoin has been resilient in maintaining its principle. Initiatives of hard forking to increase the block size have been labelled as contentious and against decentralization, and the scaling debate has led to the accelerated development of a second-layer infrastructure to take some of the clutter. Similarly, Ethereum also develops scaling solutions like Plasma, Raiden, but takes it a notch farther with the plans to shard the blockchain for greater data efficiency.

It would be unfair to go to far with this comparison, as a project which intends to become a world computer, a reliable platform for smart contracts, and a backbone for tokenization clearly can’t follow the same path as something simpler which only aims to be sound money. Both Bitcoin and Ethereum have a long way to go before reaching their goals, but these differences in approach to monetary policy and upgrades reveal a lot about their underlying motivations and ideologies.

Nevertheless, the last point will refer to Ethereum’s 12 million founder reward and 60 million ICO pre-mine. Of the 105.171.622 ether units minted at press time, 72 million (about 68%) have been issued before everyone else got their chance to start mining. To the business-minded developers who don’t want to worry about losing their status due to potential financial problems, this sounds like a good plan. But hardcore bitcoiners would have never accepted such a premise and look for protocols that are fair to the extent of immaculate conception. This idea leads us to the final part of the article, where we address cleavages and why they’re dangerous.

Case study four: dividing the space according to ideological predispositions

In a sense, the phenomenon of attracting like-minded individuals who share similar social and political values is a no-brainer. Friendships and meaningful social relationships are often established on the basis of likeness. However, taking these interactions to the extent that they turn into tribalism is dangerous for progress: while competition is great and brings the best out of each camp, ostracizing and setting boundaries is unhealthy.

When someone new discovers cryptocurrencies right now, they will most likely get drawn to the project which best reflects their worldview. Sometimes it’s a friend who helps discern between the sides by introducing a personal passion or involvement in one of the protocols, but individual exploration is just as significant since a Rothbardian will definitely reject anything that deals with taxation and pre-mines.

There isn’t enough cooperation to find a middle ground and present the projects as complementary in achieving parallel goals for a better world, so the interactions are often times tense and divisive. The example of Andreas Antonopoulos comes to mind: due to his geekiness and technical background, he pursued Bitcoin and has spent many years exploring its intricacies and educating others. But when he got interested in Ethereum as an acquired taste and started working on educational resources for this other protocol, he has fallen out of grace in the eyes of some puritans. Mr. Antonopoulos, despite still supporting Bitcoin, is getting cast out for not being coin monogamous.

Now let’s think about this scenario where a known Ethereum developer who works on blockchain sharding suddenly starts contributing to Bitcoin Core, or vice versa. There would be a lot of tension in the air, fuelled by suspicions of sabotage and bad intentions all around.

Sadly, the relations between Bitcoin and Ethereum supporters reflect the contemporary political landscape from the United States of America, where liberals and conservatives can’t even discuss basic issues without resorting to labelling and name-calling. Even if there is a common ground and the incentives are aligned to facilitate cooperation, it’s unlikely to happen due to mindsets and narratives that were designed to create division and dissent.

That’s not to say that Bitcoin and Ethereum are similar enough to enable multiple collaborations between devs and advocates. But to put it in laymen terms that have been purposely avoided as much as possible throughout the article, bitcoiners resemble supporters of right-wing politics (US and UK conservatives, European liberals, et al) while Ethereum fans are more to the left side of the spectrum (American democrats, UK labour supporters, European socialists).

Essentially, there’s nothing wrong with having to ideologically-different camps that stand for opposite values. However, this new decentralized world should take some cues from the disastrous international politics and try to be better. If we’re building the foundations of a system where you’re a maximalist of either A or B, then we still have lots of lessons to learn. Competition is great, conflicts of ideas are constructive, helpful and healthy in a society, but at the end of the day we must live with each other and distinguish between rivalry and common goals that even the biggest of anarchists can accept.

Generation X/Millennial picture credit: AESC

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