I'm Tech-Impaired But in Charge of Spearheading Development of an Altcoin

[smooth]

Hopefully, we would be OK with regard to securities law if we premine 100% and distribute those coins to users of our app at no cost.

I think so if you can also get many other apps to use your coins and create a huge diverse ecosystem for these tokens (but I don't think you can do that without losing your focus on your app!), but consult your own attorney. Note smooth and others felt premine was culpable. I argued against that. None of us are lawyers.

I doubt distributing 100% at no cost is a problem.

What I suspect will never escape some degree of capability is selling ICO coins. No matter how many times and how many different ways you claim "it isn't an investment" we all know it really is an investment. Prosecutors and judges know too.

But sure get your own legal advice. Better yet, pay multiple lawyers to give you different advice. Then you can pull out whichever one you need and claim good faith since you were relying on competent advice of counsel.

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[pineapples]

i recommend integrating an existing altcoin or even 4.

use ones with a strong existing infrastructure that means you can get away with minimal requirements to support your usage.
you will not even need to run nodes, just use their existing api's
and many such api's are generic between coins, so won't require too much work between coins.

also if you use existing popular coins, it will be an encouragement for those coin users to use your app,

if your app is awesomely used and popular, then you could consider adding an in-house currency which you could distribute through the app itself.
personally i'd recommend PoS as it's easier to protect the network by holding a % of premine in house staking wallets, rather than putting it at risk to the amount of random rogue hash or even legitimate coin-switching pools.

[Nxtblg]

I replied to you in the long thread about the Howey test.

Your reply:

Afaics, the Howey test only requires that investors had a reasonable cause to expect their gains would come from the efforts of some group or community. So if you are pitching your coin to investors, I think you will be culpable. Just being decentralized in terms of distribution of the coins (and not selling it directly) doesn't appear to be sufficient. The Supreme Court said it will look past any obfuscations and always at the underlying economic reality, meaning whether the investors were reasonably relying on the lead developer for their future returns.

says that you're either antsier or more prudent than I. You seem reluctant to accept that Howey requires that all four criteria be met, and even more reluctant to recognize the efficacy of a "best-efforts" defense. Did you read the link I supplied, or the Wikipedia article on Howey? W.J. Howey went out of his way to discourage independent action. By my lights, that's the complete opposite of the peer-to-peer foundations of cryptocurrency. As I noted, I'm no lawyer myself...but I fail to see why a best-efforts defense backed up by repeatedly and publicly encouraging independent entrepreneurial action won't hold up.

A capable lawyer could really drag out the case by slowly and emphatically introducing every individual exhortation by the dev (team) to build an independent service for the cryptocurrency - as Defense Exhibit A, B, C, and so on in a performance that would be a lot like a filibuster - and not stop introducing them until he runs out, or is shouted down by the judge (which would give him good grounds to "except" [i.e., indirectly object and give notice of a future appeal.]) or until the prosecutor agreed to stipulate that there's a pattern of exhortation that's the opposite of the pattern of W.J. Howey's exhortations. To mount a defense of this kind, all you need to do is be somewhat of a nag.

[TPTB_need_war]

Hopefully, we would be OK with regard to securities law if we premine 100% and distribute those coins to users of our app at no cost.

I think so if you can also get many other apps to use your coins and create a huge diverse ecosystem for these tokens (but I don't think you can do that without losing your focus on your app!), but consult your own attorney. Note smooth and others felt premine was culpable. I argued against that. None of us are lawyers.

I doubt distributing 100% at no cost is a problem.

How do you prove 100% was distributed not to yourself? I think you should remove the "100%" and reconsider if that changes your stance since you were stating in my thread that a premine is culpable.

[TPTB_need_war]

i recommend integrating an existing altcoin or even 4.

I think he wants to add value for users by giving them some coins for free. So he would need to partner with an altcoin that has that sort of partnership opportunity available. Afaik, none do. It is one of the marketing ideas I was going to pursue with my coin. Obviously Aeon and other coins which are distributed via PoW or are already fully distributed for PoS can't qualify for his needs.

And you all think I was joking when I said I had many tricks up my sleeve on marketing. This wasn't the only one.

use ones with a strong existing infrastructure that means you can get away with minimal requirements to support your usage.
you will not even need to run nodes, just use their existing api's
and many such api's are generic between coins, so won't require too much work between coins.

also if you use existing popular coins, it will be an encouragement for those coin users to use your app,

He is naive if he thinks he can manage his own coin. But let him learn the hard way.

if your app is awesomely used and popular, then you could consider adding an in-house currency which you could distribute through the app itself.
personally i'd recommend PoS as it's easier to protect the network by holding a % of premine in house staking wallets, rather than putting it at risk to the amount of random rogue hash or even legitimate coin-switching pools.

Choosing an inferior consensus model in order to create an inferior copycoin is of low value to his users (Edit: because as the linked post points out, wide-scale adoption drives value and wide-scale adoption via network efforts requires trust in the consensus model).

[smooth]

Hopefully, we would be OK with regard to securities law if we premine 100% and distribute those coins to users of our app at no cost.

I think so if you can also get many other apps to use your coins and create a huge diverse ecosystem for these tokens (but I don't think you can do that without losing your focus on your app!), but consult your own attorney. Note smooth and others felt premine was culpable. I argued against that. None of us are lawyers.

I doubt distributing 100% at no cost is a problem.

How do you prove 100% was distributed not to yourself?

First of all, if you are talking about criminal culpability in a theoretical sense, you don't need to prove anything, the prosecution does. In a practical sense it might help to use KYC-type procedures, have low-barrier methods to receiving free coins without limiting that to only a portion of the distribution, keep good records, etc. Or maybe it is impossible, I don't know.

It certainly isn't the case that every ICO has to be of the form "hey anonymous investorsoh-sorry-I-meant-users, send your BTC to this address and we'll send you some coins, and remember this investmenttoken is not an investment".

I think you should remove the "100%" and reconsider if that changes your stance since you were stating in my thread that a premine is culpable.

I was responding specifically to the OP's statement here about giving away 100% of the coins. If you don't give away the coins but instead sell them (or do anything else like pretend to give them away while actually keeping them or giving them to privileged affiliated parties) you are likely taking a bigger risk.

[TPTB_need_war]

It certainly isn't the case that every ICO has to be of the form "hey anonymous investorsoh-sorry-I-meant-users, send your BTC to this address and we'll send you some coins, and remember this investmenttoken is not an investment".

Obviously you are referring to Iota and Ethereum.

I was responding specifically to the OP's statement here about giving away 100% of the coins. If you don't give away the coins but instead sell them (or do anything else like pretend to give them away while actually keeping them or giving them to privileged affiliated parties) you are likely taking a bigger risk.

And thus my point was that it can't proven that you gave away 100% and thus the implicit distinction you made was impossible.

[TPTB_need_war]

I replied to you in the long thread about the Howey test.

Your reply:

Afaics, the Howey test only requires that investors had a reasonable cause to expect their gains would come from the efforts of some group or community. So if you are pitching your coin to investors, I think you will be culpable. Just being decentralized in terms of distribution of the coins (and not selling it directly) doesn't appear to be sufficient. The Supreme Court said it will look past any obfuscations and always at the underlying economic reality, meaning whether the investors were reasonably relying on the lead developer for their future returns.

says that you're either antsier or more prudent than I. You seem reluctant to accept that Howey requires that all four criteria be met, and even more reluctant to recognize the efficacy of a "best-efforts" defense. Did you read the link I supplied, or the Wikipedia article on Howey? W.J. Howey went out of his way to discourage independent action. By my lights, that's the complete opposite of the peer-to-peer foundations of cryptocurrency. As I noted, I'm no lawyer myself...but I fail to see why a best-efforts defense backed up by repeatedly and publicly encouraging independent entrepreneurial action won't hold up.

A capable lawyer could really drag out the case by slowly and emphatically introducing every individual exhortation by the dev (team) to build an independent service for the cryptocurrency - as Defense Exhibit A, B, C, and so on in a performance that would be a lot like a filibuster - and not stop introducing them until he runs out, or is shouted down by the judge (which would give him good grounds to "except" [i.e., indirectly object and give notice of a future appeal.]) or until the prosecutor agreed to stipulate that there's a pattern of exhortation that's the opposite of the pattern of W.J. Howey's exhortations. To mount a defense of this kind, all you need to do is be somewhat of a nag.

I can probably safely assume you didn't read the entire thread of prior discussion and analysis at the link I provided to you. I don't have time to go redigest that thread again, so I will just attempt to broadly resummarize from memory. You should refer to the thread to dig deeper.

I had read the actual Supreme Court text and not just summary of interpretation. The judgement revolves around the interpretation of the meaning of "investment contract" and it specifically says that there are no specific cases that will preclude the interpretation of the economic reality:

The term 'investment contract' is undefined [...]it had been broadly construed by state courts so as to afford the investing public a full measure of protection. Form was disregarded for substance and emphasis was placed upon economic reality. An investment contract thus came to mean a contract or scheme for 'the placing of capital or laying out of money in a way intended to secure income or profit

So there are no specific rules. The court will look at the economic reality of whether participants were placing of capital or laying out money in expectation of profit. Note that 'capital' might not even mean money. It can include applying their effort, which is a form of human capital. I confirmed this by reading in depth other expert interpretations and subsequent case law.

It appears to me that the court will look at the reasonable expectations of the participants. And always side with protecting the public. Thus my interpretation is if the participants are not investing but just using your tokens, then they don't need to be protected by securities registration. However if your tokens are being invested in by investors expecting a profit, then you need to register then with the SEC. This is why I advised making sure the ecosystem is well diversified asap, so that by the time investors start accumulating the tokens, then it can't be alleged that the investors were basing their investment on the ongoing effort of the original developers of the coin. It is with this interpretation that I have concluded that even coins (such as Aeon and Monero) which distributed their coins via PoW are still culpable under this law. And I don't understand why smooth is risking his already lucrative employment as a software developer to work on a coin that could end up getting him in big trouble. He doesn't need that! And for what gain? IMO Monero and Aeon are not solving any major paradigmatic issues for crypto. OTOH, since they are very small fish, they are likely to never amount to any legal case, but again why waste effort?

But again I am not a lawyer, so you can't cite my posts as legal advice!!

[EvilDave]

Moving back to the point: use Nxt. Just posted in the old NXT thread:
https://bitcointalk.org/index.php?topic=303898.msg13506440#msg13506440

Yes, and it is very, very simple. Check out the wiki:
http://nxtwiki.org/wiki/Monetary_System
And your tech guys will need an API reference to play with:
http://nxtwiki.org/wiki/The_Nxt_API
Nxt-related set-up costs will consist only of the fee for new currency creation, which will vary from 40 to 25,000 NXT, depending on what length your currency code is:
25000 NXT for three-letter codes, 1000 NXT for four-letter codes and 40 NXT for five-letter codes.

If you need more info, come for a chat on www.nxtforum.org, good luck with your project.

[Nxtblg]

I can probably safely assume you didn't read the entire thread of prior discussion and analysis at the link I provided to you. I don't have time to go redigest that thread again, so I will just attempt to broadly resummarize from memory. You should refer to the thread to dig deeper....

Thanks for doing it! I'm not a lawyer myself; I'm just a crypto enthusiast.  And to be frank, I'm batting this around in part to gin myself up; in this sense, I'm not dispensing advice of any sort. I have a long track record of sinning my own sins & taking my own blame.

It's just that criteria #2 and #4 really cut to the heart of why a cryptocurrency and its ecosystem is profoundly different from a business or corporation. If a court unthinkingly applies the Howey test in an choplogicky manner, it'll act as a stereotypical regulator (if you get my drift.)

That said, I should be preparing myself to "sin my own sins and take my own blame."

[ignitiondefect]

Moving back to the point: use Nxt. Just posted in the old NXT thread:
https://bitcointalk.org/index.php?topic=303898.msg13506440#msg13506440

Yes, and it is very, very simple. Check out the wiki:
http://nxtwiki.org/wiki/Monetary_System
And your tech guys will need an API reference to play with:
http://nxtwiki.org/wiki/The_Nxt_API
Nxt-related set-up costs will consist only of the fee for new currency creation, which will vary from 40 to 25,000 NXT, depending on what length your currency code is:
25000 NXT for three-letter codes, 1000 NXT for four-letter codes and 40 NXT for five-letter codes.

If you need more info, come for a chat on www.nxtforum.org, good luck with your project.

Thanks EvilDave. This looks ideal so far. I'm reading up on it now.

[smooth]

I was responding specifically to the OP's statement here about giving away 100% of the coins. If you don't give away the coins but instead sell them (or do anything else like pretend to give them away while actually keeping them or giving them to privileged affiliated parties) you are likely taking a bigger risk.

And thus my point was that it can't proven that you gave away 100% and thus the implicit distinction you made was impossible.

Economic reality, as you said. If you really give away the coins and the money really doesn't flow into your pocket, that's one thing. If you "give away the coins" and then next day you happen to mysteriously discover funds to buy a Lambo, that's something else. Much better chance to end up in the slammer in the latter case (though both may still be small risks in an absolute sense, or not).

If you want 100% guarantees, too damn bad. They don't exist. You could do absolutely nothing having to do with coins/investments/securities and the next day you could be out jogging instead of inside coding and get hit in the head by a meteorite and killed.  Everything in life is deciding which risks to take, and even then accepting that much is unknowable and uncontrollable.

[TPTB_need_war]

If you want 100% guarantees, too damn bad. They don't exist. You could do absolutely nothing having to do with coins/investments/securities and the next day you could be out jogging instead of inside coding and get hit in the head by a meteorite and killed.  Everything in life is deciding which risks to take, and even then accepting that much is unknowable and uncontrollable.

Concur:

Lol. Well you know if I succeed in creating any decentralized design TPTB may take revenge on me. But the point after all is what the design can accomplish for everyone else. And if I get to fuck a few more virgins before I die, then I parting with more than Obama given that Michelle is a man.

[Spoetnik]

@OP
You say you don't know anything..

Then the 2nd half of your first comment you go on and on about knowing everything.

Your full of shit.

And voting crap ? ..that sounds dumb and gay.
Up voting posts etc is always a bad idea.

Tacking on a pointless currency to what sounds like a pointless app is ..pointless.

I think all you want here is people to give the idea to copyright.
This routine is often employed by guys here who want to make their coin but want pre-approval.
They are concerned otherwise it will get ignored / flamed.
So they want the public to tell them how to make it so YOU can reap the reward.

And maybe drum up some business here and find a dev to tack on a shit coin for you.

Fuck this shit.

[ignitiondefect]

^^You must be a lot of fun at parties.

[ignitiondefect]

I'm currently leaning towards creating a token through Counterparty that uses the Bitcoin blockchain. GetGems did this for their app, which has a built in wallet that can store both Gems and BTC. I like the idea of being part of the bitcoin ecosystem and being compatible with the blockchain, etc.

[ignitiondefect]

Have any of you used the GetGems app or purchased Gems?

[TPTB_need_war]

Smooth and others have pointed out that GetGems adoption is estimated to be pathetic.

Again we have advised that creating your own shitcoin for your app is really silly because you will not have enough network effects and investors will also not be interested in your vertical market coin, even if your app becomes super popular it won't matter because you as a developer don't have the focus to make innovations of the coin features needed and the ability to market the coin horizontally. Block chain tech is reserved for experts. You are expert at marketing your app. You aren't likely an expert at everything, given you admit in the thread title that you are "technically impaired".

Horizontal markets (which can be a mosaic of a plurality of vertical markets) are the only way to incentivize strong network effects.

This is the last time I will comment in your thread, because it is obvious that you are determined to create your very own shitcoin.

GetGems is looking for ways to do airdrops to users. Why not partner with them. You can't create coin network effects by yourself.

(bear in mind that I took a look at GetGem's website and based on the website alone, I am not confident in their marketing acumen, but perhaps their apps are where the marketing action is)

Please do not mistake my negativity on your plan to create a shitcoin, as indicative of any animosity towards you or your app plans.

[pineapples]

if your app is awesomely used and popular, then you could consider adding an in-house currency which you could distribute through the app itself.
personally i'd recommend PoS as it's easier to protect the network by holding a % of premine in house staking wallets, rather than putting it at risk to the amount of random rogue hash or even legitimate coin-switching pools.

Choosing an inferior consensus model in order to create an inferior copycoin is of low value to his users (Edit: because as the linked post points out, wide-scale adoption drives value and wide-scale adoption via network efforts requires trust in the consensus model).

inferior consensus model vs blockchain at risk from any person with a middling mining rig...  unless POW coin becomes incredibly valuable to mine of course.

there are coins trading that you can usefully cpu mine with a cheap arse vps. i could put my low end gaming puter on them and screw them up ...