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Author Topic: In principle, is an individual miner the "creator" of his block reward?  (Read 1359 times)
Timo Y
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March 19, 2013, 01:53:19 PM
 #1

Technically, it could be argued that bitcoins are "created" collectively by the network and simply "awarded" to the miner, or "found" by the miner, or whatever.

But judges tend to care more about what's going in principle, rather than what's going on technically.  So regarding the the FinCEN statement, I think that this is the more legally pertinent question.

This is how I would argue that an individual miner is not the creator of "her/his" coinbase currency units, not even in principle:

*Can an individual miner decide how many coins are created? No.
*Can an individual miner decide whether his/her discovered block makes it into the longest chain? No. Though this is likely, it's not guaranteed.
*Can an individual miner decide whether his/her discovered block makes it into the consensus chain? No.
*Are miners, individually or collectively, responsible for choosing the consensus chain? No.
*Can an individual miner create currency units by solving a block but not publishing it? No.
*What if a miner solves a block, but a third party publishes it? Who is the creator? The solver or the publisher?
*At what moment does a "currency unit" come into existence? At the moment of the coinbase transaction? Or only 120 blocks later?
*If it only comes into existence 120 blocks later, can the miner still be considered the sole "creator"?  Didn't the collective effort of other miners also contribute to "creation"?

Discuss.
 

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March 20, 2013, 05:50:58 AM
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A final type of convertible virtual currency activity involves a de-centralized convertible virtual currency (1) that has no central repository and no single administrator, and (2) that persons may obtain by their own computing or manufacturing effort.

This is the provision which applies to Bitcoin and miners.

A miner doesn't have to be considered a creator.  He merely needs to obtain his Bitcoins (or other virtual currency) by his "own computing effort" (people pooling their computing efforts will almost certainly be covered under this provision, too).  

Quote
I don't think it matter because miners cannot remove coins from circulation so they are not administrators.  If Amazon coins start getting issued Amazon can create and remove coins from the system so they are the administrators.

No-one's arguing that miners are administrators.  The central issue with the potential to affect miners is them being classified as money transmitters if they sell their coins.

Different provisions apply to Blizzard (most certainly an administrator) and WoW gold than to Bitcoin.  WoW gold would count as (b) Centralised Virtual Currencies and therefore the provisions of that paragraph would apply to Blizzard.  Bitcoin counts as (c) Decentralised Virtual Currencies and therefore the provisions of (c) apply to Bitcoin, miners, and exchanges.

Off course an interesting question is how it would come to the attention of regulators that you're selling BTC you mined.  Exchanges don't require you to disclose the origins of the BTC you're offering for sale, and wouldn't have the resources to verify any declarations by customers about such origins anyway - are they going to be required to report every single BTC deposit just in case you're selling BTC you mined as opposed to BTC you bought or received as payment for goods/services?

Also, bear in mind that this is a guidance statement.  It tells you how FinCEN intends to approach the issue of virtual currencies but it doesn't create legal definitions in and of itself.

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March 31, 2013, 06:36:36 PM
 #3

Technically, it could be argued that bitcoins are "created" collectively by the network and simply "awarded" to the miner, or "found" by the miner, or whatever.

But judges tend to care more about what's going in principle, rather than what's going on technically.  So regarding the the FinCEN statement, I think that this is the more legally pertinent question.

It isn't legally relevant at all.  A judge would consider the actual wording of the statutes and regulations, which do not contain any definitions related to creating bitcoins.


I don't think it matter because miners cannot remove coins from circulation so they are not administrators.  If Amazon coins start getting issued Amazon can create and remove coins from the system so they are the administrators.  I wrote to FinCEN and asked though.

There is no definition of "administrator" in 31 CFR 1010.100.  The closest would be "provider of prepaid access" in (ff)(4).  Whether or not Amazon meets this definition depends on the specifics of the Amazon Coins system.


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April 01, 2013, 01:34:08 AM
 #4

Bitcoins are created by the code, or we can use the term "network itself", not solo miner or pool. Solo miner or pool just fullfill the requirements
for new bitcoins to be created, that is all.

Even if somehow this "creator" refers to the recipient of the generated coin, who would be the creator?

If I mine in a pool, I am providing hashing capacity service to the pool.    The pool operator is the party that receives the generated coin.  Individual miners get paid for that work, but generally not from the generated coin.   

Now Eligius and P2Pool distribute generated coin directly to the miner proportional to the work contributed, so in that case it might be argued the miner was the "creator", but in all other instances apparently it would be the pool.

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April 02, 2013, 05:00:58 AM
 #5

and don't forget that 70-75% of miners merely contribute to a pool.  The pool operator obtains the block reward.  The pool operator (pool adminstrator) distributes the virtual currency thereby obtained based on its own internal scoring or sharing system that is completely within that persons' control. 

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