rpietila Altcoin Observer

[JorgeStolfi]

So the point is if you are going to use the King's money, than you pay his taxes.

That "if" may be unwarranted... according to random commentaries in the net, the tax in question was a "poll" (per-capita) tax that was due whether one used Caesar's money or not.

But OK, we can save that reading for consolation in the future, when bitcoin inflation will be over and the miners will charge 4% fee on every transaction -- including when you get your pay, when you move it to cold storage, when you take it from cold storage, and when you spend it.

As for that other stuff about the camel/rope, the consensus is fergerit, right?

I find the Christian Bible enlightening by way of analogy. I hope that altcoins are not the False Gods ...

Do you mean that bitcoin is the True God? 

[AnonyMint]

the miners will charge 4% fee

That is one strong reason why we won't be using Bitcoin.

[georgehosterguy]

If someone died, was buried and came back to life after 3 days, what would you call that today? http://knowyourmeme.com/memes/zombie-jesus

U win 

[NewLiberty]

True.  But I think the "ICO" is very clearly in violation of the law.  This creates a liability when they are sued by investors who lose money as a result.

Which law specifically do you think is violated?

The Securities Act of 1933, section 5(a) for one.  There are others which may also pertain, but I am not a domain expert, and prefer to mention only the one which seems relatively straightforward in its application.

Is Poloniex doing anything at all with securities?
Even Bitshares and XCP aren't traded there as securities. 
Nothing they sell is a share of a company, or anything like that, is there?
Again, I am in now way intimate with their business practices, but I'd imagine that would be a hard one to stretch into applying to their business.
They may run into trouble with the CFTC once the Winklevoss do their thing, because then they would run into issues if anyone traded what might amount to a basket, but most of what I see there is pretty small volumes.

[NewLiberty]

I remember what Jesus is quoted as saying, "Render therefore unto Caesar the things which are Caesar's; and unto God the things that are God's".

I'm no expert but wasn't he saying in the first verse to give Ceaser whatever he wanted when it comes to money control and in the second ... didn't that have to do with morals and crap ... not crypto???

Actually the first half was about paying the taxes to the Romans.

I also seem to remember something about a rope passing through the eye of a needle...

I think it was a camel ...

That is now assumed to be a translation error, the original words for 'rope' and 'camel' (in Aramaic?  Greek?) being very similar.

The eye of the needle was a famous gate in Jerusalem.  It was so named because it was very small.  A rich man going to heaven being like a camel going through the eye of the needle was particularly apt to his contemporary audience.  Not only was it very difficult, but you'd have to remove the packs and possessions, then the camel would have to bow down and be on its knees.  The lesson was one of humility, not of impossibility.

[xulescu]

Please do not consider my intemperate, alarmist language as grounds to cease business with Poloniex.

"Let’s don’t be alarmist"

AIG financial officer, September 12th, 2008

[aminorex]

The eye of the needle was a famous gate in Jerusalem.  It was so named because it was very small.  A rich man going to heaven being like a camel going through the eye of the needle was particularly apt to his contemporary audience.  Not only was it very difficult, but you'd have to remove the packs and possessions, then the camel would have to bow down and be on its knees.  The lesson was one of humility, not of impossibility.

That gate wasn't constructed until centuries later.  The reinterpretation is thus erroneous.

[aminorex]

True.  But I think the "ICO" is very clearly in violation of the law.  This creates a liability when they are sued by investors who lose money as a result.

Which law specifically do you think is violated?

The Securities Act of 1933, section 5(a) for one.  There are others which may also pertain, but I am not a domain expert, and prefer to mention only the one which seems relatively straightforward in its application.

Is Poloniex doing anything at all with securities?

Check out the SuperNET threads.  I can't bring myself to represent it fairly.  But I definitely think the proposal which I originally read was a securities offering.

[pa]

True.  But I think the "ICO" is very clearly in violation of the law.  This creates a liability when they are sued by investors who lose money as a result.

Which law specifically do you think is violated?

The Securities Act of 1933, section 5(a) for one.  There are others which may also pertain, but I am not a domain expert, and prefer to mention only the one which seems relatively straightforward in its application.

Is Poloniex doing anything at all with securities?

Check out the SuperNET threads.  I can't bring myself to represent it fairly.  But I definitely think the proposal which I originally read was a securities offering.

DRAFT doc for SuperNET is at http://209.126.70.170/SuperNET.pdf
feedback appreciated

[smooth]

True.  But I think the "ICO" is very clearly in violation of the law.  This creates a liability when they are sued by investors who lose money as a result.

Which law specifically do you think is violated?

The Securities Act of 1933, section 5(a) for one.  There are others which may also pertain, but I am not a domain expert, and prefer to mention only the one which seems relatively straightforward in its application.

Is Poloniex doing anything at all with securities?
Even Bitshares and XCP aren't traded there as securities. 
Nothing they sell is a share of a company, or anything like that, is there?

You are looking for a security as in a share of stock or some other traditional and specific form. That is not required.

http://en.wikipedia.org/wiki/Securities_and_Exchange_Commission_v._W._J._Howey_Co.

Key phrase: "broad array of contracts and other schemes to raise capital in a way to secure some income or profit from the use thereof"

[NewLiberty]

That gate wasn't constructed until centuries later.  The reinterpretation is thus erroneous.

The experts disagree, so can we.  Maybe it was babbling nonsense, maybe it was profound.

http://en.wikipedia.org/wiki/Securities_and_Exchange_Commission_v._W._J._Howey_Co.

Key phrase: "broad array of contracts and other schemes to raise capital in a way to secure some income or profit from the use thereof"

This case would apply to derivatives contracts, and futures contracts.  Or to a security.  So I don't see it as a problem for Poloniex though it may keep Risto from coming to the USA, sigh...
If the SuperNet is a security of some sort it could bring trouble.
I don't really know what it is, it is difficult to determine from what is written in the Supernet treads I've come across.
It seems to mostly be promises, which could put its issuer in hot water depending on how it is handled.

Edit: Calling it an IPO (or even an ICO) is likely a mistake.  It may confuse the regulators against the interests of those involved.

[smooth]

That gate wasn't constructed until centuries later.  The reinterpretation is thus erroneous.

The experts disagree, so can we.  Maybe it was babbling nonsense, maybe it was profound.

http://en.wikipedia.org/wiki/Securities_and_Exchange_Commission_v._W._J._Howey_Co.

Key phrase: "broad array of contracts and other schemes to raise capital in a way to secure some income or profit from the use thereof"

This case would apply to derivatives contracts, and futures contracts.

No, that is not right at all. Did you read the article? It involved a leaseback scheme, not derivatives or futures at all.

The "investment contract" interpretation has been used to prosecute all manner of "investment schemes."

The test is:

1. investment of money due to
2. an expectation of profits arising from
3. a common enterprise
4. which depends solely on the efforts of a promoter or third party

I don't really see how supernet could fail to satisfy that test.

[SlipperySlope]

Here is the nine month chart of Litecoin mining difficulty as presented by Bitcoin Wisdom. Note the more rapid increase from May through July as Scrypt (fixed) ASICs displaced GPU mining rigs for that altcoin. Hash rate increased almost 8x during this period in which litecoin prices fell 6x. Interesting that the hash rate has leveled off in the past month as litecoin prices capitulated in August.

To a greater extent even than bitcoin, it appears that mining difficulty has no positive correlation with litecoin price.

[TooDumbForBitcoin]

The "investment contract" interpretation has been used to prosecute all manner of "investment schemes."

The test is:

1. investment of money due to
2. an expectation of profits arising from
3. a common enterprise
4. which depends solely on the efforts of a promoter or third party

I don't really see how supernet could fail to satisfy that test.

To my untrained eye, there are a few more "coins" on poloniex (the only exchange I pay attention to) that satisfy the same test. 

[smooth]

Scrypt-N ASICs

Litecoin uses Scrypt not Scrypt-N

[smooth]

The "investment contract" interpretation has been used to prosecute all manner of "investment schemes."

The test is:

1. investment of money due to
2. an expectation of profits arising from
3. a common enterprise
4. which depends solely on the efforts of a promoter or third party

I don't really see how supernet could fail to satisfy that test.

To my untrained eye, there are a few more "coins" on poloniex that satisfy the same test.

You may be right.

Putting a security on a blockchain does not turn it into something other than a security. It might ultimately make the law more difficult to enforce, but it won't be particularly hard to enforce it against Poloniex. I don't know that leads to bankruptcy though, it could easily just mean a tolerable fine plus delisting or maybe just delisting, no further listings of that form, and not even a fine. We are of course guessing here.

[TooDumbForBitcoin]

I edited my post after Smooth replied. 

Smooth did not delete my parenthetical.    "(Poloniex is the only exchange I pay attention to)."

I'm sure the same or similar "coins" are traded on other exchanges.

[NewLiberty]

That gate wasn't constructed until centuries later.  The reinterpretation is thus erroneous.

The experts disagree, so can we.  Maybe it was babbling nonsense, maybe it was profound.

http://en.wikipedia.org/wiki/Securities_and_Exchange_Commission_v._W._J._Howey_Co.

Key phrase: "broad array of contracts and other schemes to raise capital in a way to secure some income or profit from the use thereof"

This case would apply to derivatives contracts, and futures contracts.

No, that is not right at all. Did you read the article? It involved a leaseback scheme, not derivatives or futures at all.

The "investment contract" interpretation has been used to prosecute all manner of "investment schemes."

Yes, I am familiar with the case and its subsequent applications.
It does not apply to trading and exchange of capital.
It does apply to offerings which entail the use of capital by others, futures, derivatives, contracts for difference, or securities, and it emphasizes substance over form with the test which you articulated well:

The test is:

1. investment of money due to
2. an expectation of profits arising from
3. a common enterprise
4. which depends solely on the efforts of a promoter or third party

I don't really see how supernet could fail to satisfy that test.

It might satisfy it, I don't really know what Supernet is.  Very possibly it does, from what I've read of it.  Ethereum has perhaps a similar issue.
Certainly none of the other items on offer at poloniex would satisfy that test.
Open sourced distributed developed software money is neither a common enterprise, nor does it depend solely on the efforts of#4.
Centralized development can become problematic however as it pushes the line closer to #4.

#2 Expectation of profits...  There seems to be quite a bit of that being promulgated.

[NewLiberty]

To my untrained eye, there are a few more "coins" on poloniex (the only exchange I pay attention to) that satisfy the same test. 

Are they closed source, or centrally developed?

[AnonyMint]

Here is the nine month chart of Litecoin mining difficulty as presented by Bitcoin Wisdom. Note the more rapid increase from May through July as Scrypt (fixed) ASICs displaced GPU mining rigs for that altcoin. Hash rate increased almost 8x during this period in which litecoin prices fell 6x. Interesting that the hash rate has leveled off in the past month as litecoin prices capitulated in August.

To a greater extent even than bitcoin, it appears that mining difficulty has no positive correlation with litecoin price.

You must factor in the mHash/$ and mHash/watt improvement.

Removing the GPU miners removes a lot of adopters and potential txs and value. Replaces them with fewer entities running ASICs (not everyone has more capital to invest, selling your GPU doesn't return 100% of sunk costs). Now it has stabilized at this lower level. Probably like all market driven effects, it is oversold because of inertia of emotions and speculation.