Whether Ethereum is a security
prestonbyrne.com
Whether Ethereum is a security
1–10 of 40 posts
Re: Whether Ethereum is a security
#2Those 2 charts the author cites describe different things: the Ethereum chart shows _cumulative_ amount of BTC raised over time, while the Swarm chart shows BTC raised per block.
Furthermore, the author's argument that observing a power law distribution is an argument in favor of the Ethereum pre-sale being participated in by "one or very few hands" shows that his understanding of basic statistical concepts is lacking.
Observing a power law distribution is an argument in favor of many, many participants. This is what we see in nature when looking normally distributed variables among large populations.
Stick to law, Preston.
Re: Whether Ethereum is a security
#3Those 2 charts the author cites describe different things: the Ethereum chart shows _cumulative_ amount of BTC raised over time, while the Swarm chart shows BTC raised per block. Furthermore, the author's argument that observing a power law distribution is an argument in favor of the Ethereum pre-sale being participated in by "one or very few hands" shows that his understanding of basic statistical concepts is lackin…
You must not remember how small the Ethereum universe was in 2014. If you think that curve is the outcome of an organic market process, there's a bridge in Brooklyn I'd like to sell you.
Re: Whether Ethereum is a security
#4Those 2 charts the author cites describe different things: the Ethereum chart shows _cumulative_ amount of BTC raised over time, while the Swarm chart shows BTC raised per block. Furthermore, the author's argument that observing a power law distribution is an argument in favor of the Ethereum pre-sale being participated in by "one or very few hands" shows that his understanding of basic statistical concepts is lackin…
You must not remember how small the Ethereum universe was in 2014. If you think that curve is the outcome of an organic market process, there's a bridge in Brooklyn I'd like to sell you.
I was actively involved in the Bitcoin ecosystem when the ETH pre-sale launched. I'd argue that the majority of pre-sale participants were BTC holders. That group was not small in 2014.
Also, look at https://en.wikipedia.org/wiki/Cumulative_distribution_functi...
Re: Whether Ethereum is a security
#5Kickstarter campaigns follow a similar pattern to the ethereum graph shown in the article. It’s not because of a malicious user who wants to secretly own all the kickstarters. It’s because time-limited crowdfunding campaigns tend to attract the most donations at the beginning (when enthusiasm/press is high) and towards end of the campaign (when FOMO is high).
Also the author should really state in the article that the swarm graph is not cumulative.
Re: Whether Ethereum is a security
#6Earlier quoted context omitted.
You must not remember how small the Ethereum universe was in 2014. If you think that curve is the outcome of an organic market process, there's a bridge in Brooklyn I'd like to sell you.
I was actively involved in the Bitcoin ecosystem when the ETH pre-sale launched. I'd argue that the majority of pre-sale participants were BTC holders. That group was not small in 2014. Also, look at https://en.wikipedia.org/wiki/Cumulative_distribution_functi...
All of the pre-sale participants were BTC holders because that is the only currency the Foundation accepted for presale Eth.
The question is how many of those BTC holders there are and whether presales/ICOs usually follow that pattern. Most don't, they use all their powder in the beginning (there's no Indian summer surge of donations towards the end of the sale). Even when they do it is not as pronounced as here. That's what makes the curve weird.
Re: Whether Ethereum is a security
#7Near as I can tell, the Howey precedent is for a type of asset so vastly different from a cryptocurrency such as bitcoin/ethereum that it is pretty much completely at the discretion of regulators as to whether they consider it to be a "security".
I know it would be nice to live in a world where judges can use an objective reading of the law/constitution to decide for certain in one way or another on such a fact, and that it would be nice to live in a world where lawyers like Preston could therefore make a reliable prediction from their expertise as to how courts will rule, but sadly in our world things don't work that way.
In an outlier situation like this, without strong precedents, regulators can make any decision they please and then create post-hoc rationales for defending their view.
(similarly, responses to this comment from either side will be easily able to make equally convincing absolutist arguments as to why bitcoin/ethereum are/aren't securities, given the vagueness in interpretation of precedents.)
Re: Whether Ethereum is a security
#8Earlier quoted context omitted.
I was actively involved in the Bitcoin ecosystem when the ETH pre-sale launched. I'd argue that the majority of pre-sale participants were BTC holders. That group was not small in 2014. Also, look at https://en.wikipedia.org/wiki/Cumulative_distribution_functi...
All of the pre-sale participants were BTC holders because that is the only currency the Foundation accepted for presale Eth. The question is how many of those BTC holders there are and whether presales/ICOs usually follow that pattern. Most don't, they use all their powder in the beginning (there's no Indian summer surge of donations towards the end of the sale). Even when they do it is not as pronounced as here. Tha…
This is totally wrong: Since there was no "upper limit" on total cap of ether in the presale there was a significant incentive in waiting until the last minute to benefit from additional information (i.e. to know what percentage of ETH supply you were bidding on) and similarly to withhold bid info from competitors- This was partially offset by a gradual decline in ETH/USD exchange rate set by the presale terms.
It seems pretty clear that you haven't studied the mechanisms of these sorts of crypto auctions, since you are ignoring a lot of the underlying complexity and the many differences between different auctions in practice, or you have forgotten a lot of the intricacies of this particular auction. (which may have been a good or bad design in this case, both cases can be made.)
If you think it's common for actors in an auction system to "use all their powder in the beginning" unless there's a explicit reward for bidding late then you've clearly never been a victim of ebay bid sniping LOL
Re: Whether Ethereum is a security
#9Earlier quoted context omitted.
All of the pre-sale participants were BTC holders because that is the only currency the Foundation accepted for presale Eth. The question is how many of those BTC holders there are and whether presales/ICOs usually follow that pattern. Most don't, they use all their powder in the beginning (there's no Indian summer surge of donations towards the end of the sale). Even when they do it is not as pronounced as here. Tha…
This is totally wrong: Since there was no "upper limit" on total cap of ether in the presale there was a significant incentive in waiting until the last minute to benefit from additional information (i.e. to know what percentage of ETH supply you were bidding on) and similarly to withhold bid info from competitors- This was partially offset by a gradual decline in ETH/USD exchange rate set by the presale terms. It se…
I've updated the post to include a chart of the Tezos raise, which was both much larger than the Eth raise and I think illustrates my point rather well.
Re: Whether Ethereum is a security
#10Near as I can tell, the Howey precedent is for a type of asset so vastly different from a cryptocurrency such as bitcoin/ethereum that it is pretty much completely at the discretion of regulators as to whether they consider it to be a "security". I know it would be nice to live in a world where judges can use an objective reading of the law/constitution to decide for certain in one way or another on such a fact, and…
Well it's not the regulators who make the decision and set the precedents, it's the judges. Regulators are currently trying to figure out, to the extent existing precedents are inadequate, how to extend by analogy the existing precedents to the new circumstances in such a way as to convince a judge to extend the precedent. This is how a common law system is designed to work.