Unlike Bitcoin, which issues new currency units through mining, XRP is issued by Ripple. The case against Ripple appears to revolve around this point: is the XRP token a security?
The only things that matter are hype, and people buying/selling according to what people think other people are going to do.
Nearly every crypto-related story comes with narratives that it's good for the exchange rate for various reasons, but ultimately the price goes up (temporarily) because people expect other people to expect the price to go up and want to get ahead of it.
The true winners of crypto will be the ones who can come up with better models of human nature and hype, and all the factors at play, and leverage that to their success, just like the true winners at casinos are those who can learn to count cards, except with crypto they won't be able to kick you out.
It's also a market where market manipulation and insider trading is fair game, and that needs to be modelled in as well.
It's an interesting time we live in, and it's an interesting anarchic economy with its own interesting set of problems to solve.
The problem is that humans are impatient and even "short term" may be a couple of decades before it all shakes out.
Looks like CrossTower has already de-listed XRP from its exchange. Incredible how fast information gets digested in crypto markets!
https://thecryptoreport.com/an-sec-victory-in-ripple-case-wo...
You: I’m not sure that I would put it that way, but let me clarify using your analogy. What this model shows is the music, so to speak, just slowing. If the music were to stop, as you put it, then this model wouldn't even be close to that scenario. It would be considerably worse.
To me the distinction is very clear and simple. However if I really needed money I still would probably issue an ICO and claim it is not a security because there is a big possibility that it will go unnoticed as SEC goes only after the bigger fish.
https://www.axios.com/sec-official-ether-is-not-a-security-9...
If the network on which the token or coin is to function is sufficiently decentralized – where purchasers would no longer reasonably expect a person or group to carry out essential managerial or entrepreneurial efforts – the assets may not represent an investment contract.However, in Ethereum's case, it is designed to literally implode due to ice age if Vitalik doesn't intervene. The SEC was probably not cognizant of this fact when they made their statement.
There is no real world use. It probably wouldn't even exist without Grayscale.
It so happens that the consensus of the majority decided to stick with Ethereum rather than classic. But still no single person or entity gets to decide.
The Ethereum foundation kept a huge stash from the pre-mine, so you'd have a hostile actor with a large position on your forked chain, enough to crash the price of any nascent chain. This combination is a governance model rooted in game theory.
Ethereum Classic shows pretty well how this works in practice. There was controversy around the DAO, yet no fork could be kept functional. It is a Grayscale project which they will keep around as long as people are willing to speculate on it. Nobody pretends it has any real use.
This is completely false. The Ethereum Foundation has less than 0.5M ETH, or less than 1% of the total supply.
But Ethereum Classic and Ethereum share a common blockchain history and it proves that the community doesn't always follow blindly the proposals of the Ethereum devs.
That event (a part of the community splitting of on a hardfork and forming Ethereum Classic) has affected the governance of Ethereum ever since. Not directly, but indirectly.
Every hardfork is now checked for contentious changes very thoroughly. The last major change that didn't make it because of that was the proposed change to the mining algorithm (granted, ProgPOW had other problems as well).
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The "Ice Age" is a builtin feature of the Ethereum chain, where the mining difficulty deliberately ramps up to an unreasonably level past a certain number of blocks. The only thing which can reset this is for nodes to update to a revised consensus algorithm.
The point of this is to essentially force a periodic "vote of confidence" -- instead of nodes passively not updating their software, every few years they HAVE to, or the difficulty bomb comes into play. Which means when a major hard fork update is proposed, no one can sit on the sidelines, they have to either choose the proposed fork, or propose an alternative for consensus to rally around. This cycle repeated every year or so, and has gone pretty smoothly so far.
The point of this is to encourage active participation, so nodes can't sit there and cast "passive no" votes to everything, they're incentivized to actively participate in the network's evolution.
Even if a node doesn't update, mining just slows down. Nothing anywhere in that process will cause the Ethereum network to "implode", that's IMO a rather emotionally charged way of describing things.
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As to "requiring Vitalik's intervention" -- that's just an outright falsehood.
Not only is Vitalik not directly involved in the coding of any of the multiple independent Ethereum clients anymore, but there is a very large group of developers (of which the "founders" are a very small %) which work out the proposals for updates. And anyone can propose an update -- the software and the high level specs are all open source (and most are on github).
Proposing a full milestone update of the Ethereum network is complex, and probably more work than a single individual could pull off reliably -- but that's the whole point. There is no gatekeeper (and definitely not Vitalik), and the only way these things are accepted is because the larger community (validators/miners, folks running nodes, user community) all feel involved enough to accept or reject proposals.
You could remove every single founding developer, every incorporated organization, and the Ethereum network and it's developers would keep going. And the value of the token derives from it's use on the network, not on those companies turning a profit (and most of them are non-profits).
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All of the above, along with numerous other aspects of the new beacon chain, are designed to incentivize decentralization of assets and control, as well as active over passive participation.
I think the SEC was quite well aware of the situation, and made the right call about Ethereum.
It's truly fascinating how little the underlying technology of cryptocurrencies matters to the exchange rates and how they're traded.
Fun fact: Ripple actually lost some of the early history of their ledger! Everything before block 32569 was lost.
Yes. That's why Coinbase got out of margin trading. They claim the SEC made them do it. But all the SEC did was to say that "delivery" meant delivery to the customer's wallet, not an entry on Coinbase's books. Coinbase was willing to exit margin trading rather than actually pay out.
This follows the procedure for physical commodities, like grain. A key point there is that the organization storing the grain is totally separate from the trading process. What you're trading is a warehouse receipt for grain in a grain elevator somewhere. You can "take delivery" by getting the warehouse receipt and starting to pay storage charges. At that point your broker no longer has access to the asset. Eventually someone buys it who actually intends to use it, and they have it loaded onto a train or truck.
The key point here is separation between the broker, exchange, and storage facility. Cryptocurrencies use cryptographic wallets instead of warehouses, so "delivery" means delivery to the user's wallet.
But otherwise this document spells out everything that Ripple/XRP critics have been trying to drill into XRP Army conscripts for half a decade.
That Ripple is in the business of selling XRP and uses ambiguity between the context of “ripple” and deflection to say there are third parties using enough XRP to make it scarce in the future. When this was never happening, and to this day is not happening.
The complaint mentions a third party that paid to get XRP this year to use a Ripple Labs product. They bought the XRP from Ripple to the tune of $70mm and immediately sold it on the public markets.
I think the illusion is shattered with this complaint. But XRP should be able to retain its transfer usage, just back at 2013 price levels.
Not necessarily in support of Ripple specifically, but I do think having something that can actually challenge the SEC and reduce them to tears is a good thing. There are lots of things about the capital economy that could use change.