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What’s all that SEC decision everyone’s discussing?
The world of cryptocurrency exploded with relief – US regulators made a decision on the ICO (initial placement of tokens), stating that companies should receive through the sale of electronic assets that must comply with federal securities laws. For this year it was decided by the prices. Nevertheless, analysts, issuers and lawyers have already stated that its consequences will be positive.
The US Securities Commission (SEC) has published a report of an investigation into the DAO. During the “placement” period from May 28 to August 2016, about 700 people from the United States bought DAO tokens. The investigation was to answer the question of whether the US securities regulation was violated during the DAO project implementation by the German company Slock.it, the persons involved and intermediaries.
Why did it happen in the first place?
Recall that in October 2016, CEO of the Digital Currency Group (DCG) Barry Silbert warned in his forecast for 2017 that the next big step for the SEC could be a close examination of the activities of the organizers of cryptocurrency tokens (ICO). As Silbert noted at the time, it is possible that such crowd sales will be classified as securities trading and, accordingly, will have to be regulated.
It should be noted that the regulation by the SEC concerns only those tokens that, when issued, were positioned as stocks and correspond to Howie’s test. That is, these measures will not affect classical cryptocurrency tokens (coins), including Bitcoin, broadcast, etc. Thus, the SEC poses a serious barrier for American companies and private investors in the organization and participation in the ICO, if the project creators do not register it with the SEC.
Did the market and neighborhood respond to the news somehow?
Probably, we will see a more restrained spread of ICO in the United States, since adherence to the SEC rules in some cases requires the disclosure of a large amount of information from both the fundraising company and the participants in the offering.
This does not necessarily mean a decrease in the number of cryptocurrencies since the number of ICOs outside the United States can only increase. Klukhenek notes that American companies with a blockchain business may switch to more traditional financing mechanisms – attracting venture capital or private capital.
What does SEC’s choice indicate?
It depends on the circumstances of each transaction. However, it is clear that the “virtual” nature of the organization that sells securities based on the blockchain for other types of digital currencies does not exempt it from the regulation of American securities laws. Steve Obi, a partner at law firm Jones Day, says that you can determine if tokens are securities using the Howie test. This is a legal criterion that is used in American judicial practice to determine whether a particular instrument or a commercial transaction is an investment contract and, accordingly, security. The test includes four signs: investment; common enterprise; waiting for profit; third-party efforts.
Regarding the organization of The DAO, which was the subject of an investigation, the SEC decided not to view the situation as a crowdfunding contract, because, among other things, the project was not a broker or a fundraising portal registered with the SEC and the Financial Institutions Agency (FINRA).
What Is A DAO?
DAO – a decentralized autonomous organization is a type of future organizations for ideal workers who are fed up with unproductive meetings, trips to work only to see someone in person, or the execution of boss orders, whose expertise is not particularly believed. We are now in the early stages of launching these futuristic companies. And the first attempts come up against certain problems, which is quite expected. But the most important thing in the DAO concept is precisely its decentralized essence. There is no boss or executive director at DAO, a blockchain-based organization. And there is a customizable set of working relationships that are constantly self-organizing to achieve certain results and implement certain projects.
In the future, it will be easier to get coins than now. Today, the most common way is to buy bitcoins for dollars, euros, yen and other currencies, and then to buy bitcoins for tokens or coins of the DAO whose member you want to become. Also, to enter the DAO, now you can buy another cryptocurrency, the ether (based on the blockchain Ethereum). For many, the Coinbase cryptocurrency platform is the initial gateway for the transition from the fiat world to the cryptocurrency one. Next, users go to such exchanges as EXMO, Bitfinex or Kraken.
What is the difference of DAO?
The DAO is a brand new type of organization that is best described by comparison with a digital company that is not tied to any legal entity. It should be noted absolute impartiality in the selection of participants. Using the implementation of smart contracts from Ethereum, The DAO allows anyone from all over the world to participate in the management of the general fund of funds.
Principles of work in the DAO
And there is another potentially huge advantage to this structure. Because DAO is organized around smart contracts and values, not people and roles, flexibility and agility for innovation increase significantly. To begin with, any owner of a DAO token can make an offer, where he will indicate the amount of ETH that will be required to develop a product or service. The proposal also defines the level of control over the powers with which The DAO should vest potential contractors.
After making a proposal, the owners of DAO-tokens participate in the voting. Each of them has absolute power over their own funds invested in the project. They can also vote for changing the service provider or changing any other offer parameter. Moreover, even if the owner of DAO tokens subsequently decides to leave the project, he or she will still have the right to make a profit from the sale of a product or service.
The logo of Bitcoin (virtual currency) is pictured on a door in an illustration picture taken at La Maison du Bitcoin in Paris July 11, 2014. REUTERS/Benoit Tessier
Criticism
Another point is related to the platform on which The DAO operates. The “wise crowd” of people supporting The DAO may be so absorbed in the hype around ETH that, in choosing projects for support, it will start to give preference to Ethereum and related ideas, the usefulness of which, according to experts, has not yet been proven.
Demonstration to Bitcoin Mining Pool
Bitcoin mining is a transaction verification process done by computerization on a decentralized network. Mining a pool is another approach of power contribution used to smooth the mining process. Bitcoin mining can maximize the cost and sometimes it is not even lucrative because of the energy expenses. It is an essential practice of pooling where the processing power involves several computer systems solving the Bitcoin transaction blocks.
Benefits and Fees
There are some obvious benefits of joining a mining pool. If you are indulged into a mining pool, then you might have a higher possibility of winning Bitcoins with more processing power. This also includes a stable earning by signing up with a pool. Also, you might need to keep an eye on the numerous benefits available while searching for a mining pool. The tokens can be awarded according to your contribution to the pool processing power.
Likewise, you need to focus on the fees to the mining pools. This might be deducted from your rewards. The portion of fees generally varies from 1 to 10% of your share. There are some pools which may not deduct anything at all.
Shortcomings
Bitcoin mining pools have some shortcomings as well. Whatever the payback the pool gets, it will only be shared among the members. The policy will remain the same even if the yields are lower and you are a solo miner. Whether it is a feasible solution or not, depends on your sole objectives.
Troubles in Mining
Mining cryptocurrency may trouble you at different levels. Till now around 21 million Bitcoins are capped among which 80% of it has already been mined. It is becoming progressively robust for mining Bitcoin in a detailed to reach the cap. This implies the nigh but for a solo Bitcoin miner, it can be impossible to take on the big mining business. The mining pool makes an appealing alternative, particularly for Bitcoin miners. Apart from Bitcoin, you can mine immensely of other tokens as well.
Ideal Cryptocurrency Mining Token
For a beginner, it is worth to start with other cryptocurrencies other than Bitcoin. Try trading Altcoins in exchange to mine Bitcoin.
SHA256
Bitcoin uses SHA256 as the proof-of-work algorithm. If everything is fine with SHA256 means it would be difficult to mine Bitcoin without any devoted ASIC mining rigs.
Scrypt
Scrypt is another form of an algorithm which is mostly used by other cryptocurrencies like Litecoin. This takes comparatively less processing power for mining tokens.
Multipool Mining
The smart miners have a permitted system to mine the most profitable cryptocurrency regularly. Multipool mining is practiced for changing various mining tokens as the price fluctuates.
The Beginning of Bitcoin Mining Pool
Higher the mining pools, more chances you will have to win the Bitcoin processing power. This creates an attractive alternative for the Bitcoin miner to take part in mining pools.
Last but not the least; keep an eye on some different benefits you may be offered while shopping around a mining pool. The list is big enough for the sites of different mining pools you can sign up and enjoy the rewards.
Blockchain Scalability Issue: Is The Future As Bright As It Seems?
Ever since the world stumbled upon the word cryptocurrency, there has been a continuous excitement amongst tech-savvy enthusiasts. Blockchain innovations only add more to the drama by introducing more advancements to existing models and working on newer ones. Not long ago, no one would have ever imagined that there shall be a virtual currency form featuring a decentralized approach. It was not only a far-fetched thought but also one that seemed impossible. However, after the cryptocurrency’s release, more and more users are awakening to this new reality of possibilities and eager to decipher what more can it bring along.
But no matter how prosperous it goes on to become, it still faces the issue of scalability. In order to keep its growth stable, analysts need to address this issue of scalability at the earliest. Succeeding in this quest will offer cryptocurrency the traditional approval it craves from financial markets.
Blockchain’s Scaling Issue
It is not a hidden fact that blockchains can be severely impacted if they fail to capacitate scalability. This issue arises due to the nature of consensus protocols of the blockchain. As per the guidelines, each applicant node on a cryptocurrency network needs to process every transaction specifically occurring in that network.
This very feature allows blockchain to follow a decentralized approach but at the same time prevents this innovation the capacity to scale. Whenever a new transaction is processed one more block is added to the transaction ladder in the blockchain.
All those who wish to question the scalability issue with blockchain needs to see the large quantity of associated data with transactions. Initially, Bitcoin blocks were topped at 1MB equating to 2,020 transactions. Yet, it was still possible to make infinite transactions on each coin. All these transactions are recorded on each block.
As the records grow and transactions continue, the block sizes kept increasing without limitations. Even if we increase the cap-size per block, it still remains difficult to keep scaling up.
This results in the blocks growing in size with processing times becoming longer than before.
Can This Issue Be Addressed?
Pressing transaction activities is a way to scale blockchain. By making use of the side-chains for small transaction management whilst tape-recording the consensus on the blockchain can ease this issue. If this is implemented, users will be able to make an offline transaction. In this regard, the first chain will only display information about the transaction and not become associated with it.
Another smart way to resolve this issue of scalability is by using small-sized networks. They have fewer nodes that help identify the scaling capability of the blockchain network. The small-sized network also makes it easier to get a result of all the transactions happening on the network.
Conversely, increasing the size of the blockchain may also offer a solution as more transactions will then be accommodated at a time.
Final Word
No one expected blockchain innovation to enjoy this widespread adoption upon its origin. Its ever-growing popularity demands that the issue of scalability be addressed. Furthermore, a permanent solution be implemented to eliminate further issues. Once this issue at hand is taken care of, users will be able to enjoy superior performance leading to increased users and pervasive adoption.