It’s clear now that the SEC is coming for crypto. Everything other than Bitcoin is security. The regulators could not be any clearer about this.
Like me (according to my mom), bitcoin is special and unlike any other kid on the block. But what makes an asset a security? Let’s get into it!
Four reasons Bitcoin is NOT a security:
1/ Decentralization
This word has been thrown around so much that it has lost meaning. Let’s go through it together:
- Bitcoin: operates on a peer-to-peer network where transactions are validated by a distributed network of computers called ‘nodes.’ Think of it as a bunch of computers that keep relaying messages and saying ‘Yes’ or ‘No’ to each other.
- Crypto: operates on semi-closed networks with central overlord coordinators. Made a transaction they don’t like? BLOCKED.
This difference in decentralization is a key differentiator in separating Bitcoin from securities that rely on Vitalik and his mood swings.
2/ No promoters
Bitcoin has no marketing team. Well, at least not an official one. And no, your shitposting on Twitter doesn’t count. In the meantime, crypto projects throw parties with cocaine and hookers and pay influencers like BitBoy to shill their _insert_new_dog_breed_ coin.
Remember: no promoter = no problem.
3/ Utility
Bitcoin has one job: peer-to-peer medium of exchange. This makes Bitcoin a CURRENCY. Other cryptos have features that resemble traditional securities (e.g., utility tokens).
This key distinction separates Bitcoin from the regulatory scrutiny that comes with securities.
4/ Investment vs. utility
The last and the most important question in determining whether Bitcoin is a security or not: the Howey test.
The question to ask here is: does the asset involve an investment of money in an enterprise with an expectation of profits derived from the effort of others?
At this point, it should be clear that cryptos are centralized and require work from their founders, teams, and promoters to pump investors’ bags. While Bitcoin also pumps, there is no enterprise or foundation generating profits.
TLDR: With its decentralization, lack of promoters, currency utility, and lack of investment expectations, Bitcoin sets itself apart from the securities crowd.
Anyways, what do you think will happen when the crypto crackdown happens? Where will all that value flow?
I have a guess…
And remember, it’s Bitcoin, not crypto.
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