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Are you saying Tether isn't run on a blockchain? Because it most certainly is. The SEC crypto tsar recently had quite negative comments about MakerDAO at SWSX,

Are you saying Tether isn't run on a blockchain? Because it most certainly is. The SEC crypto tsar recently had quite negative comments about MakerDAO at SWSX, as in they may be in breach of securities law. Something to note. The decentralized nature still makes it far less riskier to the end consumer.

chrisco255 7y ago
Well the Tether transactions are run on a centralized blockchain, but the underlying value of Tether is based entirely on trust in Bitfinex backing it with actual dollars. As for Maker, I really don't know how the SEC would begin to shut it down if it wanted to. It's entirely smart contract driven and it's live on the Ethereum blockchain, which is truly decentralized. Surely we need to update securities law for the 21st century as I'm not sure the Howey test had blockchain era in mind.
- grubles 7y ago
  Maker is run on a centralized blockchain. Ethereum is pretty admittedly centralized on the Infura node-as-a-service platform, which in of itself is hosted on AWS. https://www.coindesk.com/the-race-is-on-to-replace-ethereums-most-centralized-layer https://www.coindesk.com/the-race-is-on-to-replace-ethereums...
  - splintercell 7y ago
    If Infura was compromised tomorrow, it could cause a bunch of damage to Ethereum ecosystem, it wouldn't even remotely be structural. You act like Infura owns 50% of the mining power. It's just one aspect of Ethereum layers which is dominated by Infura. But if you keep creating these arbitrarily created measures, you can just as easily say "Bitcoin is centralized because bitcoin domain names and subreddits are owned by a single entity" (and this single entity managed to dominate the block size debate). If Chinese firewall goes up tomorrow, bitcoin would suffer a big damage. If Congress passes FATCA/FBAR reporting regulations for crypto, sanctions on China, bitcoin would suffer a big damage. But the idea is that none of these things would kill Bitcoin, and that's the main thing. You're calling Ethereum a 'centralized blockchain' because you're trying to cognitively justify against the vastly superior feature set of a competing blockchain. Ethereum fanboys do the same when they've to argue against scalability of TRON/EOS etc or other chains.
    - grubles 7y ago
      Controlling node consensus is the most important "layer". Nodes enforce protocol rules. If most "dapps" are using Infura, then Infura can easily force changes upon not only the dapps themselves but the entire network. Ethereum's engineering decisions have absolutely led to this, as well. Arbitrary "dapps" do not need a blockchain. Having all of this unnecessary data "on the blockchain" makes it bloated and impossible to validate, leading to entities like Infura.
- ShorsHammer 7y ago
  Can't speak for the centralisation of Omni, you have any more info on that? Know little about them, it's a word thrown around quite readily in the cryptoworld for various reasons. They present themselves as decentralised and were in the first wave of layer 2 cryptocurrencies. Tether tx's are anchored into the bitcoin blockchain somewhere along the line. RE: Maker, certainly agree, just stating the situation. There's no chance of laws being able to keep up, it's a game of asking for forgiveness later for most. If something blew up quick enough and got mainstream adaption the law would bend for it (ie. Uber, AirBnb). https://decrypt.co/5940/secs-crypto-czar-stablecoins-might-be-violating-securities-laws https://decrypt.co/5940/secs-crypto-czar-stablecoins-might-b...
  - chrisco255 7y ago
    Well the exchanges that participate in the Tether blockchain each run a node or nodes. The transactions are cryptographically verified, so there's a common ledger between all these participating exchanges. But Tether has a couple theoretical weaknesses due to this setup. A quorum of exchanges could theoretically collude to manipulate transaction history or shut out other exchanges. And Bitfinex itself is the centralized holder of the USD backing Tether, so that makes it very vulnerable to any shortcomings in Bitfinex's accounting. Ultimately to cash out Tether the exchanges have to go to Bitfinex and request a fund transfer so they are a single point of failure for the Tether chain.
    - jaycroft 7y ago
      There are certainly some trust issues with Tether, but in this case I don't think that exchanges could easily roll back Omni transactions unless they were to fork the Omni protocol. Omni transactions happen on the Bitcoin blockchain - they are effected by extra data in otherwise normal bitcoin transactions. In order to roll back the Omni transactions you would have to either (1) roll back the underlying bitcoin transactions or (2) convince everyone who runs Omni nodes to update their software to your branch which discards the transactions you wish to roll back.
      - joosters 7y ago
AlexCoventry 7y ago
Which securities law?

chrisco255 7y ago

Well the Tether transactions are run on a centralized blockchain, but the underlying value of Tether is based entirely on trust in Bitfinex backing it with actual dollars. As for Maker, I really don't know how the SEC would begin to shut it down if it wanted to. It's entirely smart contract driven and it's live on the Ethereum blockchain, which is truly decentralized. Surely we need to update securities law for the 21st century as I'm not sure the Howey test had blockchain era in mind.

grubles 7y ago
Maker is run on a centralized blockchain. Ethereum is pretty admittedly centralized on the Infura node-as-a-service platform, which in of itself is hosted on AWS. https://www.coindesk.com/the-race-is-on-to-replace-ethereums-most-centralized-layer https://www.coindesk.com/the-race-is-on-to-replace-ethereums...
- splintercell 7y ago
  If Infura was compromised tomorrow, it could cause a bunch of damage to Ethereum ecosystem, it wouldn't even remotely be structural. You act like Infura owns 50% of the mining power. It's just one aspect of Ethereum layers which is dominated by Infura. But if you keep creating these arbitrarily created measures, you can just as easily say "Bitcoin is centralized because bitcoin domain names and subreddits are owned by a single entity" (and this single entity managed to dominate the block size debate). If Chinese firewall goes up tomorrow, bitcoin would suffer a big damage. If Congress passes FATCA/FBAR reporting regulations for crypto, sanctions on China, bitcoin would suffer a big damage. But the idea is that none of these things would kill Bitcoin, and that's the main thing. You're calling Ethereum a 'centralized blockchain' because you're trying to cognitively justify against the vastly superior feature set of a competing blockchain. Ethereum fanboys do the same when they've to argue against scalability of TRON/EOS etc or other chains.
  - grubles 7y ago
    Controlling node consensus is the most important "layer". Nodes enforce protocol rules. If most "dapps" are using Infura, then Infura can easily force changes upon not only the dapps themselves but the entire network. Ethereum's engineering decisions have absolutely led to this, as well. Arbitrary "dapps" do not need a blockchain. Having all of this unnecessary data "on the blockchain" makes it bloated and impossible to validate, leading to entities like Infura.
ShorsHammer 7y ago
Can't speak for the centralisation of Omni, you have any more info on that? Know little about them, it's a word thrown around quite readily in the cryptoworld for various reasons. They present themselves as decentralised and were in the first wave of layer 2 cryptocurrencies. Tether tx's are anchored into the bitcoin blockchain somewhere along the line. RE: Maker, certainly agree, just stating the situation. There's no chance of laws being able to keep up, it's a game of asking for forgiveness later for most. If something blew up quick enough and got mainstream adaption the law would bend for it (ie. Uber, AirBnb). https://decrypt.co/5940/secs-crypto-czar-stablecoins-might-be-violating-securities-laws https://decrypt.co/5940/secs-crypto-czar-stablecoins-might-b...
- chrisco255 7y ago
  Well the exchanges that participate in the Tether blockchain each run a node or nodes. The transactions are cryptographically verified, so there's a common ledger between all these participating exchanges. But Tether has a couple theoretical weaknesses due to this setup. A quorum of exchanges could theoretically collude to manipulate transaction history or shut out other exchanges. And Bitfinex itself is the centralized holder of the USD backing Tether, so that makes it very vulnerable to any shortcomings in Bitfinex's accounting. Ultimately to cash out Tether the exchanges have to go to Bitfinex and request a fund transfer so they are a single point of failure for the Tether chain.
  - jaycroft 7y ago
    There are certainly some trust issues with Tether, but in this case I don't think that exchanges could easily roll back Omni transactions unless they were to fork the Omni protocol. Omni transactions happen on the Bitcoin blockchain - they are effected by extra data in otherwise normal bitcoin transactions. In order to roll back the Omni transactions you would have to either (1) roll back the underlying bitcoin transactions or (2) convince everyone who runs Omni nodes to update their software to your branch which discards the transactions you wish to roll back.
    - joosters 7y ago

AlexCoventry 7y ago

Which securities law?