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November 12, 2014


Good article, one thing I think you may be overlooking is that the Ethereum 'community' appears to treat the products they bought as an investment and not much more. The facts are that the technology has never even been defined.

OTOH, I see some serious difficulties in regulating investment schemes that require not much more than a push of a button on you PC to create.

Very nice article. We poured over all of these issues for months.

A few other points with respect to ether, the Ethereum token:

Ether is used on the system by developers to develop, test, debug, deploy, operate, modify, upgrade and otherwise interact with their decentralized applications (DApps). For many development projects, pools of ether will be required for normal operation, e.g. for an insurance DApp that guarantees certain kinds of transactions on the system. Developers will also use ether to pay for the services of other DApps on the system that their own DApps require.

Users of the system will require ether to pay for DApp services.

All of the above is important, of course, but it is critical to the interpretation of ether as a software product to understand that unless we require payment of small amounts of the cryptofuel ether for every computational step on the system and every storage operation, the system would grind to a halt due to excessive storage demands (e.g. storing a music collection on the blockchain) and excessive computational demands (e.g. infinite loops in DApps that freeze the system). Note that this ether is paid to the miners that process transactions on the system, not to the non-profit foundation that is responsible for building the platform.

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In the Media

  • CNBC, "Forget currency, bitcoin's tech is the revolution," Nov. 13, 2014.

    Coin Desk, "Payments Veterans Discuss Bitcoin vs Apple Pay at NY Law Conference," Oct. 23, 2014.

    Law 360, "NY Court Could Weaken Rule Shielding Banks' Overseas Cash," Sept. 15, 2014.

    Wall Street Journal, "Scoring the Falcone Settlement," May 9, 2013.

    Wall Street Journal, "Hedge Funds Tying Compensation to Risk-Taking Too," May 7, 2013.

    Wall Street Journal, "SAC Capital Brings Clawbacks to Hedge Funds," May 3, 2013.

    Law360, "Ruling Shows Limits To NY's Power Over Distant Assets," April 30, 2013.

    Risk.net, "Cross-Border Conflicts Could Leave Firms Unable to Comply," Nov. 14, 2012.

    International Financial Law Review, "How Banks Could Have Libor Cases Dismissed," July 24, 2012.

    Bloomberg Businessweek, "Dondero Still Slays Bears at Highland With New Leveraged Loans," Feb. 10, 2012.

    New York Law Journal, "Observers See Easy Fix to Bar on Court Action by FINRA to Collect Fines," Oct. 7, 2011.

    Risk Magazine, "Trouble of Moving Ratings Highlighted by SEC," May 5, 2011.

    Bloomberg Businessweek, "A Hedge Fund's Moves Mimic Insider Dealings," Feb. 17, 2011.

    Financial Times, "Hedge funds suffer from image problem," Oct. 19, 2009.

    Washington Post, "Plan to Expand Financial Oversight May Add New Risks," April 7, 2009.

    New York Times, "Hedge Fund Managers to Testify in Washington,” Nov. 12, 2008.

    USA Today, "Paulson’s Financial Reform Plan Gets Mixed Response," April 1, 2008.
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