Bitcoin community " Cultural Regulation", See what are they.
hotvedio (34) in currency • 8 hours ago
Bitcoin Community “Cultural Regulations”
The Bitcoin community has adopted its own informal cultural regulations around how a new crypto currency should be launched. The biggest conventions include:
No Premine - allocating tokens prior to launch
No Instamine - heavily bias issuance toward early miners
No IPO/ICO - selling tokens prior to launch
Only mine a small amount for yourself
Open Source MIT / BSD license
On top of these rules, there are many other expectations:
Significant advanced notice
Binaries for all platforms
Lots of Documentation
A startup that attempts to comply with all of the FinCEN regulations AND all of the Bitcoin community cultural regulations finds itself in a pickle. If you reveal enough information about your product with enough warning then the market will speculatively place a high value on your tokens. The higher the value the market places on the tokens, the more capital is wasted on a computational competition to acquire the tokens.
If the goal is to raise money legally then a startup must maximize the capital gain it realizes between the time it mines the tokens and the time it sells them on an exchange. If a high initial value is placed on the token, then the potential for capital gains is much lower and therefore the potential to legally raise money through the sale of your token falls dramatically.
On the other hand, if you comply with FinCEN and ignore the cultural expectations then your token will start out life a pariah and have low initial value. If you completely open source your software then clones can pop up to compete against you.
Perhaps the Bitcoin Communities cultural regulations are a blessing in disguise. By intentionally violating every one of their expectations you can minimize your token’s value at launch while still legally mining a token for minimal cost.
Those in the Bitcoin community who are forward-thinking enough to recognize the value of alternative allocation strategies can mine these pariah coins and profit along with their creators.
The government has handed us a huge blessing by officially recognizing computational effort and manufacturing of coins as a legal, unregulated, means of introducing a convertible virtual currency to the market. If the Bitcoin community were wise, it would embrace this blessing and welcome with open arms every project. However, if the community did change its opinion, then all of a sudden mining completion for tokens currently being shunned would increase dramatically. Such a change could end up closing the regulatory loophole by making it cheaper to comply with regulations than to compete with opportunistic miners.