[Ajedi32]

Interesting. I'd answer those questions as "Yes. No. Maybe. No." So definitely not a security.

1. Is cryptocurrency an investment of money? Obviously yes, at least in the sense you have to spend money to purchase or mine it.

2. Is cryptocurrency investment in a common enterprise? No. What enterprise? Common with who? Maybe if it's a token issued by a company or something and tied to their profits somehow, but that doesn't apply to any of the common cryptocurrencies like Bitcoin, Etherium, Monero, etc.

3. Is there an expectation of profits? This depends on entirely on the person buying the token and what they intend to use it for.

4. Does any profit come from the efforts of a promoter or third party? No. What promoter? What third party? If the value fluctuates you can make a profit, but there's no third party involved exerting "effort" that's involved in that process.

If you want to argue with me on 2 and 4, explain how cryptocurrency meets those criteria but not, say, gold.

[dontreact]

2: The more people buy and hold Bitcoin, the more valuable it becomes.

I asked ChatGPT about the definition of common enterprise:

The 7th and 2nd Circuits use a "horizontal commonality" test, where a common enterprise is found if the profits of the investors are interdependent - i.e., if the success of the enterprise is tied to the success of other investors. Essentially, the investors' funds are pooled and they share in the profits and losses.

3: Overwhelming majority of people who buy gold buy it as a hedge against inflation. In the past 5 years everyone I personally know who has bought cryptocurrency was expecting it to increase massively in value (expecting profit). 4: There have been a huge amount of cryptocurrency pump and dump stories where the promoters have benefitted immensely. In those cases it seems pretty clear that those are securities. In fact pretty much anything that isn't a top-2 coin at this point is subject to this sort of behavior from what I've seen.

[Ajedi32]

2 is also true of gold and any other commodity.

3 I'd quibble with you about "overwhelming majority", but yes that's a common use of gold. It's a fairly common use of cryptocurrency too though, especially in countries with high inflation.

4 Maybe in that specific situation yes. Sounds like you agree that's not all cryptocurrencies though. It's also kinda weird that something could go from not being a security to being one (and back) depending on how people happen using it at any given moment in time. E.g. If someone somehow managed to orchestrate a pump and dump scheme with silver, would it temporarily become a security for that brief moment in time and then go back to being a commodity afterwards?

[kajaktum]

Do you seriously think that cryptocurrency becomes a billion dollar industry because...people use it to do what? exactly? Pretty much 99% of the people that put money in crypto expected the price to go up and sell. I have not seen any mention of economical use except in third world countries. In which case, crypto is just a roundabout way of charity I guess?

Crypto people _say_ their technology have this and that use but all they _do_ is trade them.

[Melting_Harps]

> I have not seen any mention of economical use except in third world countries.

This is peak HN, if there ever was such a thing; you do realize that the Third World (an erroneous use of the term that relates to nations that were aligned with the Soviet Union but used to denote underdeveloped nations) comprises the most of the Human population; and if figures are correct about System D [0], it is actually the 2nd largest economy in the World and growing due currency collapses and hyper-inflation being wrought around the World.

In recent literature on the informal economy, System D is the growing share of the world's economy which makes up the underground economy, which as of 2011 has a projected GDP of $10 trillion.The informal economy is usually considered as one part of a dual economy.

Seriously, this is the most typical yet horridly-informed view on this matter and gets tossed in the echo-chamber; it's like saying that the USD (or any fiat currency) is really useless because the FOREX market (the biggest Industry in the World only after Agriculture) negates its utility because people only seem to trade it.

I'll be the first to tell you that 99% of crypto is a scam but seriously just stick to something you actually understand before posting these inept diatribes.

0: https://en.wikipedia.org/wiki/System_D

[jcranmer]

> the Third World (an erroneous use of the term that relates to nations that were aligned with the Soviet Union but used to denote underdeveloped nations)

That's not what "Third World" originally meant; Third World was used to refer to the non-aligned countries, those countries that were neither aligned with the US and NATO (the "First World") nor the Soviet Union and the Warsaw pact (the "Second World").

[Melting_Harps]

> That's not what "Third World" originally meant; Third World was used to refer to the non-aligned countries, those countries that were neither aligned with the US and NATO (the "First World") nor the Soviet Union and the Warsaw pact (the "Second World").

Well, I concede that point; but even then it was used incorrectly considering that these third world nations are also comprised of the most developed nations in the West: Switzerland/Finland etc...

Still, the post is seething with just as much arrogance as it was misinformed and my point remains.