Michael Saylor, the founder and CEO of MicroStrategy, has recently explained why he believes Ethereum (ETH), the second-largest cryptocurrency by market cap, is a security.
In a recent interview with Altcoin Daily, Saylor highlighted the reasons why he believes that the native token of the largest smart contracts platform is a security and not a community.
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According to the MicroStrategy chief, the difficulty bomb designed to increase the difficulty of mining ETH in order to disincentivize miners will annihilate the Ethereum mining industry.
Michael Saylor noted:
“I think it’s pretty obvious it’s a security. It was issued via an ICO [initial coin launch]. There’s a management team. There was a pre-mine. There’s a hard fork. There are continual hard forks. There’s a difficulty bomb that keeps getting pushed back…”
Saylor then concluded that the feature in the Ethereum blockchain created to delay the difficulty bomb every six months makes ETH a security.
“For it to be a commodity, there can’t be an issuer and the truth is you can’t really make decisions. One of the fundamental insights in the crypto industry is the fact that you can change it is what makes it a security.
If you look at most of these cryptos, where they have hard fork after hard fork after hard fork, the problem with a hard fork is changing the protocol means that some development team is making a decision, and if you can change the protocol in a material way, you can change the monetary protocol. A hard fork can change the issuance pattern, or it can change the value of something. So that makes an investment contract under securities law.”