V. Buterin: "Minners can lost their business due to POS"

Vitalike Buterin shared his thoughts on the current state of cryptocurrencies world
11 September 2017   585

Vitalik Buterin, creator of Ethereum, one of the most popular person in cryptocurrency world, recently gave an interview for a Russian issue "Commersant".

When we will migrate to the Proof-of-Stake protocol, even at the first stage the need for mining will drop dramatically. Proof-of-Stake uses an algorithm that doesn't require large number of computers constantly make calculations. This is an algorithm where a coin is used inside the platform itself. The consensus will become much cheaper and safer. And in fact, miners can lose their business.

Vitalik Buterin
Creator of Ethereum

Vitalik also reported about the risks for cryptocurrency owners.

The biggest risk is financial. Much is said about this and I am no exception. The market is very volatile now. This affects both large crypto-currencies and ICO-projects. A bubble can burst at any moment, and projects can lose a lot of money at once. 

He also believes that there are risks in the fact that interest to the blockchain is growing too fast, because the technology itself is not yet ready to accept all this interest. 

This situation has now developed with bitcoin. There are not enough room in the blockchain, it's becoming more and more difficult to use, the commissions are growing. In Ethereum, it [the commission] is still less than one cent. We do not intend to divide the ETH, as it was done with bitcoin, it is not necessary, but the risks still remain.

Vitalik Buterin
Creator of Ethereum

In addition, according to Buterin, the risk remains high for fraud.

Any technology can be used for bad purposes. And ours, unfortunately, too - no matter how much we wish this would not happen. We can not guarantee 100% security.

Vitalik Buterin
Creator of Ethereum

Looking into the foreseeable future, Buterin believes that the types of fraud associated with using other people's data will be relevant, when one person impersonates another. This kind of fraud, he says, is practically ineradicable and will live for a very long time.

There are also new types of fraud, for example, related to competencies.

So, companies that issue smart contracts can issue a contract with a deliberate code error that allows them to withdraw all the money. Such a case was recently recorded in our community. And it's good that this happened on a small scale - this allows us to learn and set ourselves the task of minimizing such risks.

Vitalik Buterin
Creator of Ethereum

Additionally, Vitalik notes the growth of fraud in the ICO market, when fraudsters give out a fake ICO for a real project with the help of fake sites, collecting several thousand dollars from investors and disappearing in an unknown direction. 

German Financial Regulator Clarifies Stance on ICOs

The Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) has clarified its position on ICOs
22 February 2018   32

German financial regulator admitted it was receiving many inquiries about the status of tokens and cryptocurrencies. According to an advisory letter, BaFin provides some basic definitions of ICOs and related terms. It is important because the results of a new survey showed that more than two-thirds of Germans know about bitcoin.

In this letter, BaFin educates the public and explains how tokens are typically generated, how blockchain works and that ICOs are used to raise funds for startup projects. The note states that for regulatory purposes, ICOs, tokens, coins, and cryptocurrencies are subject to the existing provisions in the field of securities supervision and other relevant national and EU laws.

The authority advises participants in ICOs to check and follow rules applicable to regulated financial instruments, such as securities. If businesses or individuals have any doubts about regulations, they should approach BaFin.

According to BaFin, companies should fulfill any obligations under the Banking Act and the Capital Investment Code, the Insurance Supervision Act and the Payment Services Supervision Act. The transactions may be prohibited if relevant regulatory requirements are not met.

The authority also states that legal classification of tokens requires precise examination. It will determine their status on a case-by-case basis after studying their features. The token should be transferable and tradable on cryptocurrency trading platforms in order to be classified as a security.