In a candid Ask Me Anything (AMA) session, Charles Hoskinson, the founder of Cardano, directed sharp criticism towards the US Securities and Exchange Commission (SEC) and raised concerns about the perceived decentralization of Bitcoin.
Cardano Founder’s Critique of SEC and Bitcoin
Hoskinson’s primary focus was on the SEC’s regulatory approach to cryptocurrencies, expressing bewilderment and frustration regarding the differentiation made by the SEC between cryptocurrencies such as Ethereum, Bitcoin, and Cardano. His concerns were not merely rhetorical but extended to the legal framework, particularly the Howey test, utilized to determine whether an asset qualifies as a security.
In his blunt remarks, Hoskinson stated,
“Then they [the SEC] come in and say it is a security. What the hell does this mean? If it is decentralized. How did Bitcoin register? It’s not. So explain to me the f****ng difference between Ethereum, Bitcoin, and Cardano, and the rest of the gang. Explain it to me. Like I’m five years old. Right now. Run the goddamn Howey test on it and show me the difference between the two. Tell me.”
Notably, Hoskinson focused on Bitcoin’s decentralization and the perceived expectation of profit among Bitcoin enthusiasts. He referred to them as “orange pill moon boys,” suggesting an inherent anticipation of profit.
“Is there an expectation of return with the goddamn orange pill moon boys? It’s there. There are so many different planks and angles that you can take a look from,” Hoskinson remarked. The expectation of profit is a key aspect of the Howey test, commonly used to classify assets as securities.
Hoskinson questioned the widely held belief in Bitcoin’s decentralization, suggesting it may not be as decentralized as commonly perceived. He argued that a 51% attack on Bitcoin could be performed by subpoenaing three major mining pools. Despite this, he claimed that Bitcoin gets a “complete [free] pass.”
Reaction from the Bitcoin Community
In response, Adam Back, CEO of Blockstream, defended Bitcoin’s decentralized status, highlighting its organic growth from zero value and the absence of an initial coin offering (ICO). He categorized Bitcoin as a commodity, distinguishing it from cryptocurrencies like Ethereum and Cardano, which he viewed as securities.
Hoskinson clarified Cardano’s launch details, emphasizing that there was no ICO and outlining the airdrop and voucher sale structure. The discussion also delved into technical aspects, with Erik Voorhees, CEO of ShapeShift, debunking Hoskinson’s claim about a potential 51% attack on Bitcoin, describing it as a common myth and providing insights into the operational dynamics of mining pools.