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  1. Coin Center, Coinbase, Union Square Ventures, Consensys, and the law firm Debevoise & Plimpton published a securities law framework document in December 2016 to analyze cryptocurrencies as potential securities. What the SEC decides to do could be completely different from this document. https://www.coinbase.com/legal/securities-law-framework.pdf
  2. Cryptocurrencies will eventually fund terrorism. What matters more is what the response will be when it happens: https://coincenter.org/entry/it-s-time-to-assess-the-potential-for-terrorist-use-of-cryptocurrencies In addition, cryptocurrencies are already regulated, but to varying degrees across the world. If we ever expect cryptocurrencies to be used for global business, regulations will need to increase. This is not a bad thing, regulation will increase usage, acceptance, and maybe even price . We've already seen some progress with Japan passing the Virtual Currency Act, which now recognizes cryptocurrencies as a payment method. I hope this trend continues. https://bravenewcoin.com/news/bitcoin-regulation-overhaul-in-japan/ If you're interested in tracking regulations, here is the best site I've found: http://bitlegal.io/
  3. Thanks, this all works well as long as terms are stipulated in the contract regarding settlement. Which means decisions need to be made regarding what's allowed. It's not hard to do, but is an unnecessary hurdle if eventually say XRP is being used to settle contracts all over the world. My hope is legislation is eventually passed recognizing cryptocurrencies (with specific characteristics of course) as legal tender (or some form of such), so settlement terms would not need to specify the allowable cryptocurrency. If this happens, especially on some global scale, that's where you get everyone using them. "Huge amounts of debts are created in a day’s worth of business. Negotiating settlement media into each and every contract takes time, so transactors may choose to omit that bit. If so, a subsequent situation may arise in which a debtor arrives to pay a creditor, but the creditor refuses to accept the proffered settlement media, thereby forcing the debtor into unnecessary default. To avoid having court rooms being swamped by frivolous default cases, I could imagine merchant law evolving a list of common media that must always be accepted in the settlement of those debts for which a settlement medium was not already specified. If the marketplace were to accept these laws, then legal tender rules would arise in the same way that VHS beat Beta—they provide a cheap and useful set of standards around which everyone can coordinate their plans and actions." Source: http://jpkoning.blogspot.com/2013/01/is-legal-tender-imposition-on-free.html Japan passing the Virtual Currency Act is a great first step as virtual currencies are now at least a recognized payment method there. I hope other countries follow suit. https://bravenewcoin.com/news/bitcoin-regulation-overhaul-in-japan/ For an interesting read regarding what constitutes legal tender: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1292893 What is Legal Tender? In law, a commercial contract is born when the parties agree on some necessary terms. In a contract to sell goods the quantity is a necessary term. For example, an agreement to “sell apples at the price of one dollar per pound, tomorrow, in my store,” is not a contract and cannot be enforced in court, because the quantity is undetermined. Legislatures worldwide resolved long ago that specifying the medium of payment is not a necessary term. Thus, if the above example is modified by adding the quantity term “ten pounds of apples,” then it is a valid contract, even though the medium of payment (as opposed to the unit of account) is undetermined. However, this raises a potential problem. A contract has been created, and each side now has an obligation. How should the buyer’s obligation to pay ten dollars be discharged? Actually, almost anything on which the parties mutually agree is acceptable, be it ten one-dollar bills, a check, peso bills according to some exchange rate, or a watch which the seller estimates as worth at least ten dollars. This is just one aspect of the freedom of contracts, which is a fundamental building block of capitalism. Legislatures have outlawed very few media of payment, such as gold (in post Great Depression legislation), or illegal drugs (which could conflict with the public interest). It does not matter if the agreement regarding the medium of payment is part of the contract, or made separately after the contract is created. The main goal of contract law is to solve disagreements after a contract is created (for instance, where the terms are vague and give rise to a dispute). Suppose that the buyer in my example, where no medium of payment was specified, offers to pay in a ten dollar bill, but the seller rejects it because he wants pesos. Given that a contract was formed and payment was tendered but rejected, can the seller sue the buyer in court for breach of contract due to this nonpayment? What if the buyer offers one thousand one-cent coins, or a ten-dollar watch? “Legal tender” is an object that confers a right on the payer. If the buyer in my example offers the correct quantity of anything that has been declared by law to be legal tender, then the seller’s lawsuit fails. The buyer may be asked to deliver the proffered payment to court, which the court would offer to the seller. The buyer is then off the hook, having fully performed his contractual obligation of making payment. On the other hand, any object that is not legal tender will not give the buyer such peace of mind. Judgment will be entered against the buyer for breach of contract if the seller delivered the goods and rejected a proffered payment from the buyer that did not constitute legal tender. For this very practical purpose, every country specifies which objects are considered legal tender for debts that are subject to its contract law. Typically, the government gives this status to currency it issues itself, but this is not necessary. Since legal tender laws protect buyers, sellers may want to protect themselves from these laws. Usually, it is remarkably easy to do so. Before the necessary details of the contract are finalized (that is, before contract formation), the seller can specify the medium of payment. If the parties agree to a specific medium of payment, then this term will become part of their contract. If that medium of payment is not outlawed by other laws (for example, voided as a matter of public policy, as in the illegal drug example above), then legal tender laws will not apply. If, on the other hand, there is disagreement about the medium of payment, then a contract fails to come into existence. Going back to my example, suppose that before agreeing on the quantity of apples to be delivered, the seller states (e.g., by posting a sign near the cash register) that he must be paid in pesos. If the buyer refuses and this medium of payment is not acceptable to both parties, then a contract is not formed, and nobody has any contractual obligation at all.
  4. @JoelKatz Thank you for the response. I assumed Ripple was addressing this area, but I was not sure to what extent. I'm glad to see the GPSG increasing it's members and exposure. Contracts and rules that everyone plays by can be a messy area, so addressing these issues upfront is great to see.
  5. Thank you for the clarification, this is what I was wondering about. If XRP is not legally recognized, and company B challenges company A on the settlement, my assumption is company B would win in court if this were to happen today. I know we're not there yet, but I'm not worried about the next year or two, I'm worried about 5-10 years from now and what additional large hurdles will eventually need to clear for XRP to realize it's full potential.
  6. Yes, I probably am. However, any investment thesis should include potential risks and evaluation of such risks to aid in the valuation process. I'm poking holes to see what falls out. And the legal problems you pose IMO should be included in whatever international legal framework is eventually agreed upon. What cryptographic hash functions are allowed to be used is especially important. My point is more that these decisions have not yet been made in many countries, and until they are, I would not expect wide usage of cryptocurrencies to be used commercially. Once the legal framework is in place, usage should spread quickly. https://bitconnect.co/bitcoin-information/8/legality-of-bitcoin-cryptocurrency
  7. Because that's one entity making a unilateral decision to move value on their own books. Not an agreement between two entities in different countries to transfer value. Also, everything other than XRP in the system is an IOU. Essentially a legally binding agreement to transfer value at some point in the future. Transferring XRP, is actually transferring that value, not a future promise to do so.
  8. To clarify, digital signatures are currently used all the time throughout the world. I do not question that they are legally binding. This only happens now because laws have been passed recognizing the validity of a digital signature to carry the same weight as a handwritten signature. Before the relevant laws were passed, digital signatures were not used in practice. Theoretically speaking, I agree with you. But corporations did not begin to use digital signatures, until laws were passed allowing them to do so. There is too much risk for when something goes wrong, to not have protection under the law. I'm questioning if we have a similar situation with the usage of XRP. New technology, tons of prospects, but we still need some laws passed before full implementation. I'm not concerned with a bank owning XRP on the RCL. I'm questioning if Bank A in the UK and Bank B in Mexico both own XRP on RCL, and they enter into a transaction and decide to settle that transaction with XRP, because they both own some and it's easy to settle with, is using XRP legally considered fulfilling the obligations of the agreed upon transaction. I don't think that is currently the case. They can agree on whatever they want, until something goes wrong and they need a court to decide, now laws matter. I'm proposing that in order for XRP to be considered legally binding for a transaction, laws need to be passed recognizing it as such. Banks around the world won't just agree with each other to use it because it's easy or cheap. They also need legal assurances that if something goes wrong, a court won't say XRP shouldn't have been used as an exchange of value.
  9. Question: Is using XRP (or any digital currency with a cryptographic hash function) to exchange value legally binding? Why I'm curious: Electronic signatures (e.g. Docusign) have not always been legally binding. The US, the UK, and the European Union all passed similar laws around 1999/2000 establishing a legal framework to treat electronic signatures as equivalent to handwritten signatures. The United Nations published an international framework for cross-border recognition in 2005. Here is a bit of history on electronic signatures: 1976: Whitfield Diffie and Martin Hellman first described the idea of a digital signature scheme, but they only theorized that such schemes existed 1977: Ronald Rivest, Adi Shamir and Len Adleman invented the RSA algorithm, which could be used to produce a kind of primitive digital signature 1988: Lotus Notes 1.0, which used the RSA algorithm, became the first widely marketed software package to offer digital signatures 1999: The ability to embed digital signatures into documents is added to PDF format 2000: The ESIGN Act makes digital signatures legally binding 2002: SIGNiX is founded and becomes the most broadly used cloud-based digital signature software 2008: The PDF file format becomes an open standard to the International Organization for Standardization (ISO) as ISO 32000. Includes digital signatures as integral part of format. So you have roughly 10-years from Lotus Notes marketing digital signatures as a product until easily embedded digital signatures can be added to PDF documents. After another few years, everything becomes legally binding. These days, electronic signatures are used almost everywhere, outside of a few things like wills, trusts, divorce documents, etc. Without laws changing around the world, you would never have international corporations signing contracts electronically 'hoping' they would be enforceable. When business gets messy, as it always does, you rely on the law to protect your rights. And if the law says no electronic signatures, even if that means I need to jump on a plane to sign a document, I jump on a plane. So back to my original question. Does anyone know of existing case law supporting the enforceability of cryptocurrencies being a legally binding financial instrument? What about internationally? I'm a huge fan of Ripple and believe in the value proposition of XRP, but I don't see XRP being used by large institutions until it's considered a legally binding transfer of value. You'll likely get a few cutting edge banks to test the waters, but the big guys will wait until laws are passed. Regulations and legality are IMO, harder issues to tackle for XRP to succeed than technology improvements or getting banks interested in using XRP. Don't get me wrong, I support XRP, and believe in it's investment merits. This is just one of the risks I see. To be clear, all investments have risks. We're all putting our capital at risk with the belief those risks will eventually subside, and our investment will provide a healthy return. I'd love everyone's thoughts on the topic, especially if you're an attorney. If anyone doesn't believe this matters, I'm all ears as well.
  10. It looks like we have one of the initial projects coming out of the recent Berlin Interledger hack-o-thon, unless I've missed something. It's a start to an android app written in Java and Python using the interledger specs for completing a payment. Solutions are coming..... https://github.com/Shopify/interledger-payment-app-example Interledger Payment App This is a project that was done as part of a hack-o-thon organized at the Interledger Workshop at Blockchain Expo. This repo is meant as a showcase of an Android payment app, using the Interledger spec for payment. As such, it contains both the website implementation of the Payment Request and a Payment App itself. It does not contain the ledger implementations. These are hardcoded to use https://red.ilpdemo.org and https://blue.ilpdemo.org as originating and the destination ledgers. Both are running the NodeJS ILP kit and have been implemented as an initiative to show off the Interledger spec.
  11. @Fanust Check out the Coursera course from Princeton on cryptocurrencies: https://www.coursera.org/learn/cryptocurrency
  12. If XRP can truly become a transitional method of value exchange, how much of these existing markets could it be used for: http://money.visualcapitalist.com/all-of-the-worlds-money-and-markets-in-one-visualization/ IMO, a piece of those pies are the potential. Risks of achieving this are still extremely high.
  13. snowpar

    SF Bay Area meet-up

    I'd love to make it and meet some of you if there is room. I'll likely be driving from the city, but would Bart over if the location is close by a station. I can chip in as well.
  14. This is 100% correct. However, I do believe there will be a digital asset used as XRP was originally intended. It's just a matter of if XRP wins the race to adoption. They have a pretty good start, but technology and innovation can easily dethrone the best current solution eventually. One thing is for sure, if XRP does take off and start to get wider adoption and usage, there will be a number of companies on their heels trying to beat them.
  15. XRP is likely appropriately valued currently given the uncertainty regarding further adoption by banks, MM, institutional investors, FX traders, and eventually subsets of the greater population. I'm in the camp of markets are generally efficient (i.e. the current price reflects all information known about the underlying investment). However, I believe there is information asymmetry in regards to digital assets, and especially Ripple. Tokens are hard to get into. You have verifications, multiple exchanges, wallets, risks of loosing a wallet, sending money to the wrong person, these weird complicated addresses, SilkRoad and Bitcoin stigma, etc. You also have a ton of people that have figured that part out, but don't have the technical expertise, financial background, or business experience to evaluate tokens appropriately. Thus, it's not a level playing field in regards to access or experience for proper price finding to occur. This will eventually happen. Ripple is making sure of it, and trying pretty hard. I'm more interested in what price is appropriate when everyone has easy access to XRP, especially if the banks already use it themselves. I believe banks are just a stepping stone to the greater population. This is just the beginning. How many of your friends or family have a ripple wallet where you could send them money? It's no different in concept than Facebook. How valuable is Facebook if only 1 or 2 of your friends have an account? Look what happened when everyone signed up.... But don't forget Myspace.
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