A SAFT is an investment contract (security) offered by blockchain developers to accredited investors. The tokens that are ultimately delivered to the investors, though, should be fully-functional, and therefore not securities under U.S. law. The SAFT imitates the Y Combinator Simple Agreement for Future Equity, or “SAFE,” which has been widely used to finance early-stage companies for years.

What’s the problem?

The ICO model is an increasingly popular mechanism to raise startup funds from all over the world. Without clear regulations, token issuers and investors have operated under a cloud of legal uncertainty. Did these public sales result in unregistered securities? Why does that matter?

Issuing unregistered securities is a violation of Section 5 of the Securities Act of 1933. Beyond significant monetary penalties, issuers could face a maximum of five years of federal prison.

At a U.S. Senate hearing in February, Securities and Exchange Commission chairman Jay Clayton stated, “I believe every ICO I’ve seen is a security.” As technology continues to outpace regulations, the industry is in desperate need of a standard, compliant transactional framework to finance token networks.

The SAFT: A Potential Solution

The reasoning behind the SAFT framework is the fact that there is no bright line determining which types of tokens are securities and which are not.

Security tokens may serve as a substitute for traditional securities such as corporate stocks. On the other hand, utility tokens are designed to function like a Chuck-E-Cheese token, providing utility to purchase a service on its native network.

The SAFT framework initiates a way to help utility token issuers finance a distributed network without breaking financial regulations; specifically securities laws. Although utility tokens aren’t designed to be securities, they might end up being considered securities at the time of issuance by the U.S. Securities and Exchange Commission (SEC) when sold to the public.

 

How does a SAFT Work?

  1. Developers of a token-based decentralized network enter a written agreement (SAFT) with accredited investors. The document calls for investors to fund the development of the network in exchange for discounted tokens at a future date. The company developing the network registers with the SEC and does not issue tokens.
  2. The developers use investor funds to develop the network. Investors do not receive tokens at this point.
  3. Once the network is functional, tokens are issued and delivered to investors. At this stage, tokens can be sold to the public directly or through exchanges.

At a high-level, you can think of a SAFT as a deferred ICO. Rather than issuing tokens for cash simultaneously, developers create a contract (SAFT) and raise money to develop a functional platform before creating tokens.

At this time, utility tokens are genuinely functional, supporting the argument that they are not actual securities. This argument is essential as no court, regulator, or taxing authority has yet interpreted the SAFT framework.

Benefits

  • The framework can work within existing laws, one that doesn’t assume legislative change to accommodate the technology.
  • SAFTs can reduce risks for institutional investors, and public investors can still access tokens, albeit at a later date.
  • Potentially mitigates the mass exodus of crypto developers to foreign jurisdictions.

Limitations

  • The SAFT framework is not very useful to non-utility tokens that are themselves securities when sold to the public
  •  It won’t aid utility tokens where purchasers rely on efforts of the seller to increase the price after the token is already in circulation. Examples include buybacks and promises to develop functionality after the token sale.
  • The framework currently focuses on U.S. federal law and potentially deemed illegal in other jurisdictions.
  • Excludes public investors from participating in the early stages of a presale.

A Move in the Right Direction

The SAFT framework is an initial step towards an emerging standard for how blockchain network developers can responsibly innovate. It provides one approach to balancing the risk and reward among stakeholders and benefits from adhering to existing laws.

The SAFT project is a community attempt at self-regulation and has a long way to go before becoming an industry standard. That said, there is an open call for participation, and you are encouraged to join the project.

More Information

https://saftproject.com

https://www.cooley.com/news/insight/2017/2017-10-24-saft-project-whitepaper

https://cardozo.yu.edu/sites/default/files/Cardozo%20Blockchain%20Project%20-%20Not%20So%20Fast%20-%20SAFT%20Response_final.pdf

 

An Initial Coin Offering (ICO) is a new fundraising mechanism where tech startups, mainly from inside the digital-currency sector, create a new virtual coin or token and offer it for public sale. ICOs are similar to an Initial Public Offering (IPO) and crowdfunding.

IPOs are a highly regulated capital-raising process where shares of a company are sold to public investors to raise money for operations. On the other hand, crowdfunding brings together various individuals who commit money to new projects and companies they want to support. Crowdfunding does not involve receiving shares of the company and is usually reward-based.

ICOs combine the two dealing with early-stage supporters also motivated by a potential return on their contribution. Current regulations, or lack thereof, make ICOs an attractive method of raising money.

How does an ICO work?

Typically a team announces a project for a blockchain related project on Bitcointalk. The announcement contains information about the project such as a whitepaper, roadmap, ICO guidelines, and team. ICOs involve a public address where contributors send their digital currencies (BTC, ETH, etc…) in return for a token.

Specific token function and initial price varies but can be compared to chips at a casino. In order to use the product being developed, you will need “chips” to pay for services. For example, Ethereum conducted an ICO in 2014 selling Ether tokens for Bitcoin. It is one of the most successful ICOs to date and is currently the most popular platform for conducting ICOs. (Find out why  Ethereum has become the go-to blockchain for ICOs, here.)

Ether is simply a token used for paying transaction fees or building or purchasing decentralized application services on the Ethereum platform. The ICO ran for four weeks and raised $18 million making it the second largest ICO to date. This capital was used to fund development of services around the Ethereum blockchain. Ideally, after the initial crowdsale, a token will make its way onto exchanges. Exchanges allow tokens to be traded like stocks in the secondary-market giving early contributors the option to sell their tokens at a premium.

How much money are we talking about?

During Ethereum’s ICO one token was valued at $0.311. An investor who contributed $1,000 received 3,215.43 tokens. About 3.5 years since those same tokens would be valued near $2.73 million; around a 273,508% return!

Having already surpassed early-stage VC funding for internet companies, ICOs continue to be an attractive alternative for startups. Fred Wilson, a venture capitalist and early investor in Facebook and Twitter, stated ICOs “are a legitimate disruptive threat to the venture capital business.”

ICOs exploded in 2017 and companies are still raising a TON of cash. Total fundraising over the past four years is estimated at a staggering $6.4 billion dollars with $1.32 billion raised in Q3 2017 alone. Large rewards entail large risks and the excitement surrounding ICOs has not gone unnoticed by regulators.

Are ICOs Legal?

It depends. SEC rules state you cannot sell securities without proper compliance work. Lack of regulations means each token must be evaluated on an individual basis. Investors can evaluate if a token is a security using the Howey-Test.

Under the Howey Test, a transaction is a security (or investment contract) if:

  1. It is an investment of money
  2. There is an expectation of profits from the investment
  3. The investment of money is in a common enterprise
  4. Any profit comes from the efforts of a promoter or third party

Many tokens fall under point 2, and SEC Chairman Jay Clayton remarked: “to date no initial coin offerings have been registered with the SEC.” Note that the organization investigated the infamous DAO. They concluded the ICO violated federal securities laws with unregistered offers and sales of DAO Tokens. The agency decided not to bring charges in this instance but cautioned investors.

Regulations vary by country and are evolving. ICOs are currently banned in China and South Korea. Click here to find more information on ICO regulations in your country.

A New Hybrid Asset Class

ICOs are a new and innovative way for startups to raise money using a cryptographic token. Billions of dollars have flowed into ICOs and the model poses a potential threat to the venture capital industry.

Regulations are uncertain and catching up with the market. The fate of ICOs may not be clear but the industry is rapidly developing a compliant framework for token sales with projects like SAFT. (Simple Agreement for Future Tokens)

Oliver Bussmann, a former chief information officer at UBS, and now head of a fintech advisory firm stated: “ICO as a new business model leveraging blockchain technology will sustain as the digital way, combining crowdfunding and (a) new hybrid asset class of equity ownership and currency.”

Some ICO Resources

Research and Communities:

 

 

Poloniex is a United States based cryptocurrency exchange founded in January 2014 by Tristan D’Agosta. The American company is currently registered in Wilmington, Delaware with a corporate office in Boston. It accepts only cryptocurrencies deposits (Including USDT) and has a large number of trading pairs – one of the largest, in fact.

Poloniex has a large amount of liquidity and as such is recommended for professional and mid to high-level traders, of which there are almost 60,000 online at a given time.

Poloniex currently ranks #1 on the BlockExplorer Top 25 Cryptocurrency Exchanges List.

Poloniex Cryptocurrency Exchange Summary:

poloniex cryptoName: Poloniex
URL: https://www.poloniex.com
Total trading pairs: 101
Founded: 2013
Deposit fees: no
Withdrawal fees: no
Trading fees: 0.10% – 0.25%
Margin trading: yes
USA accepted: yes
Verification levels and withdrawal limits:

Verification Level

Requirements

Limits

Level 1 Email, First & Last Name, Country $2,000, USD Margin Trading Enabled
Level 2 Complete Address, Phone Number, Date of Birth 7,000 USD
Level 3 SSN, Scan of Photo ID, Selfie holding your ID $25,000 USD
Enhanced Verification Contact Support Greater than $25,000 USD

Poloniex Exchange Verification Process

Poloniex’s verification process is simple and is only required for withdrawal of currency. All users will need to enter their full name, date of birth, and address to start, after which webcam based verification of photo ID and possibly a utility bill will take place – This involves holding the requested identification document next to your face and allowing your webcam to take an image.

Once verification is confirmed users can withdraw $25,000 equivalent per day, which can be increased by contacting Poloniex support. It is recommended that users get verification before beginning to trade, as without verification you can only deposit and trade currency.

The exchange has a tiered fee system using a maker and taker model. In this model, trades happen between makers and takers, where the taker places an order to match a maker’s order. Because makers add liquidity to the market they are given a fee discount. Fees are calculated as an average of trading activity, with higher activity leading to lower fees. You can find a breakdown of volume to fees available here.

blockexplorer example

BlockExplorer allows you to view information about transactions, blocks, and addresses on the Bitcoin, Bitcoin cash, and Zcash blockchains. On the main page of BlockExplorer, you will see information about the bitcoin blockchain, specifically the most recent blocks and transactions. you can select which cryptocurrency you want to view at the top of the page, and just below that you can search for block heights, transaction hashes, and addresses, and you can select which currency you wish values to be displayed to you in, this defaults to USD.

How to view blocks on BlockExplorer

For blocks, you can see the height of the block, how long ago it was mined, how many transactions were on the block, who mined it (if that information is available), and the size of the block in bytes. You can also see a constantly updating list of all the most recent transactions sent to the network

You can either click on a block height or search for a block height to view more specific information about the block, such as the number of transactions on the block, the reward that went to the person who mined the block, when the block was mined, and the number of transactions that are stored on that block. Below that information, you can see each individual transaction on the block and some information about it, such as the address it came from and the address it was sent to, the amount transferred in your selected currency, and the number of confirmations the transaction has.

How to view transactions on BlockExplorer

If you click on a transaction hash or search for one, you can view details on that transaction, such as the size in bytes it takes up in its block, the fee per kilobyte at the time of the transaction, the time it was received, and the block it is in (if applicable). Below that you can see specific information on who the transaction came from, where the transaction was sent, and how much currency was involved

How to view addresses on BlockExplorer

If you click on an address you can see what transactions have been sent to it, the total amount of currency it has received, how much it has spent, and how much it currently has available

What are blocks, transactions, and address?

A block is a list of transactions when a block is mined all the fees for the transactions in it go to the miner, and the block is added to the blockchain. A transaction is just that, a transfer of cryptocurrency from one address to another, minus the fee. 

BlockExplorer has a Bitcoin Blockexplorer, a Bitcoin Cash Blockexplorer, and a Zcash Blockexplorer. Stay tuned for more!

top cryptocurrencies november 2017

Since the release of Bitcoin, cryptocurrencies and blockchain technology have taken the world by swarm. Typically, a cryptocurrency is differentiated from a normal, fiat, currency because it is decentralised, not centralised. Cryptocurrencies allow internet users to transfer value in a peer-to-peer (p2p) system without middle men. This means that payments cannot be censored, and financial friction will inevitably be lessened internationally. Over the last several years, we have seen all of these use cases slowly come to fruition.

Where Bitcoin and most other altcoins are only psuedonymous, new cryptocurrencies such as Zcash can actually be provably anonymous. Still others, such as Ethereum, have created decentralised platforms for smart contracts – paving the way for our decentralised future. Some of these cryptocurrencies use Proof of Work (PoW) while some use Proof of Stake (PoS) – still others use a hybrid model, or a different type of consensus algorithm to address the Byzantine Generals’ Problem altogether.

No matter how you look at it, since the release of Bitcoin in 2009, the cryptocurrency space has evolved – and is still evolving. Now that 2017 is coming to an end, let’s take a step back and look at the top 25 cryptocurrencies from 2017. Use this list to find the best cryptocurrency for you!

Where can I buy these cryptocurrencies? You’re in luck! BlockExplorer also has a Top 25 Cryptocurrency Exchanges List of 2017 that will let you compare different exchanges around the world and choose the one that’s best for you.

Disclaimer: Buy cryptocurrency at your own risk.  This top cryptocurrencies list does not constitute professional financial advice.

Top 25 Altcoins, Blockchains, and Cryptocurrencies (2017 Edition)

1. Bitcoin (BTC)

Max supply: 21,000,000.0
Current supply: ~16,705,000
Hashing algorithm: SHA256
Proof Type: PoW
Start Date: January 3rd, 2009
Difficulty adjustment frequency: 2016 blocks
Block reward: 12.5
Blockexplorer: https://www.blockexplorer.com

2. Ethereum (ETH)

Max supply: N/A
Current supply: ~96,000,000
Hashing algorithm: Ethash
Proof Type: PoW (PoS planned)
Start Date: July 30th, 2015
Difficulty adjustment frequency: Per-block
Block reward: 3

3. Litecoin (LTC)

Max supply: 84,000,000
Current supply: ~54,020,000
Hashing algorithm: Scrypt
Proof Type: PoW
Start Date: October 10th, 2011
Difficulty adjustment frequency: 2016 blocks
Block reward: 25

4. Bitcoin Cash (BCH)

Max supply: 21,000,000
Current supply: ~16,825,500
Hashing algorithm: SHA256
Proof Type: PoW
Start Date: August 1st, 2017
Difficulty adjustment frequency: Median Time Past (11 blocks)
Block reward: 12.5
Blockexplorer: https://bitcoincash.blockexplorer.com

5. Ripple (XRP)

Max supply: 38,305,873,865.0
Current supply: 38,305,873,865.0
Hashing algorithm: N/A
Proof Type: N/A
Start Date: February 2nd, 2013
Difficulty adjustment frequency: N/A
Block reward: N/A

6. Bitcoin Gold (BTG)

Max supply: 21,000,000
Current supply: ~16,775,123.4
Hashing algorithm: Equihash
Proof Type: PoW
Start Date: October 25th, 2017
Difficulty adjustment frequency: Per-block
Block reward: 12.5

7. Dash (DASH)

Max supply: 22,000,000
Current supply: ~7,716,621.9
Hashing algorithm: X11
Proof Type: PoW/PoS
Start Date: January 18th, 2014
Difficulty adjustment frequency: Per-block, Dark Gravity Wave (DGW)
Block reward: 3.6

8. IOTA (IOT)

Max supply: 2,779,530,283.0
Current supply: 2,779,530,283.0
Hashing algorithm: N/A
Proof Type: Tangle
Start Date: July 17th, 2016
Difficulty adjustment frequency: N/A
Block reward: N/A

9. Ethereum Classic (ETC)

Max supply: N/A
Current supply: 97,858,853.0
Hashing algorithm: Ethash
Proof Type: PoW
Start Date: July 23rd, 2016
Difficulty adjustment frequency: Per-block
Block reward: 5

10. NEO (NEO)

Max supply: 100,000,000
Current supply: 100,000,000
Hashing algorithm: N/A
Proof Type: Delegated Byzantine Fault Tolerance (dBFT)
Start Date: October 17th, 2016
Difficulty adjustment frequency: N/A
Block reward: N/A

11. Monero (XMR)

Max supply: N/A
Current supply: ~15,407,875.5
Hashing algorithm: CryptoNight
Proof Type: PoW
Start Date: June 2nd 2016
Difficulty adjustment frequency: 2 blocks
Block reward: 6

12. NEM (XEM)

Max supply: 8,999,999,999
Current supply: 8,999,999,999
Hashing algorithm: N/A
Proof Type: Proof of Importance (PoI)
Start Date: March 31st, 2016
Difficulty adjustment frequency: N/A
Block reward: N/A

13. EOS (EOS)

Max supply: 1,000,000,000
Current supply: 1,000,000,000
Hashing algorithm: DPoS
Proof Type: Delegated Proof of Stake (DPoS)
Start Date: June 26th, 2016
Difficulty adjustment frequency: N/A
Block reward:N/A

14. Cardano (ADA)

Max supply: 45,000000000
Current supply: ~25,927,070,538
Hashing algorithm: Ouroboros
Proof Type: PoS
Start Date: January 28th, 2017
Difficulty adjustment frequency: N/A
Block reward: N/A

15. Qtum (QTUM)

Max supply: 100,000,000
Current supply: 100,000,000
Hashing algorithm: POS 3.0
Proof Type: PoS
Start Date: December 19th, 2016
Difficulty adjustment frequency: N/A
Block reward: N/A

16. OmiseGO (OMG)

Max supply: 140,245,398
Current supply: 140,245,298.2
Hashing algorithm: N/A
Proof Type: PoS
Start Date: June 23rd, 2017
Difficulty adjustment frequency: N/A
Block reward: N/A

17. Zcash (ZEC)

Max supply: 21,000,000
Current supply: ~2,714,456.3
Hashing algorithm: Equihash
Proof Type: PoW
Start Date: October 28th, 2016
Difficulty adjustment frequency: Per-block
Block reward: 10
Blockexplorer: https://zcash.blockexplorer.com

18. Stellar (XLM)

Max supply: 100,804,167,793
Current supply: 17,713,853,990
Hashing algorithm: N/A
Proof Type: N/A
Start Date: July 23rd, 2016
Difficulty adjustment frequency: N/A
Block reward: N/A

19. Lisk (LSK)

Max supply: 159,918,400
Current supply: ~115,352,280
Hashing algorithm: DPoS
Proof Type: PoS
Start Date: May 24th, 2016
Difficulty adjustment frequency: N/A
Block reward: N/A

20. Tether (USDT)

Max supply: N/A
Current supply: 674,967,839.0
Hashing algorithm: N/A
Proof Type: N/A
Start Date: October 6th, 2014
Difficulty adjustment frequency: N/A
Block reward: N/A

21. Waves (WAVES)

Max supply: 100,000,000
Current supply: 100,000,000
Hashing algorithm: Leased POS
Proof Type: Leased Proof of Stake (LPoS)
Start Date: December 6th, 2016
Difficulty adjustment frequency: N/A
Block reward: N/A

22. Stratis (STRAT)

Max supply: N/A
Current supply: ~98,639,001
Hashing algorithm: X13
Proof Type: PoW/PoS
Start Date: August 9th, 2016
Difficulty adjustment frequency: N/A
Block reward: 1

23. Bitshares (BTS)

Max supply: 2,511,952,117
Current supply: 2,511,952,117
Hashing algorithm: SHA-512
Proof Type: PoS
Start Date: May 11th, 2014
Difficulty adjustment frequency: N/A
Block reward: N/A

24. Monacoin (MONA)

Max supply: 105,120,000
Current supply: ~55,627,825
Hashing algorithm: Scrypt
Proof Type: PoW
Start Date: January 1st, 2014
Difficulty adjustment frequency: Digishield
Block reward: 25

25. HShare (HSR)

Max supply: 84,000,000
Current supply: ~42,303,371.2
Hashing algorithm: To be announced (TBA)
Proof Type: PoW/PoS
Start Date: October 2nd, 2016
Difficulty adjustment frequency: N/A (TBA)
Block reward: N/A