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Are these assets backed by legally binding contracts? If the answer is no it doesn't seem like a stretch. If I sold you a stock in my company that gave you non
by as_i_fall 5y ago
Are these assets backed by legally binding contracts? If the answer is no it doesn't seem like a stretch.
If I sold you a stock in my company that gave you none of the traditional shareholder rights I'd also call those shares "fake", which seems to be what's going on here.
- beambot 5y agoForward contacts and SPVs are two ways of encumbering share ownership without (necessarily) conferring all the rights of the underlying shares.
- as_i_fall 5y agoSure, but those are backed by different legally binding contracts which also give legal recourse to buyers. My point is that unlike other types of synthetic assets these seem to have no legal backing and could quite conceivably be regulated out of existence in the future.
- tylersmith 5y agoNobody is claiming to be selling stock in companies. They're claiming to be, and are, selling synthetic assets that track that price movements of stock.
- klipt 5y agoHow is that different to a bucket shop? https://en.wikipedia.org/wiki/Bucket_shop_(stock_market) https://en.wikipedia.org/wiki/Bucket_shop_(stock_market)
- tylersmith 5y agoIt's not really. They're transparent, auditable, and typically they're designed to use over-collateralization to prevent liquidity problems, but they're not 100% immune to them and still count as bucket shops IMO. But they're absolutely not fraud or "fake stocks".
- trainsplanes 5y agoAccording to the Wikipedia link, bucket shops are illegal gambling. So if what this is doing isn't any different than a bucket shop... I think we'll see the same outcome.
- tylersmith 5y agoYes I think that's very likely. The closer DeFi gets to traditional markets the more likely enforcement is coming.
- sneak 5y agoWhat are some possible enforcement mechanisms against Ethereum DeFi smart contracts?
- ohgodplsno 5y agoThe greater Ethereum community accepts to put restrictions into place, or the US/EU/China puts sanctions on Eth owners and traders. You get to either move to Sealand, or accept restrictions.
- cinquemb 5y agoI'd love to see the DoD/CCP conduct a metadata drone strike agaisnt addresses that were generated for a specific transaction x seconds ago, correlated with some IP addr correlated with some location that ended up being a server running in supply closet on one of their military bases. Esp for chain running evm compatible contracts that are more scalable than ethereum and can have millions of ephemeral validator nodes.
- deleted 5y ago[deleted]
- as_i_fall 5y agoI imagine very few people would be interested in smart contracts if it became a defacto legal standard in the US and Europe that these contracts are unenforceable. Of course this doesn't address contracts being written out of Russia or traditional financial havens, but how valuable is a vehicle which can't be used to move assets into or within the US or Europe? I think the question of enforcement is the wrong one.
- User23 5y agoThat’s what GOOG is (as opposed to the “real” Alphabet stock GOOGL). So by your definition one of the FAANGs is issuing “fake” stock. And for some reason it trades higher than the “real” shares.
- joosters 5y agoOwning GOOG still gives you a real 'share' in the company, i.e. if the company was wound up and all its assets sold off, you would get paid in proportion to the amount of GOOG you owned. Whereas you would get no such thing with these fake stocks.
- anm89 5y agoNo one is claiming they are selling you a stock in a company. That's the whole point. They are very clear that they aren't selling you a stock in a company.