In an interview with the popular YouTube channel Altcoin Daily, Saylor says that Ethereum’s constant changes, along with the fact that it was released after an Initial Coin Offering (ICO), and the “difficulty bomb” make ETH a security.
The “difficulty bomb”is a mechanism to be implemented on the Ethereum mainnet that will proves to increase ETH’s mining difficulty. The network is migrating from a Proof-of-Work (Pow) to a Proof-of-Stake (PoS) consensus protocol and the “difficulty bomb” prevents miners from maintaining the former blockchain.
Saylor used the following reasons to make the claim why Ethereum is “obviously a security”:
There is an Ethereum pre-mine, there’s a hard fork, you know there are continual hard forks, and there is a difficulty bomb getting pushed back. The difficulty bomb is going to wipe out the entire of ETH mining industry.
A commodity, according to Saylor, is resistant to change. A security is constantly changing and there are entities capable of controlling critical decisions (the difficulty bomb). Saylor concluded that if you can change an asset, it is a security.
“That’s the challenge in the crypto space, really, they are all securities. And the problem with it is, that they are all securities trading on exchanges that do not have a license to trade securities.”
Bitcoin, Saylor argues, is different from a security because there was no initial coin offering, and nobody wants to change the network’s software.