Yesterday, Charles Hoskinson, Co-Founder and CEO of Input Output Global (IOG), addressed the growing concerns regarding Cardano’s network capacity. His comments come amidst a broader discussion about the platform’s scalability and utility, challenging previous narratives that labeled Cardano as a ‘ghostchain.’
On 18 December 2023, Hoskinson took to social media platform X (formerly known as Twitter) to respond to some concerns about Cardano’s blocks being too full. He recalled past criticisms where Cardano was dubbed a “ghost chain” with no use or utility.
Contrasting this with the current scenario of high network activity, Hoskinson expressed satisfaction, noting that Cardano is designed to handle such loads. He also pointed to the potential for further optimization of the network and DApps for scalability, both in the short and long term, sharing a link to a YouTube video for more details.
Hoskinson emphasized that Cardano’s growth was achieved through community engagement, drawing a parallel with Bitcoin’s growth model, independent of venture capital, crypto media, or influencers.
In a livestream last month, Hoskinson critiqued the U.S. Securities and Exchange Commission (SEC) for its perceived leniency towards Bitcoin, particularly regarding its decentralization status. He argued that Bitcoin is not as decentralized as often claimed, suggesting that its hash power structure makes it vulnerable to a 51% attack. Hoskinson challenged the SEC to apply the Howey Test to Bitcoin, questioning how it is differentiated from Ethereum and Cardano. He pointed out that Bitcoin investors, whom he referred to as “orange pill moonboys,” harbor an expectation of returns, a factor used in determining whether an asset is a security.
Hoskinson accused the SEC of engaging in an ineffective legal battle against the crypto industry, predicting continued losses in court cases for the SEC. He expressed his belief that this regulatory struggle would end without formal acknowledgment of errors or compensation from the SEC. Additionally, Hoskinson showed support for libertarian lawmakers who aim to reduce government influence, aligning with his view that cryptocurrencies should rebuild the ‘horrifically broken’ social contract.
Adam Back, a notable figure in the crypto world and CEO of Blockstream, engaged in a discussion with Charles Hoskinson about the SEC’s stance on Bitcoin. Back argued that Bitcoin’s unique characteristics set it apart from cryptocurrencies like Cardano and Ethereum. He highlighted Bitcoin’s lack of an Initial Coin Offering (ICO), its inception with zero value, decentralized nature, absence of a central figurehead or a significant reserve held by a foundation, and its non-corporate status. These aspects, Back suggested, place Bitcoin outside the scope of the Howey Test’s definition of a security, categorizing it more as a commodity.
Hoskinson, in response, emphasized that Cardano did not launch through an ICO but rather through an airdrop, followed by independent trading of ADA on exchanges. He also referred to a separate asset sale conducted outside the U.S., priced in Yen, to distinguish Cardano’s launch from typical ICOs.
Back, however, maintained that certain elements in Cardano’s launch, such as the airdrop, premine, and market-making activities, could still be perceived as characteristics of an ICO. He also noted the reliance on a management team in Cardano’s case, which aligns with the Howey Test’s criteria for a security, based on the expectation of profits from managerial efforts.
Expanding the comparison, Back likened Bitcoin to natural commodities like gold and diamonds, which are not classified as securities despite being subject to market dynamics. In contrast, he viewed Ethereum, Cardano, and similar cryptocurrencies as securities, considering them unregistered and incapable of registration under current regulations.