Non transferable coin in Safenetwork

Hi,

What if we add a boolean variable to the coin address, which if true will lock the wallet for transfers. Simply the wallet ballance could be used only for buying PUT operations and nothing else. It could not be transfered to another address. Such feature would make dramatic changed to the adoption process of the network. Simply our problems are, that users need to obtain some coin balance to be able to use the network acivelly. But we can’t give the coins for free, because someone would create a bot that would milk such faucets. It a faucet, or developer of the app have an option to credit his user accounts with nontransferable coins, than the motivation for missuse would be much smaller. The other and much more important reason for doing a locked address is legal. Simply if we have a locked balance that noone can unlock and can only spend it for buying resources, then the balance is not crypto coin from legal point of view. We can even name such balances differently, like storage credit. This way, the whole crypto regulation issues can be avoided. We don’t need exchanges. We can simply sell the coins directly as credit. Threre is no need for KYC, since the credit is not transferable, so there is no way how to use it as money transfer. It is not a form of money anymore. More important is, that such balance is not anonymous, simply if I open a business for selling such credit, I do not need to care of KYC or any investigations, because it can’t be transfered and as such is not anonymous. I don’t even need to care for any crypto laws. We can even have such credit on any exchange that has problem with Safe network Token, which is anonymous. Simply the exchange would make a withdrawal transaction, that would send Safe Network Token to such locked address. From legal view it is just a storage credit buying from crypto exchange. Such locked Safe network token can be even named with different name, like credit, balance, etc… And of course anyone who owns Safe Network Token can make such a transaction, that would change SNT to such nontransferable token.
And the legal issues would be solved on every part. There are crypto laws forcing to tax any crypto coin usage. So any user using our network who has to use SNT is breaking a law if he does not do accounting and does not pay taxes on every transaction. But if he buys SN-credit, it is not a crypto anymore. He is not breakng a law. He just prepaid some storage. Same applies for companies. If a company wants to buy storage and they need crypto coin for that it is legal hurtle. Buying nonstransferable storage is completelly legal. If I as develoepr want to create accounts on safenetwork for every user of my mobile app, than I have to do a transaction where I donate some SNT to his account. But If I can transfer credit only, I am not doing crypto transactions. And I am not at risk of bot milking my coins via mass registration of accounts.

Advanced version of such lock: In addition of such boolean add a max transfer counter.Such number would indicate how many times can be locked credit moved to other locked credit address. Locked credit address balancee can’t be moved to non locked state. I need this advanced version, because as a developer, I am doing crypto transaction, when I am crediting my users with locked credit. But If I can buy locked credit, that can be transfered at least once and only to locked credit state, than I can move nontransferable credit to nontransferable final address. This way I am not doing crypto transaction and I do not need to care about crypto laws, nor about KYC, etc… Simply everyone who do not care about crypto coins itself would be allowed to use the network easily and would not need to care about crypto laws and taxes.

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It is crazy how complicated can be using Safe Network while keeping everything according to law of some countries.
As it is great idea how to deal with this problem, it is terrible for common sense.

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It is not intuitive. It is very simple, instantly solves all the legal problems, solves adoption problems. Solves faucet problems. Problem with anonymous coins on exchanges. It allows to keed current coin model and with minimum changes allows to bring common terminology to the users world. What are people used to? To buy coins or to buy a storage? When they buy some service online, is it transferable? No, it is not. They buy a service not speculative currency. They do not need to think about price, because such credit can’t be sold. And it is expected to be able to buy the more storage the later they use it.So, for us, who think about Safecoin as a currency since the ICO happened it is weird and non intuitive. But for common people it is how it should be and how it is everywhere in the online world. Crypto coins are not intuitive for them. There are many more examples, where such nontransferable credit would be very required. For example a parent - child relationship. Do parents give children money? No, they buy them their favourite service online and they expect that children will not be able to exchange their in game currency from one game for buying drugs in another. For us, the crypto coin guys it does not bring anything bad. We will simply avoid such conversion from coin to locked coin, but for the rest the nontransferable type would be much more friendly.
And there is another exampe form simulated gambling /gambling industry. In gambling, people bet real money and win or lose real money. In simulated gambling, people buy virtual coins, so they lose real money and can’t win anything. And yet, the simulated gmabling is many times bigger industry than gambling industry. Simply in simulating gambling the motivation is fun, people do not expect to earn money. In real gambling they expect to win and that is really painful if they lose.
Now if you have transferable coin, than there is an exchange price attached to it. People who do not want to trade and have to use it for the services will suddenly become exposed to the price change pain. Any pump&dump will make them think, wow, I could have sold and buy back cheaper. And that emotion hurts. Removing that emotion is a good think. Of course nothing stops them to use transferable safecoin if they want. But for that they would need to go to the exchange, do the KYC, etc…

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I do like the idea of having a coin balance where it can only be used for purchasing of network resources.

The spend limits could be implemented by an App level app with 2 coin balances (one for user other for “parent”). Where the parent say allocates an “allowance” per period. The “parent” has access to both coin balances so they can see the balance in each. So only transfer when desired according to the rules set in the APP

Maybe the lock on spending only to buy network resources (PUTs) could be a crypto signature, so the lock can be removed. So sign a message with the coinbalance keys with a counter sign by second set of keys. Once the lock is on only the use of both set of keys can unlock it.

I doubt though it is desirable to prevent other types of spending at the network level since that requires the network to have knowledge from external sources. Whereas the spend only for network resources is knowledge the network knows.

EDIT: My reason for allowing unlocking is because of

  • error in sending to balance - need to undo. Useful if user uses that coin balance for their PUTs spending.
  • allow retrieving of those balances when no longer wanted for its purpose. This saves losing SNT that will never be retrieved otherwise.

From legal point of view, it is important not to allow unlocking ever. Once unlocking is possible, it is not storage credit but transferable coin, and the crypto laws apply. This implies it has to be done on network level, not app level. Network has to disable such transactions. But of course if we want such locking not for legal reasons but for usage reasons, than the options how to do it are broader. But my goal was to solve adoption and legal issues. I as a person am living in a crypto tax hell. So using safenetowork itself is an accountancy and taxing nightmare. If I will use it, than only because I will try to be 100% anonymous and illegal. But I would love to use it legally. And for business purposes anonymous and hidden is not possible.

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From an laymans view the SNT is already a in-network token. Making it more so does not change that.

The lawmakers already know that in-network tokens (real life tickets, Game credits/tokens, resource tokens) can and will be used for bartering. But since the tax depts will tax people on realised profits they do not see it as an issue. SNT is limited as an asset. Well of course till its too late and the buying/selling using crypto reaches such levels they will change the laws anyhow making your idea useless/unknown as extra protection.

Why you asume you understand tax laws of other countries? For example in my country every time I do any upload it is a crypto transaction ,where I am exchanging a crypto coin for a service. This implies that each time I buy a PUT operation, I have to calculate what is the coin worth in EURO according mayor exchange rates, for example coinmarket cap. And I have to pay taxes on each separate transaction. So it means, let say I buy 10 safecoins at 1 EURO each. Than I do a PUt operation and a fraction of my balance is removed. Now If the price of the coin at that moment was over 1 Euro, I have to pay tax on profit, since I sold the coin at price higher than 1 EURO. Nobody cares, what I purchased. I paid for a service with crypto coin and each transaction is taxed separatelly. So I would have to count millions of transactions to be even able to calculate my taxes. It does not matter what are the laws in your country, it matters what are the laws in all the countries. And those laws are really sick. And if the safenetwork coin will be transferable outside of safenetwork than it is a crypto coin by definition. IT is not barter. There are crypto laws that define that this is not a barter. Ask @dirvin about crypto tax hell in UK. And be assured that in other countries it is much worse. I have to pay 39% tax on any crypto to crypto/service/purchase transaction, and if the transaction is losing money I can’t count such loses to lower my earnings from other transactions.

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Its not a in-game token.

What country charges tax or declares a tax event the transfer of a WOW purchase of a in game object for another person. OR for 2 people using WOW tokens for bartering objects. That is the same as SNT

Nlol, not at all. WOW token can’t be moved outside of wow. By your definition Bitcoin is same cathegory as WOW token. It is not correct. In-game currency is not transferable. If you create a game and your currency can be exchanged for anything meaningful in real life than you have created a currency where financial laws apply. If you can only buy a staf inside a game than it is in-game currency and no regulation applies. For example our company is developing games with in game currency, where people can bet it agains each other, or even play a slot machine with it in the apps. It is simulated gambling and it is legal even for teenagers. But you can’t convert such currency to anything meaningful. If you allow users to buy for example T-shirt with such currency, which is actual real thing, than it is not simulated gaming but gambling. Such think is agains TOS of Apple and Google app store. They would remove the app and report you to the authorities for doing illegal gambling. And crypto laws use similar definiton. It you can’t convert such in game currency to anything else ouside of the game, it is not a crypto currency. If people can trade it outside of the game it is some form of currency which falls under some regulation. And if that currency is decentralised adn can be converted to something outside of the system than it is 100% crypto currency.

In the UK it doesn’t matter if your selling crypto, cats, bats, cars, whatever, if you profit over your yearly allowance you still need to report it and pay your tax.

Any token locked or not, when sold, if worth more than when bought is a capital gain, so needs declaring once your over your allowance or asked to file a tax return.

Plus I want to trade snt, so I don’t like this idea.

Is this workable though?

Couldn’t I just wrap a ‘locked’ wallet in another ‘unlockable’ keypair, and then sell/trade that? A simple loophole.

You can, non locked coin is SNT, locked is credit. Both can be used to buy PUTs. And only non locked can be used as money and of course traded.

The idea is to name such locked address diferently, so it has official distinction like storage credit. This way tax office can’t claim it is a coin. Once it is locked it is in-app currency, that can’t be used outside. So it is not crypto anymore and having a different name for it in GUI would make that distinction crystal clear. And as such buying PUTs via such credit is not crypto transaction. But buying puts via unlocked SNT is crypto to service purchase, which is taxable event.

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Aye, but my point is that these locked things could still be traded if they are wrapped. So doesn’t it kinda make it redundant?

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Anyone can wrap anything. I can wrap apples in some erc20 token and trade them like this. But that does not make apples crytpo coins. The wrapping service is crypto …

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Interesting, I posed a radical idea in house, never to be taken to mean a suggestion or design idea lest I be hung :wink:

In any case, the random idea was

What about a new coin, one that is farmed, distributed via social network etc. to start (like PayPal etc. did with free cash). This would not appear on exchanges at all, at least not by us. If these were DBC type tokens then it starts to work even better. Folk could give them to each other via any means. People would likely trade them for stuff (barter type). (this goes down a hole).

However an unarguable utility token, but one that every farmer/user is in charge, some may set up online transfer capabilities.

Then we still have MAID, these still trade and subject to all crypto and laws and the likes. This then becomes pure speculation and more loosely tied to the “value” of the network itself.

We never took it further as it seemed full of problems, probably the biggest issue being folk calling us (maidsafe) scammers, but that is expected in any case with any rollout. Our investors are to be paid out (voultarily) in safecoin, so it’s obviously not an attempt to derail that value.

This proposal @Antifragile seems similar and well worth the community investigating. It’s interesting albeit potentially a field of land mines.

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yup, I have been thinking about some free credit distribution to speed adoption process many times. The problem is complexity and as you said the other problem is we have a Safe coin that was promised to do this functionality. Then suddently out of nothing the idea of optional disabling of transactionability came to my mind. The cool part is, it does not make new coins. It is existing coin, that can be locked forever until spent fro PUTs. So in fact this makes existing coins even more valuable. By locking it, the coin is completely locked into the system and as such can’t be traded. It is not fungible anymore. That solves legal problems. I proposed advanced version, where such locking could have some max cap of transactionality, but that could be a landmine. Sticking to nontransferable is way safer from legal point of view. Simply such credit system would allow anybody to donate his coins for storage credit purposes only. That is huge. And also for me as a person, I would instantly turn my coins into such locked credit, because that would make only 1 taxable transaction. After that credit is just a prepaid service and any buying of PUTs is not cypto transaction. But If I have to buy each PUT with crypto coin, than my tax calculation would be impossible. And there is another user’s point of view. People are used to prepay some service, like virtual coins in a game. But they do not wire their bank account to such game and do not allow transactions from bank account to be controlled by such game. So for security reasons it is smart to have separate account for PUTs only, so you accidentaly do not drain your coins by missclicking or uploading too much, etc… So I my opinion user interface should have such option to have separate coin balance for monetary purposes and separate coins balance for put operations. Of course none of those 2 need to be locked. Locking is just a feature, that helps with donating of credit and with legal issues related to crypto laws and crypto taxes.

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Would be still legal to only count difference between 1.1. and 31.12. of your SNT holding and write down for tax office one spending at average price during that year ? Or do you expect that some spending will be non anonymous so you have to specify each separately ?

I have to pay tax on every transaction separately. The calculation is done based on average price at the time of transaction. So this means, If coins pumped above my average buying price, I have to pay tax on the difference. If the price dorps few minutes later under my buying price I do not have to pay such tax, but I have to do the calculation anyway. And if I made losing transaction, than such lose can’t be used to lover my taxes from other transactions. That is why they want each transaction to be calculated sepearatelly. This way they can tax you like hell. In such tax system you pay taxes even that you earned nothing and are in lose.

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Yes it’s a terrible system and esp where there is high volatility. You pay tax on avg price per day, so all txs for year must be at open or close daily price. So you sell and the price shoots up and the close price is 2X what you paid you are in immediate trouble, potentially bankrupt. It’s a really silly system and with the volatility and “route to fiat” having to go through BTC or similar you are in a really precarious place. Whereas if you pay on fiat conversion or purchase of products/services then it’s easy and fair.

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