Finance newbie here, but what is a 'security'? I looked it up, but can't grok it despite people's best attempt to describe it. All the articles can't sum it up in an ELI5 way. What's the TL;DR way of describing a security, and how does BTC fare in this? Is BTC a security?
Most cryptocurrency promotors claim that they have this brilliant team and a great roadmap and in the future all the activity they're going to promote is what will make the token worth something, etc. Which is actually what does make them a security.
The claim in the article is that Bitcoin is mostly not like that. There's a protocol and a bunch of users, but there's no one who's leading the enterprise and causing the value to do something. Not sure I buy that claim, but it's not totally crazy.
There are some projects run by corporations who create and sell tokens, and whose founders have made claims promising returns derived from ongoing operations and investments.
Probably not in the traditional sense. The difference Bitcoin has to most cryptocurrencies is that it was specifically designed with no "premined" blocks and no preordained rewards. In contrast, a lot of projects sold tokens through an "ICO" with a promise of a future project developed against it. ICOs are basically securities, because you're buying the token without actually any guarantee that the project delivers on what it needs to deliver on for the value to change.
In contrast, again, Bitcoin was just offered as a cryptocurrency, from the start. The first block encoded a current event to distinguish the fact that there aren't any rewards already allocated to creators. It was also launched with the complete product available from the start (sans network upgrades).
Note: I'm not saying that Bitcoin is good or anything. I'm just distinguishing between it and most other tokens. Bitcoin has governance systems in place and other systems that make it "more security like" but clearly the SEC chair doesn't seem to believe it crosses that line.
The other replies give the technical definitions, but the high level picture is that a security is an investment opportunity. The issuer of a security has to follow a bunch of laws to ensure that said issuers don’t go around scamming everyday people
