Out of the blockchain context, I could then run a raffle with no skill based on chance, pick a winner, but they have to walk up a hill to claim the prize. In this case its still an illegal lottery regardless of how much work they had to put in.
In the random elections, I understand that the likelyhood of getting elected is random on the stake in the pool, but is is just one or potentially a handful of nodes that all do the validations and share the reward between agreeing nodes?
That would really make winning a skillful thing. Well either way, but I think it is the latter. In that case, the skill of being up and running correctly every time you are elected to the leader group. You would get more for being “most reliable in group” all the time.
Agreed that pools use skill, but they cant conduct skill on behalf of the individual.
With that logic you can find elements of gamling in any aspect of your life:
- Walking accross the street and not being hit by the car - gambling;
- Buying some stocks/real estate and hoping it grows in price - gambling;
- Buying some random seeds and watching them grow into a plant (you don’t do anything, right?) - gambling
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Agreed, but its not my logic, I went up against the gambling commission in 2017 and its a complex thing to navigate around.
Additionally, here in the UK, if you run an “illegal lottery” you get taxed 12% of proceeds up front by HMRC for running it, therefore there are distant but potential tax issues at hand with whoever holds the treasury, this may also have consequences for pools.
I know it seems very distant, but surely its wise to understand these possibilities.
In your analogy the person would have to walk up the hill to get the prize. So they were randomly selected to preform work and get paid for it. That is not gambling. If I needed to pick a plumber to fix my sink and opened the phone book (yes I’m old) and threw a dart at it to pick the plumber did the plumber that fixes the sink win a lottery?
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It is if I had to put money in to get the chance to be selected.
I believe Cardano will be considered a utility token and not a security token which may have an important implication.
Yeah I don’t think SEC regulation would play a role in this, but potentially there are also religious limitations that may limit users as well as legal limitations. Overall I don’t want there to be any excuse for GOV’s to go after the protocol, and this really does jump out as a potential problem.
Also to look closely at that analogy in POS one is not paying money to someone else for the right to play a lottery. The tokens always remain in the possession of original coin holder. It is used as a selection method to pick a service provider. With that said government regulators are not rational so who knows.
Yeah, we don’t pay each time to participate, we pay when we buy ADA. Similar to premium bonds in that sense.
You can pay taxes from your gains, it’s not a problem https://www.gov.uk/government/publications/tax-on-cryptoassets/cryptoassets-for-individuals
That’s an entirely different tax, this would be the potential for gaming duty for pool holders. As mentioned the tax side is in my opinion more of a distant concern.
IANAL, but it looks to me like you’re reaching. Yes, the selection is lottery based, but any lawyer will argue the overarching intent of the random/lottery selection to be a necessary requirement to insure the integrity/fairness of the Cardano system. He/she will probably invoke another precedent in law where this integrity requirement is important or more important than the method of selection and let a judge and/or a jury decide the outcome of your “dilemma”, which in the USA at least, I am certain even if it reached SCOTUS after a prolonged battle… would still justify Cardano’s method of winner selection in POS.
I believe your point, at least in the developed world, is moot.
My issue is that using this logic I could establish a non blockchain based lottery and use as many random number generators as I like to ensure the fairness and integrity of my lottery with elements of work required by the chosen winner, but ultimately I would still be breaking the law.
Again, being deterministic is not a desirable property of a true lottery system. Therefore, my feeling is that your point is mixing up part of the system with its entirety.
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That’s just it - Cardano is not a lottery - it uses a lottery method as a means to an end. Now you could argue taxation of “winnings” of this lottery, but that’s not really a concern here - we get taxed on all profits.
You are arguing that because it employs a lottery system that it’s what? Illegal? Like I said, we can play these word games like armchair lawyers without any idea of how real law works, and like I said, IANAL, but to me it seems you’re reaching and this is a non issue.
It isn’t a lottery, but it uses a lottery method and I get a return on my investment. Again by that logic I could obfuscate my lottery with another task or greater good, but it would still be illegal.
My point is though, that I agree with you, but having had experience in this area specifically it jumps out at me and if this is an issue that can be simply solved so there is zero ambiguity around it, then isn’t that a safer scenario?
Also, this is probably most likely an issue exactly in the developed world, especially USA where online gambling and the offering of online gambling comes with huge potential liabilities.
Another issue this could potentially cause, if POS was deemed to be a sort of online gambling of some sort, it could potentially prevent the use of credit card payments to purchase ADA in the future which is already a highly problematic area without the excuse of facilitating gambling.
@Evgeny_S I think also, ironically, if it was determined to by gambling, then in the UK afaik, then there would be no tax on stake rewards.
So if it was skill based gambling, then it would be advantageous to the individual ADA holder.
Edit for clarity - By adding a skill based element as proposed quickly above, this would ensure the legality of the system as it would become a skill based game rather than gambling. This would potentially have tax implications for the individual holder (ie no tax due) and would ensure no gambling laws where broken. The tax implications for pools however are not clear without research.
But the payoff isn’t random, just the selection is. It is more like a bounty to be collected.