The Toshi Test: To Determine A Digital Commodity

2 min readJul 22, 2023
Howey Test vs Toshi Test

In the same way that: S.E.C vs W.J. Howey Co 1946, resulted in the “Howey Test” to determine a security, the “Toshi Test” can be used to determine a digital commodity.

The Howey Test recognises four criteria for determining whether a security has been created:

  1. An investment of money
  2. In a common enterprise
  3. With the expectation of profit
  4. Derived from the efforts of others

Any offer that does not match these four criteria and is not defined as either a good, service or commodity is securities fraud.

The Toshi Test can be used to determine a digital commodity. Any digital token that fails to match all of the follow seven criteria is a security:

  1. A common starting point: A reasonable amount of time & opportunity provided for anyone & everyone to start the network.
  2. Common (neutral/organic) growth without a central point of influence.
  3. Economic competition resulting in common entry & exit to compete within the network.
  4. Common accountability/a chain of digital signatures.
  5. Locked protocol, so no one can change it & no one controls it.
  6. Unbounded scale, so limitations & restrictions cannot be manufactured & the network not be manipulated.
  7. An economically competed for, extracted, fixed token supply, so it cannot be either inflated or deflated it, & therefore no one controls it.

In brief, the above points can be summarised by asking these seven questions: Is there a…

Common starting point?
Common growth?
Economic competition?
Common accountability?
Locked protocol?
Unbounded scale?
Fixed supply?

Data can only be commoditised one way, therefore there will only ever be one digital commodity.

Currently the only digital protocol that fulfils the requirements for the “Toshi Test” is the original protocol & genuine Bitcoin (BSV).