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> why do I need to make $1M/year in order to prove to the US government that I'm worthy of investing into a startup

Bernie Madoff lost tens of billions of dollars of investors’ money [1] in a clear fraud. This is terrible, but nobody ended up destitute [2]. The systemic risk was contained.

Contrast that with the savings and loan crisis [3]. This lost retail investors’ money. People ended up destitute. That, and lots of retail investors (i.e. non-accredited investors) doing zero diligence allowing the problem to metastasise, turned a prosecution problem into a political problem. When masses are turned on the street, nobody cares that they should have done their diligence. They become a political problem.

The government's rationale for regulating retail investors more strictly than accredited investors is that a laissez-faire attitude towards the former's activity has, historically, resulted in massive fraud that then creates political problems. I believe there is a middle ground between our total-ban regulations and Bitcoin's laissez faire. Finding that, however, will require both sides understand why we have the regulations we do.

[1] https://en.m.wikipedia.org/wiki/Madoff_investment_scandal

[2] https://www.bostonglobe.com/business/2013/12/11/five-years-a...

[3] https://en.m.wikipedia.org/wiki/Savings_and_loan_crisis

Disclaimer: I am not a lawyer. This is not legal nor securities advice. Follow securities laws.

Boy, is it me, or is the writing absolutely awful in that 'Savings and Loan Crisis' wikipedia article? I can barely make it through a sentence without getting confused and re-reading.

If a person with a wikipedia account can revert the last change (from 9/20/17) on the Savings & Load Crisis page, it's immature vandalism.

> People ended up destitute

Weren't the institutions FDIC insured? The wiki page you cited mentions some institutions receiving FDIC insurance. In that case, how did the victims end up destitute?

I mean, why do I need to make $1M/year in order to prove to the US government that I'm worthy of investing into a startup

Accredited investor is defined as either of $1m assets exclusive of positive home equity or income north of $200k for two years ($300k if you need to include a sompouse) and reasonable expectation of the same.

I sympathize with the general complaint but as this is a thing that many HNers will confront at some point I thought I'd correct the record.

> I think that the cryptocurrency/blockchain space is the next big thing in the world on-par with the internet

with the difference that internet worked exactly as planned from the beginning, had a clear goal and solved a real problem.

Did it though? Sure, the base protocol (TCP/IP) has mostly been unchanged up until IPv6, but the early implementations had plenty of bugs and limitations. And the goals solved were less clear back then as well, especially when BBS etc somewhat directly solved the problem of "get some data from another party without leaving your house" quite simply. Remember, there was once a time where there was no standardized image format on the internet. Hence, why Gopher was a contender to replace HTTP. It really took until the late 90s that most people realized how much it could be used for.. and it took until the late 2000s before most of those radical uses could be realized into something practical (ie, online shopping once seemed like a strange thing you'd only want for niche items... but now Amazon exists).

And beyond that, when the internet first became a real thing outside of researchers, it required pretty intimate knowledge of the technology to properly connect to it and get it to work. Remember that operating systems use to not include a TCP/IP stack for instance. It would be a long complicated process to get your computer to actually connect to the internet... but now, in 2017, for the most part all you do is say "connect to <accesspoint> with password XXXX" and it magically works. Right now I think this is parallel to blockchains. It takes a lot of technical knowledge to really use smart contracts and blockchain tech right now, but I imagine a future where it is no more difficult than logging into your bank account, or writing an Excel macro.

writing an Excel macro is HARD

> Did it though? Sure, the base protocol

Yes, it did

Cryptocurrencies are not working right now, not even as intended by their authors

> I receive my salary in bitcoin based on spot price tied to USD

Why would you want that? Why not just receive USD, and buy BTC each month if you like the price?

> (disclaimer: co-founder of a blockchain project)

That doesn't make it desirable. If it has good revenue it could explain it from the company's perspective; otherwise, is it funded in BTC?

exchange fees, and a general dedication to cryptocurrency

So the exchange fees magically vanished?

Maybe the people paying him are being payed in crypto currency.

You can transfer money to Coinbase for free with a SEPA transfer. Transfer from Coinbase to GDAX for free. Buy crypto currency without fees by placing maker orders on GDAX. Then transfer the crypto coins into your own wallet without a fee.

Wow, that sounds insanely complex not to mention risky due to all the hacks cryptocurrencies have suffered.

I'll take my safe and free direct deposit. I actually had a case where a bank teller gave me the wrong state's routing number because she thought my account should be based in the one she lived and not the one that was set up. My entire month's pay went to the wrong account and I freaked out when i figured out what happened. I went to a chase bank and explained the problem, they found the money in the other account and were able to send it into mine.

Screw up the bitcoin address in any one of those transactions and your money is permanently gone.

> This is why ICOs are such a big thing right now for westerners

How can you tell if it's westerners investing for the future or Chinese miners trying to get liquidity through any means possible?

People should take responsibility for their own actions. A lot of ICOs are fluff and high risk. People should be aware of that before they invest. If they don't do their research, they shouldn't blame lack of regulation for their laziness. How would regulation fix this?

Who would enforce regulations? You would necessarily have to centralize things and hand over power to an authority. This would defeat the purpose of a dencentralized blockchain.

I'm very interested to see how far things can be decentralised.

I have no real ideas what this would look like but I wonder if there are decentralised approaches to regulation that would work (community decides together who the bad actors are?)

> I'm very interested to see how far things can be decentralised.

a lot in theory

very little in practice

That isn't a a very popular opinion to hold on HN, as you may have noticed. I think that there is a strong faith in decentralisation and removing rules by many who frequent HN, that have yet to be proven to work well, if the goal is a higher living standard for as many people as possible as well as limiting damaging externalities.

I think there's many outright lies about decentralisation told in crypto circles. So many ethereum contracts turn out to have a central override that one party can control. 'Decentralised' systems often turn out to have a company in charge so that they can make money off of an app. Even blockchains are allegedly decentralised, and yet all it takes is a couple of mining pool owners to collaborate to gain overall control of the thing.

Are there any real decentralised systems out there that couldn't be controlled or overruled by a few well-placed individuals working together?

You are mistaking a goal with claims that the goal has been 100% achieved.

> Are there any real decentralised systems out there that couldn't be controlled or overruled by a few well-placed individuals working together?

The internet is probably a good example.

The internet is a great example. I look forward to any cryptocurrency project getting anywhere close to such a thing. (And calling yourself 'web 3.0', like ethereum, does not count :)

As for decentralisation 'goals', the difference is not clear. Decentralisation is the buzzword that the sector loves, but I haven't seen much in the way of progress towards it.

I'm very interested to see how far things can be decentralised.

The problem is that crypto people seem overly keen on decentralising without thinking whether or not there is an actual advantage in doing so, or whether the advantages might outweigh the disadvantages. There is an unfortunate viewpoint that decentralisation is just always a "good thing".

> There is an unfortunate viewpoint that decentralisation is just always a "good thing".

Well, to put cryptocurrency in its historical context, the design-decision to make the architecture of the internet(/darpanet) decentralized was because of the very real and persistent possibility of global thermonuclear war. If you want your computer networks to stay up after NY, DC and SF have all been wiped off the map, decentralization is fairly key.

So I would say yeah, the world has changed, and decentralization is now always a good thing. It's not just "crypto people", it's "people"[0] carrying on in "software"[1] what is already a decades-old trend in computer networking.

[0,1] scare quotes because people and software are both scary

> How would regulation fix this?

Two ways I'm aware of:

1) Require documentation ahead of time that will make prosecution harder after the fact. Without documentation scammers can just say "oops, we lost our client database" or "oops, we never recorded a document for that investor". You can still commit fraud while submitting heavy documentation, but it gets harder not to paint yourself into a lie.

2) Firewalls between parts of an ecosystem. Maybe it's problematic for and exchange to trade a security it itself issued. You make that illegal, and then colluding entities need to communicate across corporate boundaries, which is harder to keep hidden.

I sort of agree with you that this runs counter to decentralization. But the decentralization community has yet to implement voluntary versions of these things. Where's the crypto SEC that I can opt into which maintains strict reporting and audit requirements tied to the issuer's financial stake? Until we have credible versions of that I don't see how we can say we don't need the SEC.

I suspect that the regulatory counter to sleek “get in now” marketing pages has to look something like requiring accreditation for investors.

Do you think it’s possible to square the desires to make startup investing accessible to retail investors and to prevent fraud? If so, how?