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Comment by modeless | Hacker News Reader

People might not be so eager to dump money into these scam investments if the government hadn't strangled legal and regulated equity crowdfunding. The SEC needs to look at ways to allow people to invest in legitimate opportunities, not just shut down scams. The JOBS act has been a bust in this regard as far as I can see.

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There's pretty sound reasons why non-accredited investors can only invest in public tradable assets. Accredited investors can get into non-public companies if they earn a high enough income such that they can take that kind of volatility. For students fresh out of college that should focus on saving, it is not a great idea to throw those savings into non-public startups. It sure sounds tempting, but many times over has been shown to be the most risky asset class.

It could be argued that a student has lots of earning potential left in their life, so their risk tolerance is actually higher than someone, say, near retirement on a fixed income.

I get what you are saying though. For most people it is not an appropriate investment, hence the accredited investor rules.

People should be allowed to make risky investments if they want, especially if they keep that risk to a small percentage of their portfolio. Besides, the lotto and casinos exist and are still allowed in most places, which is basically what you're leaving these people to do (and what I've seen many younger people waste their money instead).

Isn't it this very website where people over and over again say that the best time to take a risk is when you're young, anyway, and don't have any responsibilities?

There's a difference between risky investments and outright scams, though, and I'm fine if the government steps in and stops the scams, although I worry that they'll start seeing every single ICO as a scam and want to stop all of them (to be fair, it almost seems like they all are right now to me as well).

That's one of the nice things about the rise of cryptocurrencies, actually, is it's allowed younger people to make bets that have wildly paid off for them, that would otherwise not been available to them. It was risky as hell for sure, but for those people that only put in what they could afford to lose, it's outperformed every other investment by many many times this past year.

People can already make a risky investment, by just buying public stock on the public markets.

So there's no reason why they shouldn't be able to make other risky investments, right?

Public companies have strict auditing rules, and other controls that prevent insiders, or a small group of people colluding with insiders from ripping off other investors.

This is not the case with private firms, and doubly-so for ICOs.

There's risky investments, and there's walking around the bad part of town after dark, wearing a blindfold, with two wallets in each hand, hoping you'll find a winning lottery ticket on the ground.

The regulations are more about regulating the ability to make money off of naive investors, in my view. You should be able to offer the ability to make risky investments to people, but there should be enforcement mechanisms to ensure you're not misleading people.

People really dont understand how accesisble buying crypto is in comparison to typical asset classes, specially outside the U.S.

To open a brokerage account in argentina, you have to physically go to an office to sign up, and pay thousands of dollars upfront to just open an account.

Banks are also a hassle to open an account at, since they charge you 20-50U$S a month plus comission charges are in the 4-5% on funds.

Bitcoin was great because it was also an easy way to receive funds as a kid (circa 2010).

Not being regulated has been the greatest advantage to the crypto market.

I think that's a very insightful statement.

Right now regular people only have a few different options to invest in:

1. Stocks

2. Bonds

3. Cash

4. Your own bootstrapped business

5. Cryptocurrencies

6. Lottery

The first 2 are obviously limited growth opportunities... Corporations are already massive, people will never get the 100x or 1000x returns that they need to actually notice any lifestyle difference... And even if they did, by that point the world would be a horrible place not worth living in and you'd be near the bottom of the pile because you got in too late.

Interest rates are too low so holding cash is pointless.

In this VC-dominated and corporation-dominated landscape, the odds of successfully bootstrapping your own business are near zero and everyone knows it.

Lottery usually appeals to the working class due to the large potential payoffs. But everyone knows that the odds are terrible and that there are middlemen taking a cut.

Cryptocurrencies on the other hand are like a giant international startup which aims to disrupt the entire financial system and which is in a very good position to do so because everyone is in on it. The returns are great and the odds are much better than lottery.

Why do you think that it's a reasonable expectation that an economy offers a 1000X multiplier on your money? Where is this value supposed to come from? By altering the means of exchanging capital a significant number of people get 1000X richer?

Those kinds of gains can only come at the expense of other "investors".

Yes, assuming that cryptocurrency takes over and it becomes a whole new ecosystem, the gain will be at the expense of everyone who doesn't hold cryptocurrency especially the wealthy elites whose net worth is mostly tied up in the current fiat system.

More people will start offering services on a blockchain and anyone with computing power will be able to run a node for the service and will profit directly from customer payments made to their blockchain address.

The key here is that anyone with moderate technical skills will be able to assist in providing a service by setting up a node on the relevant blockchain - It's not like in the current fiat system where I can't just run my own machine to help service Google users for example (in exchange for a commensurate portion of the proceeds).

It's a fundamentally better system because it takes out the middleman. The current fiat system is all about locking people out while the new system will be able making it impossible to lock people out of opportunities.

> especially the wealthy elites whose net worth is mostly tied up in the current fiat system

Single parents hovering at the poverty line also have their entire net worth tied up in the current fiat system and they're far more likely to be hurt than someone with the means to be flexible

Hurt?

Their net worth is negative.

They'd love nothing more than seeing their net worth rise to $0.

That's just trading one problem for another. We'd just see a big increase in equity crowdfunding scams instead

We need to do some serious advocacy around this issue. Hacker news is surprisingly pro-investment restriction, which I could expect from hardcore VC's, not regular folks that look at startup news every day.

Augh, damn these lawmakers and their heavy-handed efforts to prevent fools being separated from their money.

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