"Available to US accredited investors."
It seems a little ironic that any Joe Blow with a credit card can buy cryptocurrency, at presumably higher risk since he's managing the assets himself, but he can't invest in this fund.
It seems a little ironic that any Joe Blow with a credit card can buy cryptocurrency, at presumably higher risk since he's managing the assets himself, but he can't invest in this fund.
What we really need is the real consequences for fraud / false financial claims.
In business investing its the opposite. They really do think they stand a chance at making millions even when the odds may actually be worse than gambling in some cases, especially if they fail to do their due diligence.
So maybe instead of regulation we simply need a legal, notarized document signed for every investment that states "I am aware that I stand a very high chance of losing all of my money and relinquish my rights to sue anyone involved unless outright fraud has been established." Probably still wouldn't work, but its worth consideration.
I've always suspected that was part of the reason- it's simply far easier to defraud small fry who don't have the experience to spot fraud or the resources to prosecute it.
Legal and diligence costs on most illiquid investments are tens of thousands of dollars. Anyone investing small amounts (a) can’t afford the diligence, (b) probably doesn’t know what they’re doing and (c) can’t afford to lose even that small amount. That attracts a specific variety of fraudster (see Bitconnect). We’ve seen this happen every time we break the wall between markets with high and low information assymetry.
Unscrupulous issuers have historically targeted less-sophisticated buyers who are less likely to be experienced investors - and also less likely to retain their own counsel to review an offering. Hence the accredited req.
Investing in an unregulated market is absolutely nothing like that. Your outcome is undefined, but you're subject to front-running, tape painting, wash trading, fake news stories and tens of other well-known scams.
The regulations aren't to stop the poor from making money. If it were a sure-fire way to make money, everyone would just do it all the time. It's the Trumpian "trade wars are easy to win" argument. If it's easy, everyone would win, so nobody would win, end of story. It's to limit people to what they can afford to lose (or at least try). And it's done in the social good also, as people who become insolvent then utilize the social safety net to get back on their feet.
Yes, we need the real consequences, and what you're describing is literally regulation.
Sorry, but if cryptocurrency is prone to manipulation and fraud (it is), casinos are tens times worse because not only do they do that, as the House must win as a business strategy, but they appeal to people who have addiction issues.
I'm not against casinos but to defend them against cryptocurrency trading and suggest average Joe is better off playing Roulette is in my opinion a misplaced attempt at morality.
Casinos can't/won't promise that you'll make money by playing their games. Securities are generally purchased with the expectation that you'll make money, and are marketed up to the allowable line of suggesting they are good ways to make money.
Allowing people to play a game where the odds are openly against them, vs. buying a security where they're being told the odds favor them but it may be otherwise, are very different propositions when you're asking if they're "fraud".
My Average Joe brain is too small to calculate probability when there are a bunch of hands involved, much less one. It is, however, large enough to place bets on which cryptocoins might be more useful than others, based on a lot of data and current event news that I have access to.
Casinos can't/won't promise that you'll make money by playing their games. Securities are generally purchased with the expectation that you'll make money, and are marketed up to the allowable line of suggesting they are good ways to make money.
I don't recall Coinbase or any exchange promising anything. And trading is just that - trading. There are waves of ups and downs of supply and demand, of various volumes of buys and sells that lead to intraday, intraweek swings in which you can attempt to play your 'hand'. Even if you don't believe in the underlying security, you can attempt to ride those waves using technology provided to you by GDAX or Bittrex or whatever - the entire order book is laid out for you to learn and think about, and speculate on. That's easier to parse than odds for .. a blackjack hand? Even a roulette wheel probability play requires some basic training in probability.
The Casino ALWAYS wins, in aggregate.
Allowing people to play a game where the odds are openly against them, vs. buying a security where they're being told the odds favor them but it may be otherwise, are very different propositions when you're asking if they're "fraud"
Okay, fine, so then regulate the 'telling' part and not the 'playing' part. I don't recall being told that the odds favor me. I was presented with an interface that let me purchase these coins. There were no words telling me what to do or not to do. The only people telling people what to do are peers and various Internet news sources that no one is obliged to follow.
* "place bets on which cryptocoins might be more useful than other" * "The Casino ALWAYS wins, in aggregate."
In the former, you expect you have some better than even odds of winning money -- otherwise you wouldn't be doing it. In the latter you clearly understand that the odds are against you. See how different those are?
We can argue about the ability to day-trade the cryptocurrency market, but it's hard to argue that the odds there are more clearly defined than in a casino. The reason there's a moving market is because we don't all agree on those odds.
> Okay, fine, so then regulate the 'telling' part and not the 'playing' part
They do regulate the telling part, quite tightly. But it's extremely difficult to control what people may tell each other outside the bounds of an issuance document. E.g. the SEC can't control what folks in r/bitcoin might be out there telling people as reasons to buy this Index fund.
In the former, you expect you have some better than even odds of winning money -- otherwise you wouldn't be doing it. In the latter you clearly understand that the odds are against you. See how different those are?
We can argue about the ability to day-trade the cryptocurrency market, but it's hard to argue that the odds there are more clearly defined than in a casino. The reason there's a moving market is because we don't all agree on those odds.
Hold on a second. I never argued that the odds are more clearly defined. How in the world can you calculate political odds, legal odds, and other odds? Can you calculate odds on a commodities trade like oil? What happens if a war breaks out between Iran and Israel? If a new technology takes hold? All of these things are another way in which odds can't be calculated as cleanly as, say, a Blackjack hand.
That many in the HN crowd consistently compare stocks and now cryptocurrency to casinos, and pad their argumentation that casinos are the same or better with an underlayment of probability calculation -- that shows the inherent mathematical bias of folks in tech. For how can one ascribe odds to purely human factors? Here's a probability prediction: chances of this comment being voted down > 50%.
(You don't need to parse a blackjack hand, btw. The odds are pre-calculated and easy to look up[0]. But I was talking about the overall odds of playing, anyway, which is usually about a 0.5% house advantage per hand.)
Note: I'm not arguing that casino odds are better or worse than the odds of a crypto trade. Just that they're better defined, which you seem to agree with me on.
Even if you don't believe in the underlying security, you can attempt to ride those waves using technology provided to you by GDAX or Bittrex or whatever - the entire order book is laid out for you to learn and think about, and speculate on. That's easier to parse than odds for .. a blackjack hand? Even a roulette wheel probability play requires some basic training in probability.
You read that as, the odds are easier to parse for crypto. That's not what I was saying, even if I worded it poorly such that it could be taken like that. It's just not an apples to apples comparison, since with a card game you can construct a mathematical model of probability around it. You can't do that so easily with many other types of speculation and investment (let's suspend argument about THAT distinction for a moment).
But my point all along is that it doesn't matter; investments can be assessed non-mathematically by following non-mathematical sources of data and making predictions. History, politics, law change and it's extremely difficult to ascribe statistics to every possible outcome, at least for almost everyone. Otherwise, there would be no market at all for the vast majority of 'investments' / 'speculations'. Only mathematicians could be involved. Now, there are people that make a living out of creating statistical models around stock movements, but that doesn't mean that every other person alive who doesn't and still pursues purchases of stocks is doing so with more risk than throwing all their chips on Black 26. And it is the same with cryptocurrency.
To circle back to the original point, yes, I feel it's rather hypocritical that casino games are open for business for the little guy, but when the little guy uses a web app with a UI with order book details to try to play the cryptocurrency market, a tool of the type really mainly known primarily on stock trading floors until recently, suddenly the little guy needs the law to step out in front to protect him from himself.
Assuming you number is correct, that's after just one game. So you're expected to lose 2% each game (51-49). So if you play 20 games, you lose 33.3% (1-0.98^20).
And you can't win against the casino in the long run. With cryptocurrency investments you can. In fact, if you choose a random time to invest, in, say, Bitcoin, you will win most of the time.
The problem with back-end enforcement (and those laws do exist) is that it doesn't remove the incentive to try issuing a scam-ish security and hope you will evade prosecution, and the damage done can take years to unwind, if it's even possible at all. This is why there are regulations on public offerings of securities to non-accredited investors.
1) So what lottery odds are not allowed?
2) Can you name a single lottery with odds in your favor?
Cause with cryptocurrencies, so far, the investors have made money on average.
2.) There's been multiple cases where lotteries were -accidentally- setup such that the odds were in the favor of players if they pursued the right strategy. Here's one: https://www.theatlantic.com/business/archive/2016/02/how-mit...
A history of gains to investors aren't an definite indicatio that an investment is good, or that the overall odds favor the investor. If I go into a casino and win roulette 3 times in a row, that doesn't mean the wheel is biased in my favor. Similarly, in most ponzi schemes, all of the early investors make money.
(And even in a non-fraudulent situation, simply having an investment go up doesn't mean it was a good investment, when examined on a risk-adjusted basis vs. other alternate options.)
Thanks for saying this. So true.
If given the opportunity to invest in something with potentially extreme returns and poorly represented risks, many people will take it either because they don't understand the risk involved or are not very good at internalizing the probability that they lose money. Just look at the ICO scams that abound today or the 2008 financial crisis.
While massive deregulation is nice in spirit and would theoretically allow people more financial freedom, I can't imagine it being viable (at least without a ton more compulsory financial education).
You think people had never lost their life savings in casinos or lotteries?
I can walk into a casino and bet $5K on every roulette roll. I personally know people who lost $30-40K in Atlantic City casinos.
Edit: Apparently they only rebalance once a year? In which case, nvm.
0. Average 52-week premium 56.18% https://www.bloomberg.com/quote/GBTC:US