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An economy is subject to evolutionary principles. A free market industry, like a hypothetical securities sector that doesn't have authoritarian prohibitions on

by aminok 10y ago

An economy is subject to evolutionary principles. A free market industry, like a hypothetical securities sector that doesn't have authoritarian prohibitions on free exchange, would evolve to become more effective at weeding out poor offerings. A subset of the population would still continue investing in bad ideas and losing money, but that is because they are gamblers, and if it weren't equities, it'd be something else they'd be friterring their money on. This evolutionary process was seen in cryptocurrency exchanges, which became less prone to involvency and hacks over time.

rebuilder 10y ago
You could just as easily say the securities sector you describe would evolve more and more efficient scammers until investing became so obviously unattractive, the flow of money simply stops. Cue financial turmoil, riots, and perhaps the rise of regulation. Just saying something would happen doesn't make it so. Do you have examples of your scenario coming true?
- aminok 10y ago
  Scammers are fighting a losing battle against the growth in public awareness. They can only capitalize on a state of ignorance. They cannot prevent people from adopting platforms and methodologies that have developed a reputation for good performance. I already gave you an example with the cryptocurrency exchange market. Other examples include people adopting Apple products as a result of it developing a reputation for quality, and platforms like eBay, Airbnb and Uber as a result of their rating system providing a reliable indicator of vendor trustworthiness.
  - rebuilder 10y ago
    Your examples are companies that produce goods and services to consumers. We're discussing regulation of investing in such companies. Different cases. Setting that aside, I think it's far too early to say the crypto exchange market has improved. The exchanges remain pretty opaque still.
    - aminok 10y ago
      What it has in common with securities is the opportunity to scam less informed consumers. The frequency of leading cryptocurrency exchange insolvencies/hacks was far greater three-five years ago than today, and it's been that way for about two years. I don't think it's too early at all to make a judgement based on that. The security practices are also very obviously qualitatively better with widespread use of cold storage. Institutional factors like much larger organisations being vested in the leading exchanges is also an indicator of security.

by aminok 10y ago

rebuilder 10y ago

You could just as easily say the securities sector you describe would evolve more and more efficient scammers until investing became so obviously unattractive, the flow of money simply stops. Cue financial turmoil, riots, and perhaps the rise of regulation. Just saying something would happen doesn't make it so. Do you have examples of your scenario coming true?

aminok 10y ago
Scammers are fighting a losing battle against the growth in public awareness. They can only capitalize on a state of ignorance. They cannot prevent people from adopting platforms and methodologies that have developed a reputation for good performance. I already gave you an example with the cryptocurrency exchange market. Other examples include people adopting Apple products as a result of it developing a reputation for quality, and platforms like eBay, Airbnb and Uber as a result of their rating system providing a reliable indicator of vendor trustworthiness.
- rebuilder 10y ago
  Your examples are companies that produce goods and services to consumers. We're discussing regulation of investing in such companies. Different cases. Setting that aside, I think it's far too early to say the crypto exchange market has improved. The exchanges remain pretty opaque still.
  - aminok 10y ago
    What it has in common with securities is the opportunity to scam less informed consumers. The frequency of leading cryptocurrency exchange insolvencies/hacks was far greater three-five years ago than today, and it's been that way for about two years. I don't think it's too early at all to make a judgement based on that. The security practices are also very obviously qualitatively better with widespread use of cold storage. Institutional factors like much larger organisations being vested in the leading exchanges is also an indicator of security.