13 ms·

What's fundamentally wrong with people losing a lot of their money on crypto? A lot of people lose money on Penny stocks, OTC markets, casinos, a lot of people

by vasco 6y ago

What's fundamentally wrong with people losing a lot of their money on crypto? A lot of people lose money on Penny stocks, OTC markets, casinos, a lot of people buy new cars that depreciate 30% in one day, etc. Everyone knows DOGE is a joke - so if you assume we're all capable of independent thought, what would you propose that is not a paternalistic view of the world? We don't need more bullshit like accredited investor credentials which create huge differences in access to investments - that is real economic inequality justified by protecting the poor from their own stupidity.

retrac 6y ago
This is my fourth bubble. Bitcoin in 2011 and every one since. It's old hat and quite amusing at this point. I certainly know not to put any money into it I cannot lose. Do they, though? Even if they know DOGE is a joke, do they have the rest of the knowledge on cryptocurrency to quite understand what they're putting their money into? The risks? The issues of things like time delay and transaction fees which may inhibit pulling funds out quickly? Etc. The first result on Google for Dogecoin currently auto-completes to "Dogecoin stock". This indicates the degree of ignorance some people are coming into it with. Large-scale price instability is a general negative. As is lack of wealth among the middle class. For an individual, losing a bunch of wealth on DOGE would just be a silly, or tragic, story. And I tend to agree that fools should be parted from their money... But if a significant number of ordinary middle class and working class people are vaporizing their savings, that's a social and institutional problem to some degree. It would have ramifications that go beyond those individuals. See when large banks fail. One can wash their hands of it and say they should have chosen a better bank. But you still have mass unemployment and lack of liquidity issues to deal with, from a policymaker's perspective. And as you say, wealth inequality is a problem. And chances are it's not the 19 year old college student who bought 100,000 of a DOGE a year ago who is cleaning house, on average. Much of this is flowing into investors who have six to eight $ figures locked in DEX exchange contracts raking in fees. For all the democraticizing potential of cryptocurrencies, a lot the wealth is flowing from the gullible to the already-rich.
- inteoryx 6y ago
  "I tend to agree that fools should be parted from their money" I disagree with this. Fools have a hard enough life without permitting predators to take their money. Nobody chooses to be a fool. I don't know what a good solution is, or how to stop something like dogecoin without being too paternalistic, but it also feels wrong to me to just ignore this game of musical money even though the most likely outcome is many people losing and a small number gaining, in a zero-sum gambling game designed to look a bit like investing.
  - betwixthewires 6y ago
    Nobody is permitting anyone to take their money but themselves. And beyond that, there are ample resources to learn how not to behave like a fool in the markets. And even further beyond that, there are plenty of fools that are good at one thing and do well with it, taking away the opportunity to try their hand at something they might be good at to save people who were too busy watching tiktok to save themselves is not how you create a just society. Also I'd like to add that the only thing speculative investing has in common with gambling is that risk is being taken, it isn't gambling, and speculation in cryptocurrencies is certainly not a zero sum game.
    - inteoryx 6y ago
      There are at least two kinds of fools. Perhaps you are thinking of "ignorant fools" - people who could know better but don't. There are also people who basically just can't know better. Chris Sacca, who went on to become a billionaire investor in companies like Twitter, tells a funny story [1] about how he made foolish decisions in the stock market and lost a ton of money. Over the course of his career he reverses his fortune and becomes rich. The message of the story is something like "Don't stop grinding or hustling" or something like that. I think he's a good example of the ignorant fool that I imagine you are thinking of. There's another class of fool though that basically cannot know better. This could include a wide variety of people, mentally unwell, gambling addicts, desperate people, elderly, people with an IQ of 80, etc. These people flat out are not going to read books on investing, or whatever mitigation path you would recommend to the ignorant fool, and if they did, they might not understand them or be able to use what they learned effectively. This is something like an "inherent fool" that I was thinking of. What proportion of people who are going to lose money on dogecoin are ignorant fools, for whom this will be a valuable lesson and a stepping stone on their way to better living, versus inherent fools for whom this will be a setback in an already challenging life? I can't speak for all cryptocurrencies in general, and I can only share my opinion, but I'm pretty confident that coins like dogecoin are certainly zero sum games. The best argument I can make for this is that zero value is being produced from dogecoin. Money is being put in, eventually people will want to take money out, but with no value being produced all the money that comes out of the system will come at the expense of those who put money in. It's kind of the quintessential example of a zero sum game. I'd compare it to the company Coke. I can buy a share of Coke like I can put money into dogecoin. Coke is going to produce cans of sugar water. People are going to buy that sugar water, putting their money into the system, and, crucially, never expecting to get it back. They put their money in so that they can consume the value that is the can of sugar water. This addition of money to the system, and the consumption of value, are what makes owning Coke not a zero sum game. Money games into the system from participants who do not expect their money back. As a shareholder of Coke, some of that money will come to me. I can own my share of Coke and benefit from the increased value that comes from the value Coke produces and the money of people who consume that value. Conversely, dogecoin doesn't produce any value. You can move dogecoins around, but nothing is getting made and nothing is getting consumed. Every participant who is putting money in expects money back. There is nobody analogous to the person buying and drinking the Coke. Worse, everyone is hoping for MORE than the money they put in to come back. As a simple matter of math, there is no real way for this to work so that everyone, or even most people, can benefit. If someone makes money, then someone else loses it. In this way, dogecoin is not at all investment. You aren't putting money towards a company or a venture, you are just buying lottery tickets that may or may not be worth more later. It's a gambling game of musical chairs. 1 - https://www.youtube.com/watch?v=EYffNTLL7go https://www.youtube.com/watch?v=EYffNTLL7go
chrisco255 6y ago
Yeah it's a little crazy that some 18 year old kid with Robinhood can go 10x long on GameStop but I can't invest in an early seed round startup.
- hkt 6y ago
  Amen. I'm in the UK which isn't in a hugely different place. I'd quite like to invest my pension fund into residential property run with an ethical approach through a co-op. I was actually laughed at by a financial advisor, who explained that ethics (other than ESG) aren't something he can help with, and that residential property investment is for the big boys - eg, institutional investors. My bank can invest in property and be morally awful in the process, but I can't do it without losing tax relief on my pension.
  - nextweek2 6y ago
    Allowing pension investments in residential property would only make house prices go higher and hurt lower income families, that's not ethical. As for ethical investing, there are plenty of options in the pension market: https://www.youinvest.co.uk/articles/investmentarticles/86842/how-invest-ethically https://www.youinvest.co.uk/articles/investmentarticles/8684... Personally, I've shifted away from etfs and buy actual shares with voting rights. Everyone can be an activist investor with a SIPP.
    - hkt 6y ago
      I'd like to do activist investments too, but they're savagely time consuming. By ethical, I mean no-eviction tenancies, long tenancies, no rent increases, etc. The fact is that lower income families have no hope whatsoever in the UK of buying a house because low incomes are now a signifier of insecure work. There's a section of the population that rotate through housing regularly enough through no fault of their own (because of landlords) that their kids can't go to the same school each year etc. Shelter has an introduction to the idea here: https://blog.shelter.org.uk/2012/11/a-return-to-revolving-door-homelessness/ https://blog.shelter.org.uk/2012/11/a-return-to-revolving-do... I'm aware of many of the other 'ethical' schemes on the market, but mostly, they're not actually that ethical once you scratch the surface. The genuinely interesting ethical stuff does carry some risk, but also accomplishes a lot. See the kinds of things listed here for what I mean: https://www.ethex.org.uk/investments https://www.ethex.org.uk/investments What I'd really like in my pension is freedom to take some risks, and representative democracy. It boils my blood to know that fund managers don't have to respect my values when they've investing my money. Likewise when the government says I can't invest in things I understand and approve of.
phobosanomaly 6y ago
I personally support the crypto-anarchist take you're espousing, but assuming that most of this stuff isn't a predatory cesspool pushing unsophisticated retail investors off of a cliff by the force of isolation-induced FOMO seems a little naïve. If enough people lose their life savings, it will be regulated.
- intended 6y ago
  At this point, I believe that humans are well aware of blind spots in the masses online, so assuming there is a predatory chess pool of sharks waiting to consume or rob the unwary should be a given. If there is a place where no light or monitoring shines, the question I would ask is how frothily the waters teem with predators.
vletal 6y ago
> protecting the poor from their own stupidity... I felt like accepting your rightish narrative and then you drop this asocial bomb?
- vasco 6y ago
  That is what is implied by the policies we have in place today. I don't believe your intelligence is measured by your bank account, that is the whole point of the comment.
  - bobthepanda 6y ago
    The regulations are not really in place to protect "the poor from their own stupidity." The regulations are in place because the lesson of the Depression is that one person losing their shirt is personal responsibility, and that's fine, but millions of people losing their shirts at the same time will pull the rug out from under the wider economy and be a societal disaster. The criteria for accredited investors is a very crude way to address this problem by reducing blast radius; we could come up with something more convoluted like requiring a minimum amount of bond posted to act as a floor (similar to how non-insured people driving cars works in some states) but the effect would be roughly the same.
    - vasco 6y ago
      The lesson of the Depression is that the Fed at the time sat on their ass and let the economy collapse around them instead of doing something. It had little to do with retail investor euphoria.
      - skohan 6y ago
        Surely it had something to do with retail investor euphoria...
      - lottin 6y ago
        Can you quote any economic historian that agrees with you?
enos_feedler 6y ago
Exactly. Tired of having to wait for these 50+ billion dollar IPOs. Would love to invest earlier
- lottin 6y ago
  What regulation is stopping you from investing earlier?
  - harles 6y ago
    I’d assume SEC regulations on being an accredited investor: https://www.investopedia.com/terms/a/accreditedinvestor.asp https://www.investopedia.com/terms/a/accreditedinvestor.asp
- chii 6y ago
  > wait for these 50+ billion dollar IPOs. Would love to invest earlier the reason these early institutional investors of pre-IPO stock gets massive gains is because there are few of them compared to retail. A startup that needs the capital is in a less commanding position, and thus, the institutional investors can demand a better price. If a lot of retail investors invest in pre-IPO like you describe, it would push the price higher earlier, and thus, there will not be a price pop _at_ IPO, and the gains that make pre-IPO allocation so attractive to retail investors will not happen.
skohan 6y ago
I suppose this is a philosophical argument more than anything, and I can't claim what's the right answer vis a vis accredited investor requirements, but it's worth contemplating that those rules originate from the crash of 29, when an unregulated market led to the financial destruction of a huge number of ordinary Americans.
- insert_coin 6y ago
  As have all the crashes since in "bulletproof" regulated markets.
  - skohan 6y ago
    I don't know if anyone has ever argued that the markets are bulletproof. Should we not have speed limits because traffic accidents still exist in spite of traffic regulation?
    - insert_coin 6y ago
      No, but we also shouldn't imply the main reason accidents occurred before was because there were no speed limits.
      - deleted 6y ago
        [deleted]
      - skohan 6y ago
        I don't think anyone is arguing that lack accredited investor requirements was the main reason for the crash of 29, just that it's one of many common-sense regulations put in place to prevent a repeat of the worst outcomes.
intended 6y ago
Interesting argument, I must say. But as an extension, I wonder why we ever stopped using Tulips as a source of value. If people wish to be part of a bubble, let them? Perhaps the obvious counter is that this causes harm to the greater good, is bit valid or insufficient ?
tarsinge 6y ago
I agree that if people are free for other life decisions (some worst like driving when they can kill themeselves), then they should be free to manage their money. But maybe the additional problem in the US is that people can lose their retirement money, so you need a level of protection, whereas a French person losing all in stock doesn’t impact its retirement.
arisAlexis 6y ago
penny stocks may or may not be a scam. if the are a scam they should be put on trial. nobody goes on trial in crypto. that's the difference. casino is gambling, regulated, paying taxes and all. these 3 are not the same.
hnarn 6y ago
> What's fundamentally wrong with people losing a lot of their money on crypto? The problem with any economic disruption that's large enough is that "the economy" includes both you and them. A concrete example is how "people" lost their homes in mortgages they shouldn't have taken in the first place: it didn't just affect them, the whole market crashed because everyone had an overvalued home. These things will cause rings on the water. Dogecoin, Bitcoin, the TINA symptoms in the general equity market are all symptoms of a bubble. I just pray that it will peter out and not blow, because an economy where everybody's grasping their savings for dear life is not a very enjoyable economy to live in.
swiley 6y ago
>Everyone knows DOGE is a joke My gf didn't. She found it on Robinhood and keeps calling it a "stock." The main reason she bought it was because of something Elon Musk tweeted and a bunch of her friends did too. I've always been pro cyrpto currency but this freaks me out.
brentonator 6y ago
I just saw an ad on Twitter today from eToro saying basically "Doge is a joke. But seriously we sell doge and you can't deny the returns have been impressive this past year. Buy doge with us" They were emphasizing the returns being impressive without the expected caveat "past performance is no guarantee of future results" stock brokers must make to ensure people think before chugging the hype. Crypto exchanges have a duty to educate and make sure people aren't putting their life savings and taking out loans to buy crypto. That's not happening right now.
HWR_14 6y ago
> What's fundamentally wrong with people losing a lot of their money on crypto? A lot of people lose money on Penny stocks, OTC markets, casinos, Yes, and people who lose all their money in casinos also need to be protected. I would be in favor of anyone who loses the equivalent of a mortgage payment at a casino and then misses said payment being forbidden from gambling for five years, as an example. > Everyone knows DOGE is a joke You know DOGE is a joke. Some people really are investing in it to make money. They are taking savings, not entertainment, funds and putting them in DOGE. > if you assume we're all capable of independent thought, what would you propose that is not a paternalistic view of the world? I'm not convinced that people are capable of being purely rational economic actors if that's what you're asking. Even if they were, they're overworked and don't understand the risks. It's not a coincidence that cigarette smoking trailed off once the surgeon general started putting warnings on packs as opposed to the previous few decades when he just announced it in statements. > We don't need more bullshit like accredited investor credentials which create huge differences in access to investments Well, we could just outlaw things like DogeCoin. We outlaw snakeoil and chain letter pyramid schemes for the same reason.
- Supermancho 6y ago
  In the US, we still aren't free of getting called and mailed by a vehicle warranty service because your car is going to "go out of warranty soon" (total scam).
  - HWR_14 6y ago
    True, but that's a technical problem with the phone system (I've never heard of a mailed scam like that.) Trivial to fix, except for the powerful collections agency/cold call lobby that feels like they have to have the ability to lie about their phone numbers.
- im3w1l 6y ago
  You know what would align the incentives beautifully? A law that says that if someone gambles money they can't afford to lose then they are allowed to claw the money back. The gambler can get their mortgage money back, automatically gets banned from casinos, and maybe the casino would try to prevent the situation from arising in the first place.
splithalf 6y ago
Tsla buys Bitcoin, tsla makes it into the s&p. That’s what’s wrong with it. It’s not stupid greedy easy come easy go money, it’s honest folks retirement account money that is in effect stolen from them.
koonsolo 6y ago
At this point, if you lost money on cryptocurrency, you must be doing something seriously wrong.
- mrkramer 6y ago
  First come first served. In a pyramid/ponzi scheme you get paid by the next fool who invests money but bucket must stop somewhere.
  - koonsolo 6y ago
    Well, that's what some people keep repeating. Haven't seen it stopped in 12 years, and it doesn't seem to have an end anytytime soon. Maybe you are just wrong in your assessment, ever considered that option?
    - mrkramer 6y ago
      Wrong in what? In cypto being a fad? Is DogeCoin used as cash in everyday life?!
      - koonsolo 6y ago
        There is a possibility that crypto goes nowhere. There is also a possibility that it will change the world. Good for you that you are certain of the outcome. You can make a lot of money knowing something that others don't. :D
        mrkramer 6y ago
        I believe in Bitcoin and Satoshi as a project and industry leader not Elon or Vitalik.
zepto 6y ago
> Everyone knows DOGE is a joke Do they? What’s different between DOGE and Bitcoin other than that someone said DOGE was a joke.
- UncleMeat 6y ago
  Doge doesn't have a cap. I don't believe the "store of value" arguments, but at least they exist.

by vasco 6y ago

retrac 6y ago

This is my fourth bubble. Bitcoin in 2011 and every one since. It's old hat and quite amusing at this point. I certainly know not to put any money into it I cannot lose. Do they, though? Even if they know DOGE is a joke, do they have the rest of the knowledge on cryptocurrency to quite understand what they're putting their money into? The risks? The issues of things like time delay and transaction fees which may inhibit pulling funds out quickly? Etc. The first result on Google for Dogecoin currently auto-completes to "Dogecoin stock". This indicates the degree of ignorance some people are coming into it with. Large-scale price instability is a general negative. As is lack of wealth among the middle class. For an individual, losing a bunch of wealth on DOGE would just be a silly, or tragic, story. And I tend to agree that fools should be parted from their money... But if a significant number of ordinary middle class and working class people are vaporizing their savings, that's a social and institutional problem to some degree. It would have ramifications that go beyond those individuals. See when large banks fail. One can wash their hands of it and say they should have chosen a better bank. But you still have mass unemployment and lack of liquidity issues to deal with, from a policymaker's perspective. And as you say, wealth inequality is a problem. And chances are it's not the 19 year old college student who bought 100,000 of a DOGE a year ago who is cleaning house, on average. Much of this is flowing into investors who have six to eight $ figures locked in DEX exchange contracts raking in fees. For all the democraticizing potential of cryptocurrencies, a lot the wealth is flowing from the gullible to the already-rich.

inteoryx 6y ago
"I tend to agree that fools should be parted from their money" I disagree with this. Fools have a hard enough life without permitting predators to take their money. Nobody chooses to be a fool. I don't know what a good solution is, or how to stop something like dogecoin without being too paternalistic, but it also feels wrong to me to just ignore this game of musical money even though the most likely outcome is many people losing and a small number gaining, in a zero-sum gambling game designed to look a bit like investing.
- betwixthewires 6y ago
  Nobody is permitting anyone to take their money but themselves. And beyond that, there are ample resources to learn how not to behave like a fool in the markets. And even further beyond that, there are plenty of fools that are good at one thing and do well with it, taking away the opportunity to try their hand at something they might be good at to save people who were too busy watching tiktok to save themselves is not how you create a just society. Also I'd like to add that the only thing speculative investing has in common with gambling is that risk is being taken, it isn't gambling, and speculation in cryptocurrencies is certainly not a zero sum game.
  - inteoryx 6y ago
    There are at least two kinds of fools. Perhaps you are thinking of "ignorant fools" - people who could know better but don't. There are also people who basically just can't know better. Chris Sacca, who went on to become a billionaire investor in companies like Twitter, tells a funny story [1] about how he made foolish decisions in the stock market and lost a ton of money. Over the course of his career he reverses his fortune and becomes rich. The message of the story is something like "Don't stop grinding or hustling" or something like that. I think he's a good example of the ignorant fool that I imagine you are thinking of. There's another class of fool though that basically cannot know better. This could include a wide variety of people, mentally unwell, gambling addicts, desperate people, elderly, people with an IQ of 80, etc. These people flat out are not going to read books on investing, or whatever mitigation path you would recommend to the ignorant fool, and if they did, they might not understand them or be able to use what they learned effectively. This is something like an "inherent fool" that I was thinking of. What proportion of people who are going to lose money on dogecoin are ignorant fools, for whom this will be a valuable lesson and a stepping stone on their way to better living, versus inherent fools for whom this will be a setback in an already challenging life? I can't speak for all cryptocurrencies in general, and I can only share my opinion, but I'm pretty confident that coins like dogecoin are certainly zero sum games. The best argument I can make for this is that zero value is being produced from dogecoin. Money is being put in, eventually people will want to take money out, but with no value being produced all the money that comes out of the system will come at the expense of those who put money in. It's kind of the quintessential example of a zero sum game. I'd compare it to the company Coke. I can buy a share of Coke like I can put money into dogecoin. Coke is going to produce cans of sugar water. People are going to buy that sugar water, putting their money into the system, and, crucially, never expecting to get it back. They put their money in so that they can consume the value that is the can of sugar water. This addition of money to the system, and the consumption of value, are what makes owning Coke not a zero sum game. Money games into the system from participants who do not expect their money back. As a shareholder of Coke, some of that money will come to me. I can own my share of Coke and benefit from the increased value that comes from the value Coke produces and the money of people who consume that value. Conversely, dogecoin doesn't produce any value. You can move dogecoins around, but nothing is getting made and nothing is getting consumed. Every participant who is putting money in expects money back. There is nobody analogous to the person buying and drinking the Coke. Worse, everyone is hoping for MORE than the money they put in to come back. As a simple matter of math, there is no real way for this to work so that everyone, or even most people, can benefit. If someone makes money, then someone else loses it. In this way, dogecoin is not at all investment. You aren't putting money towards a company or a venture, you are just buying lottery tickets that may or may not be worth more later. It's a gambling game of musical chairs. 1 - https://www.youtube.com/watch?v=EYffNTLL7go https://www.youtube.com/watch?v=EYffNTLL7go

chrisco255 6y ago

Yeah it's a little crazy that some 18 year old kid with Robinhood can go 10x long on GameStop but I can't invest in an early seed round startup.

hkt 6y ago
Amen. I'm in the UK which isn't in a hugely different place. I'd quite like to invest my pension fund into residential property run with an ethical approach through a co-op. I was actually laughed at by a financial advisor, who explained that ethics (other than ESG) aren't something he can help with, and that residential property investment is for the big boys - eg, institutional investors. My bank can invest in property and be morally awful in the process, but I can't do it without losing tax relief on my pension.
- nextweek2 6y ago
  Allowing pension investments in residential property would only make house prices go higher and hurt lower income families, that's not ethical. As for ethical investing, there are plenty of options in the pension market: https://www.youinvest.co.uk/articles/investmentarticles/86842/how-invest-ethically https://www.youinvest.co.uk/articles/investmentarticles/8684... Personally, I've shifted away from etfs and buy actual shares with voting rights. Everyone can be an activist investor with a SIPP.
  - hkt 6y ago
    I'd like to do activist investments too, but they're savagely time consuming. By ethical, I mean no-eviction tenancies, long tenancies, no rent increases, etc. The fact is that lower income families have no hope whatsoever in the UK of buying a house because low incomes are now a signifier of insecure work. There's a section of the population that rotate through housing regularly enough through no fault of their own (because of landlords) that their kids can't go to the same school each year etc. Shelter has an introduction to the idea here: https://blog.shelter.org.uk/2012/11/a-return-to-revolving-door-homelessness/ https://blog.shelter.org.uk/2012/11/a-return-to-revolving-do... I'm aware of many of the other 'ethical' schemes on the market, but mostly, they're not actually that ethical once you scratch the surface. The genuinely interesting ethical stuff does carry some risk, but also accomplishes a lot. See the kinds of things listed here for what I mean: https://www.ethex.org.uk/investments https://www.ethex.org.uk/investments What I'd really like in my pension is freedom to take some risks, and representative democracy. It boils my blood to know that fund managers don't have to respect my values when they've investing my money. Likewise when the government says I can't invest in things I understand and approve of.

phobosanomaly 6y ago

I personally support the crypto-anarchist take you're espousing, but assuming that most of this stuff isn't a predatory cesspool pushing unsophisticated retail investors off of a cliff by the force of isolation-induced FOMO seems a little naïve. If enough people lose their life savings, it will be regulated.

intended 6y ago
At this point, I believe that humans are well aware of blind spots in the masses online, so assuming there is a predatory chess pool of sharks waiting to consume or rob the unwary should be a given. If there is a place where no light or monitoring shines, the question I would ask is how frothily the waters teem with predators.

vletal 6y ago

> protecting the poor from their own stupidity... I felt like accepting your rightish narrative and then you drop this asocial bomb?

vasco 6y ago
That is what is implied by the policies we have in place today. I don't believe your intelligence is measured by your bank account, that is the whole point of the comment.
- bobthepanda 6y ago
  The regulations are not really in place to protect "the poor from their own stupidity." The regulations are in place because the lesson of the Depression is that one person losing their shirt is personal responsibility, and that's fine, but millions of people losing their shirts at the same time will pull the rug out from under the wider economy and be a societal disaster. The criteria for accredited investors is a very crude way to address this problem by reducing blast radius; we could come up with something more convoluted like requiring a minimum amount of bond posted to act as a floor (similar to how non-insured people driving cars works in some states) but the effect would be roughly the same.
  - vasco 6y ago
    The lesson of the Depression is that the Fed at the time sat on their ass and let the economy collapse around them instead of doing something. It had little to do with retail investor euphoria.
    - skohan 6y ago
      Surely it had something to do with retail investor euphoria...
    - lottin 6y ago
      Can you quote any economic historian that agrees with you?

enos_feedler 6y ago

Exactly. Tired of having to wait for these 50+ billion dollar IPOs. Would love to invest earlier

lottin 6y ago
What regulation is stopping you from investing earlier?
- harles 6y ago
  I’d assume SEC regulations on being an accredited investor: https://www.investopedia.com/terms/a/accreditedinvestor.asp https://www.investopedia.com/terms/a/accreditedinvestor.asp
chii 6y ago
> wait for these 50+ billion dollar IPOs. Would love to invest earlier the reason these early institutional investors of pre-IPO stock gets massive gains is because there are few of them compared to retail. A startup that needs the capital is in a less commanding position, and thus, the institutional investors can demand a better price. If a lot of retail investors invest in pre-IPO like you describe, it would push the price higher earlier, and thus, there will not be a price pop _at_ IPO, and the gains that make pre-IPO allocation so attractive to retail investors will not happen.

skohan 6y ago

I suppose this is a philosophical argument more than anything, and I can't claim what's the right answer vis a vis accredited investor requirements, but it's worth contemplating that those rules originate from the crash of 29, when an unregulated market led to the financial destruction of a huge number of ordinary Americans.

insert_coin 6y ago
As have all the crashes since in "bulletproof" regulated markets.
- skohan 6y ago
  I don't know if anyone has ever argued that the markets are bulletproof. Should we not have speed limits because traffic accidents still exist in spite of traffic regulation?
  - insert_coin 6y ago
    No, but we also shouldn't imply the main reason accidents occurred before was because there were no speed limits.
    - deleted 6y ago
      [deleted]
    - skohan 6y ago
      I don't think anyone is arguing that lack accredited investor requirements was the main reason for the crash of 29, just that it's one of many common-sense regulations put in place to prevent a repeat of the worst outcomes.

intended 6y ago

Interesting argument, I must say. But as an extension, I wonder why we ever stopped using Tulips as a source of value. If people wish to be part of a bubble, let them? Perhaps the obvious counter is that this causes harm to the greater good, is bit valid or insufficient ?

tarsinge 6y ago

I agree that if people are free for other life decisions (some worst like driving when they can kill themeselves), then they should be free to manage their money. But maybe the additional problem in the US is that people can lose their retirement money, so you need a level of protection, whereas a French person losing all in stock doesn’t impact its retirement.

arisAlexis 6y ago

penny stocks may or may not be a scam. if the are a scam they should be put on trial. nobody goes on trial in crypto. that's the difference. casino is gambling, regulated, paying taxes and all. these 3 are not the same.

hnarn 6y ago

> What's fundamentally wrong with people losing a lot of their money on crypto? The problem with any economic disruption that's large enough is that "the economy" includes both you and them. A concrete example is how "people" lost their homes in mortgages they shouldn't have taken in the first place: it didn't just affect them, the whole market crashed because everyone had an overvalued home. These things will cause rings on the water. Dogecoin, Bitcoin, the TINA symptoms in the general equity market are all symptoms of a bubble. I just pray that it will peter out and not blow, because an economy where everybody's grasping their savings for dear life is not a very enjoyable economy to live in.

swiley 6y ago

>Everyone knows DOGE is a joke My gf didn't. She found it on Robinhood and keeps calling it a "stock." The main reason she bought it was because of something Elon Musk tweeted and a bunch of her friends did too. I've always been pro cyrpto currency but this freaks me out.

brentonator 6y ago

I just saw an ad on Twitter today from eToro saying basically "Doge is a joke. But seriously we sell doge and you can't deny the returns have been impressive this past year. Buy doge with us" They were emphasizing the returns being impressive without the expected caveat "past performance is no guarantee of future results" stock brokers must make to ensure people think before chugging the hype. Crypto exchanges have a duty to educate and make sure people aren't putting their life savings and taking out loans to buy crypto. That's not happening right now.

HWR_14 6y ago

> What's fundamentally wrong with people losing a lot of their money on crypto? A lot of people lose money on Penny stocks, OTC markets, casinos, Yes, and people who lose all their money in casinos also need to be protected. I would be in favor of anyone who loses the equivalent of a mortgage payment at a casino and then misses said payment being forbidden from gambling for five years, as an example. > Everyone knows DOGE is a joke You know DOGE is a joke. Some people really are investing in it to make money. They are taking savings, not entertainment, funds and putting them in DOGE. > if you assume we're all capable of independent thought, what would you propose that is not a paternalistic view of the world? I'm not convinced that people are capable of being purely rational economic actors if that's what you're asking. Even if they were, they're overworked and don't understand the risks. It's not a coincidence that cigarette smoking trailed off once the surgeon general started putting warnings on packs as opposed to the previous few decades when he just announced it in statements. > We don't need more bullshit like accredited investor credentials which create huge differences in access to investments Well, we could just outlaw things like DogeCoin. We outlaw snakeoil and chain letter pyramid schemes for the same reason.

Supermancho 6y ago
In the US, we still aren't free of getting called and mailed by a vehicle warranty service because your car is going to "go out of warranty soon" (total scam).
- HWR_14 6y ago
  True, but that's a technical problem with the phone system (I've never heard of a mailed scam like that.) Trivial to fix, except for the powerful collections agency/cold call lobby that feels like they have to have the ability to lie about their phone numbers.
im3w1l 6y ago
You know what would align the incentives beautifully? A law that says that if someone gambles money they can't afford to lose then they are allowed to claw the money back. The gambler can get their mortgage money back, automatically gets banned from casinos, and maybe the casino would try to prevent the situation from arising in the first place.

splithalf 6y ago

Tsla buys Bitcoin, tsla makes it into the s&p. That’s what’s wrong with it. It’s not stupid greedy easy come easy go money, it’s honest folks retirement account money that is in effect stolen from them.

koonsolo 6y ago

At this point, if you lost money on cryptocurrency, you must be doing something seriously wrong.

mrkramer 6y ago
First come first served. In a pyramid/ponzi scheme you get paid by the next fool who invests money but bucket must stop somewhere.
- koonsolo 6y ago
  Well, that's what some people keep repeating. Haven't seen it stopped in 12 years, and it doesn't seem to have an end anytytime soon. Maybe you are just wrong in your assessment, ever considered that option?
  - mrkramer 6y ago
    Wrong in what? In cypto being a fad? Is DogeCoin used as cash in everyday life?!
    - koonsolo 6y ago
      There is a possibility that crypto goes nowhere. There is also a possibility that it will change the world. Good for you that you are certain of the outcome. You can make a lot of money knowing something that others don't. :D
      - mrkramer 6y ago
        I believe in Bitcoin and Satoshi as a project and industry leader not Elon or Vitalik.

zepto 6y ago

> Everyone knows DOGE is a joke Do they? What’s different between DOGE and Bitcoin other than that someone said DOGE was a joke.

UncleMeat 6y ago
Doge doesn't have a cap. I don't believe the "store of value" arguments, but at least they exist.