[evergrande]

Which is good because accredited investor laws prevent poor people from obtaining wealth in the same way the wealthy do. It's an uneven playing field.

Let me give a concrete example: The first time I used Stripe and Uber, I immediately wanted to invest. But I couldn't because I wasn't wealthy nor well connected enough. If they had been a DAO, I could have invested $100 and paid off my student debt and theoretical mortgage AND probably covered losing investments. One winner covers many losers, which is how VCs play the game. That's the power of early investment.

Those kind of returns are only available to the already wealthy under our current laws. Why should that be? By the time a company IPOs most of the opportunity has already been extracted. How many of us have wanted to invest in Stripe for years now? We still can't. We can only sit and watch as its largest growth years go by and the rich get richer. In the eventual IPO they'll sell their shares to us now that they've appreciated by orders of magnitude. These laws should be abolished, but I wouldn't hold one's breath. So I'm in favor of the cryptoeconomy being an alternative that one can opt into.

[waprin]

I understand your sentiment, but on the flip side, if you browse around Reddit you’ll quickly see people going all in on random meme coins like SHIB with comments like “I’ll be in a resort in Bali or homeless.” The problem is if they lose their gamble, which is pretty easy considering the huge number of scams and pump and dumps, then when they are in fact homeless, it doesn’t just affect them. Because then people will say we need to take care of the homeless with social programs which taxpayers and people who didn’t YOLO on memecoins have to shoulder the burden of.

You can’t really have it both ways, you can’t have a super strong social safety net for people who lose it all and a system where it’s easy to gamble your life savings on incredibly unregulated markets and incentive all the scammers to come out of the woodwork.

There’s a reason IPOs are much later these days than during the Dotcom boom precisely because too many retail investors lost their shirt to pump and dumps which at scale leads to broader social instability.

[jimkleiber]

> You can’t really have it both ways, you can’t have a super strong social safety net for people who lose it all and a system where it’s easy to gamble your life savings on incredibly unregulated markets and incentive all the scammers to come out of the woodwork.

I really liked this point. Then I thought about it more and I think the reason why we have accredited investor laws is because we don't actually have that strong of a social safety net. For example, I've often wondered how much risk people would be free to take if we had a UBI or government dividend or whatever ya wanna call it. If people had a guaranteed income (or guaranteed home or guaranteed other basic service), how much more risk would people be able to take? I imagine a lot.

Conversely, I've worked in entrepreneurship in the US and in East Africa. In East Africa, I think because there's very little social safety net (government provided, there's more social safety in family networks), it can be really really risky to try to be an entrepreneur.

All that to say that I think if, frankly, the ones who win the bets they place would put more money into social safety nets, then others could take more bets as well. I just think sometimes the people who win the bets they place think they won because they're skilled not because of mostly random luck and then don't contribute to government or non-government social safety nets, thus we make laws preventing the majority of people making bets that could drop them through the safety net that currently exists.

[qeternity]

> Then I thought about it more and I think the reason why we have accredited investor laws is because we don't actually have that strong of a social safety net. For example, I've often wondered how much risk people would be free to take if we had a UBI or government dividend or whatever ya wanna call it. If people had a guaranteed income (or guaranteed home or guaranteed other basic service), how much more risk would people be able to take? I imagine a lot.

Yes, and then what do you do when they have taken all that risk with their UBI? UBI only works if you draw the line there - you have to tell people there is no other support. Otherwise they will just gamble their UBI away and fall back on the same safety nets that currently exist.

[KarlKemp]

The point is sort-of the official reasoning behind the rules as they are. People will promise they'd accept all consequences of their actions. But we restrict people's freedom to trade away their own future freedom to such a degree. You can sign up for the Army for 5 years, yes. You can't sell yourself into indentured servitude. Somewhere in between those two, there's a (vague) line we've decided to draw.

Very comparable: the idea of just letting unvaccinated people die in hospital parking lots. Yes, they were stupid. Yes, they were told about as much. But no, that's not the sort of offense that warrants the death penalty. No, not even if you suspect they'd gladly let you die of your delayed reaction to the vaccine, if that were actually a thing.

[6510]

The simple solution would be to limit investment by income and savings and tax the winnings appropriately.

The real problem is that we need much more investment in ideas that are considered good/useful by some kind of democratic standard. This is a monstrosity of a puzzle to figure out. It would take a long quest transforming the questions it raises to the quality required and much effort in gathering usable data before any kind of possible answers (read 'bad') could be considered.

[barnabee]

Give everyone a UBI weekly or even daily and make contracts that commit you to forfeiting your future UBI illegal/unenforceable (they're not really possible "on chain" anyway). Sure you can lose / gamble away everything you've got _now_, but tomorrow you still have enough to eat…

Seems like you could have it both ways, if you wanted

[melony]

This is based on the false premise that productivity growth is limited and we do not have sufficient means of production to feed a country if somebody is working in entrepreneurship instead of working. The whole point of automation is to free up labour. The additional labour has to go somewhere. Do you expect every English major to work in an Amazon warehouse or become Starbucks baristas?

[young_unixer]

That's right. We should get rid of the social safety net.

[vorpalhex]

Or you could have invested $1000 and then lost it all because it turns out the company you invested in was a naked scam.

Accredited investor laws exist to protect common people from the endless amount of scams we see crypto have today.

If you don't like the laws then petition to have them changed, but simply ignoring them will probably result in the SEC knocking on your door.

[evergrande]

"We're just protecting you" is a transparent excuse to rig the game. It's pulling up the ladder. If it was actually in the best interests of the people, you educate and give them tools. You don't lock them out. And you focus on preventing and going after the bad actors, the scammers.

[bluecalm]

It's not in the your best interest to have access to more profitable but more risky investments until you have a lot of money available. If it isn't obvious to you just think of the shape of utility of money curve.

More profitable but more risky is the most you can hope for. There is competition in private equity market so it's not like it's profitable unicorns for everyone who has access to those opportunities. If anything you should be able to invest in a private equity firm to begin with so they can balance the risk for you by investing in portfolio of assets and guess what - you can do just that as some are publicly traded!

It's really not an evil plan. The regulation is just common sense to protect you from big risk of going bankrupt.

There is plenty of opportunity in public market btw. Some examples of x20s from recent years: SHOP, AMD, TESLA. Some examples of very recent although smaller multipliers: NET (really, if you just read HN once a week you know they are awesome), Unity. I mean if you are so confident about picking Uber it shouldn't be rocket science to pick one of the above either.

[barnabee]

Sounds like nonsense not common sense. It's not in my best interest for anyone but me to decide what's in my best interest. Not everyone measures their life by the same metrics.

The risk of going bankrupt is part and parcel of trying to suceed and live the life you want, whether in business, investing, day trading, or even just getting a university education in some places…

[vorpalhex]

> The risk of going bankrupt is part and parcel of trying to suceed

You probably don't have a sustainable investment strategy if bankruptcy is a likely outcome. You may have a gambling problem that involves securities, but that would not be "investment".

[errantmind]

That isn't for you to decide for someone else.

[jimkleiber]

Maybe the stronger argument is that it's not in the best interest of the community for a member to go bankrupt, even if it's what that one member believes is in their own best interest. Maybe bankrupt is not the best example, because bankruptcy law actually is a social safety net to help people not get indebted for life, or even pass on all that debt to future generations.

That being said, I think the individual vs communal risk decision and regulation is complex and really depends on the situation.

[notahacker]

Nonsense. Venture capital, as an asset class, performs far worse than regular stock indices anybody can buy with a smartphone (Some funds do very well indeed, but others actually lose their LPs money). That's venture capital as practised by professionals that get warm introductions to the highest performing startups, have teams of people to do due diligence for them, involve themselves in hiring and firing the C-suite, can award themselves ridiculously favourable terms like liquidation preferences if the company's struggling and have connections at Valley companies awash with cash when they need to get a startup that'll never be profitable an exit.

Joe Public needs to do better than the people who already have more education and tools and influence than the average person can ever expect, just to break even on their startup portfolio. And let's face it, Joe Public wants to "invest" whilst being so wilfully ignorant of basics like liquidity and adverse selection they think there's nothing to actually be protected from...

[errantmind]

People often learn one mistake at a time. Let them. If they go bankrupt, so be it.

Not everyone wants a nanny state to dictate their activities.

[jimkleiber]

As waprin mentioned above and I expanded on, I think yes, to enable people to take more risk, we provide stronger safety nets for them, which includes educating people and giving them tools. The challenge I see is that the ones who become rich mostly off the risks they take don't seem to want to invest in building those strong safety nets for people, to enable others to take risks that wouldn't be life or death, rich or homeless risks.

In the absence of resources and desire to provide strong safety nets, such as the education and tools you describe above, one way is to just prevent people from doing it.

I agree with you, I'd rather have more freedom to experiment and take risks. I also don't want people to fall to their physical or financial death.

Actually, there's a book that kinda talks about this idea called Care to Dare by a former hostage negotiator named George Kohlrieser. I took his leadership training seminar and he strongly suggested that to encourage people to take risks, we must first build secure bases for them so they feel safe enough to go off and explore knowing they can come back home.

https://www.amazon.com/Care-Dare-Unleashing-Astonishing-Lead...

[Daishiman]

> "We're just protecting you" is a transparent excuse to rig the game. It's pulling up the ladder.

This is a truism that's not based on reality. You can question whether the protection is actually useful for the case, but there's a reason a bunch of professional licenses exist, and they do protect people. I don't want to "educate myself" to see if my doctor is competent to practice.

[AlexandrB]

It'll still be an uneven playing field if you're able to invest in early-stage companies. Now it will just be populated with well-marketed stocks for worthless companies that the rich will use to extract money from the gullible.

With the benefit of hindsight it's easy to see how you would have made a killing on Uber. But what you're not seeing the money you might have lost on Theranos, or Juicero, or WeWork, or any number of other hyped-up but ultimately worthless companies.

[errantmind]

The issue is, the gullible cannot be specifically identified so blanket laws are put in place that affect (almost) everyone. I'd rather have freedom.

[jimkleiber]

I think it's a hard problem to solve. Take a less controversial one perhaps: speed limits. The same aspect could be applied, where it's hard to specifically identify the people who drive poorly at high speeds, so blanket laws are created to limit speeds. Ideally, yes, I'd rather have freedom because I believe that I personally drive well at high speeds, however, there are some people who I wish didn't have the permission to drive at high speeds.

Maybe this analogy doesn't seem so applicable to you as it seems to more directly impact other people than one's permission to risk money on a stock, however, I'd argue that decision impacts family members and communities more than apparent at first.

[errantmind]

Your argument could be applied to anything you don't like. I'm sure free speech sometimes has a negative impact on family members and communities, that doesn't mean it should be limited outside where it presents a clear and present danger to others.

As you acknowledge, the same goes for your speed limit example. It directly affects others and it could be argued it is necessary to protect their safety. Even though I acknowledge that, I don't think speed limits save lives over longer periods of time and could be removed. There would likely be a spike in accidents shortly after the transition but would normalize after. Having lived in several countries around the world, some with de facto no speed limits, people just avoided the left lane where the super fast people drove. I didn't see accidents everywhere.

[jimkleiber]

> That doesn't mean it should be limited outside where it presents a clear and present danger to others.

But isn't that specifically the challenge, in defining what's a "clear and present danger to others?"

> There would likely be a spike in accidents shortly after the transition but would normalize after.

I agree that many things do normalize over time. We create informal rules on how to interact, embedded within morals, ethics, or just expectations of how one should behave in a society. I also think sometimes rules don't informally coalesce, that we don't always resolve conflict without outside guidance and more formal negotiation.

> Having lived in several countries around the world, some with de facto no speed limits, people just avoided the left lane where the super fast people drove.

From my (cursory) understanding of at least German law, while there may not be a speed limit on some roads, those roads often have very strict laws about passing on the right, and one might get their licensed removed for doing so.

[ngc248]

All these laws have come about because they issues would have become so prevalent that instead of just affecting individual, they would have started affecting society at large.

You may be a conscientious person and take responsibility for outcomes which arise out of your "freedom". But not everyone would take responsibility and that is why these laws are there.

[LiquidSky]

>These laws should be abolished, but I wouldn't hold one's breath. So I'm in favor of the cryptoecomony being an alternative.

Me too, because the "cryptoecomony" has been an endless series of painful lessons on exactly why we need those laws. And not even in new ways! Just literally the exact same kinds of scams and abuses that led to these laws being passed in the 30s.

[Dowwie]

The paternalistic claim by regulators is that the accreditation rule protects the most economically vulnerable from fraud. Those with financial certifications and licenses, or those of greater financial means, only have human nature to blame when they make the same mistakes investing as someone without the hundreds of hours of indoctrination.

Cryptocurrency is the first modern wave of unaccredited wealth generation that is beyond regulatory control. Many people were fleeced by alt coins and get rich quick schemes. Academics have more than enough examples to draw conclusions from and use to advise policymakers, if they were so inclined to. Poor rubes didn't bet everything they had on crypto, although there undoubtedly is anecdotal evidence of some doing so. Losses were actually quite within the band of acceptance. Homes weren't lost. Family fortunes weren't wiped out.

[jimkleiber]

I wasn't saying whether it was a good thing that they should be skirted or not, whether the laws themselves were fair or not. In many ways, I probably would agree more with your sentiment than not.

I wonder if skirting the law is the best way to change the law, as it seems to skirt the law-making and law-following process. At the same time, I believe in the principles of civil disobedience, in openly disobeying a law and facing the consequences for doing so in order to shed light on the unfairness of the law. I guess I just don't know how much, if at all, I believe in the skirting of laws.