Hacker News Reader

Comment by lkrubner | Hacker News Reader

About this:

“The poorest households in the US spend 9% of their income on lottery tickets, showing that you can't legislate people out of misusing their funds.”

You’ve explained why it’s urgent that we outlaw lottery tickets. For most of USA history Protestant and Catholic leaders were unified in their opposition to all forms of gambling, and so lottery tickets were unthinkable for most of USA history. And every progressive activist that I know personally would like to see an end to lottery tickets and other forms of de facto regressive taxation. Lottery tickets, like other forms of gambling, tend to undermine habits of thrift and sobriety.

I agree with your implied analogy — ICOs are like lottery tickets. That’s why they should be banned.

View on HN

>ICOs are like lottery tickets

Not all of them, though maybe nearly all of them.

There is nothing at all wrong with using a crypto-system to distribute ownership of your business. The SEC is actively working to make this a reality. It is just a different market to do the same thing.

There is however so very much wrong with doing this outside regulation. Black market shares of your company are bad. Making up the nth new coin and selling its nonsense to the unwise in pump and dump schemes is wrong. In order to do so legally you have to be extraordinarily careful to completely divorce yourself from the US financial system and doing business on US soil.

Banks themselves are starting to use crypto-coins to operate. They're just a tool, when used in the right way they aren't an exciting anarchist revolution usurping The Man, they're just a different sort of database/API. JPMorgan is setting something up for business-to-business transactions because they think it could be a better replacement for the current complex frameworks they have for keeping track of money.

Most ICOs are like bad lottery tickets, but it's not the technology underlying it at fault.

> ICOs are like lottery tickets

Actually in most countries lotteries are pretty heavily regulated to ensure that they are indeed redistributing a share of ticket sales as winnings and are also fairly selecting winners. ICOs are like unregulated lotteries that might intend to keep the proceeds from all "investments" to themselves and/or unfairly distribute to insiders like the "influencers". Opportunity makes a thief.

People derive enjoyment from lotteries and scratch tickets. I agree that some people exhibit problematic behavior by spending some of their limited funds on these items but that is their right. I'd rather these entertainment sources be captured by the state for the good of all its people than administered privately or clandestinely.

It would be better for them to derive their enjoyment from participating in an actual investment market. They'll learn something useful instead just refining their superstitious rituals.

Imagine if anyone could buy $5 worth of stock for the product they're buying at 7-11. Over-time these small purchases would let them amass a sizeable base of assets, and all the while they'd have a stake in parts of the real economy, which would incentivize them to invest time in learning how it works. The educational value alone would be enormous.

Instead we foolishly prohibit people from participating in many of the most lucrative sectors of the economy, which corrals them into low-value dead-end activities like playing the lottos. If you want someone to grow, you don't over-protect them. That applies to raising children, and it applies to governance of the public at large.

But you do realize that without the lotto, they'll go to underground poker games, underground lotto games, or drink booze.

The gvt lotto was not created before people played lottery, it was invented because people want to play chance games anyway and that's a great way to build roads at the same time.

Would they? If security issuance wasn't centralized through prohibitions on unregistered offerings, you don't think there would be a vibrant market for micro-cap companies, with extensive retail marketing in places like convenient stores, and with enough upside potential to take market share away from games of pure chance?

I think the real market could be potentially more exciting than lottos, if regulations didn't prevent securities from being marketed the way lottos are. In a way, the token sale frenzy demonstrated that.

> Imagine if anyone could buy $5 worth of stock for the product they're buying at 7-11.

Yeah, and in ten years they might get $14, which will just give some extra profit to their creditors when they file for bankruptcy for unpaid medical bills, or be captured in a civil forfeiture. And if somehow they managed to keep it and actually save a couple grand, that just means they'll become ineligible for SNAP and lose much more in benefits.

People play the lottery because it represents something more than slaving yourself to make scraps. They are not stupid, and know the system is design to keep you poor, and that hoping to escape by amassing a few bucks is almost as delusional as expecting to win the lottery.

>>Yeah, and in ten years they might get $14, which will just give some extra profit to their creditors when they file for bankruptcy for unpaid medical bills, or be captured in a civil forfeiture. And if somehow they managed to keep it and actually save a couple grand, that just means they'll become ineligible for SNAP and lose much more in benefits.

How is that any different than matching two numbers on a lotto ticket and winning $10, or $1000?

With real-world investing, especially in micro-caps, they have a chance to hit it big as well, and make millions. So it has the same dream escapist aspect. And it provides a much more solid grounding for the future than throwing money in a game that you are mathematically guaranteed to lose if you play long enough. Investing is not a game of pure chance, and it is not zero sum. With enough skill, you can actually make money, and your skill can improve over time, and doing so actually improves how the economy as a whole allocates capital.

> How is that any different than matching two numbers on a lotto ticket and winning $10, or $1000?

That's immediately spendable; it doesn't sit somewhere where it can be taken (by illegal or legal means). That's also one of the reasons why people join susus instead of just saving, for example.

> With real-world investing, especially in micro-caps, they have a chance to hit it big as well, and make millions.

There's no change of making millions in a day, or week. The few "rags-to-riches" trading millionaires progressively amassed their money over at least a few years. But that means losing benefits, which people can't afford to risk. Like I said, the system is designed to keep them there, and they know it.

Yea scratch cards can be immediately spendable, but weekly lottos aren't. People wait, just as they wait for a volatile penny stock to spike in price. I really don't see enough of a difference between the profit potential of penny stocks, and that of lotto tickets, to assume they would be treated any differently by retail consumers, except for the long-term differences, that would make the former more beneficial to the consumer.

>>There's no change of making millions in a day, or week. The few "rags-to-riches" trading millionaires progressively amassed their money over at least a few years.

Crypto-assets have seen many thousands of percent gains in a matter of days. I don't know if you could turn $2 into a million in one week the way you can with a lotto, but the gains I think are substantial enough to compete for lotto spending, especially considering that odds of gains can be improved by the buyer through research and analysis.

Reply on news.ycombinator.com