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Initial Coin Offerings: Do we need a ‘nanny state’ to protect us?

How would you like to have been an initial investor in a successful start-up like Microsoft, Amazon, AppleGoogle or Netflix as they were getting started? All of us would love to get that snappy time machine fired up and go back to when we could invest a sizable dollar amount in these successes and reap the benefits today.

One successful way of raising funds today is through crowdfunding with companies like Indiegogo and Kickstarter. In a recent Business Journals article I spoke with Dave Mandelbot, the CEO of Indiegogo, about what is working.

Another way to raise funds, particularly in the hot space of cryptocurrencies is through Initial Coin Offerings. These are one of the hottest areas this year. Many see bitcoin, the most well-known token in the digital currency space, at a level above $4,000 (as this is being written) and remember when it was in the “just a few pennies” range back in 2009 and 2010.

Many also have started alternate coins, also called alt-coins, to rival bitcoin with various features and options. Estimates are at more than 1,000 alt-coins existing today, and some are doing well. Most are not, and those who invested hoping for instant riches are sorely disappointed.

Because of this disappointment, governments are rising up to not only issue warnings, but also to prohibit the existence of ICOs. China and South Korea prominently banned all ICOs recently. Japan, however, has welcomed them and is experiencing a thriving market and economy as thousands of retail stores embrace the use of bitcoin for purchasing goods and services.

In the United States, the Securities and Exchange Commission has issued warnings and said that it must be involved with ICOs.

We do need to exercise great caution when investing in ICOs, as is the case with any investment. The old rule of “not investing anything you can’t afford to lose” still makes sense. However, the larger issue is, Do governments need to “protect” adults who want to invest their own money? Do we need a “nanny state” to watch over people who choose to invest their money?

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