In the last year, initial coin offerings attracted billions of dollars in cryptocurrency capital from retail investors. Some folks have hailed ICOs as democratizing startup investment opportunities, but the system is not without its flaws.
When I was small, my mom played a guessing game with me and my sister when we went shopping. My mom would spot an item in the store, maybe a television or a stuffed animal. Then, she would ask how much we thought the item was worth. After we announced our guesses (and revised our estimates based on gentle suggestions), my mom would tell us the amount listed on the price tag. Whoever guessed closer to the actual price won the round – though we never really kept track of who was ahead.
This childhood game taught me to think about how much something is worth to me rather than passively consuming regardless of price. Now, when I go to a store, I quickly think to myself what I'd be willing to pay for an item that I want – and if the actual price is roughly equivalent or lower, I happily make the purchase. If not, I'll probably pass and look for that product at another store. Of course, sometimes, I splurge on things like concert tickets or video games, but I try to use the pricing game as a guiding framework.
Making judgments about stocks or other investments is a similar but obviously more challenging exercise. Especially in the blockchain and cryptocurrency world, it's difficult to determine whether a project has promise or little more than a fancy website.
Cryptocurrencies have clearly facilitated a faster and more global mechanism for raising capital. However, the ease with which projects are soliciting investors is worrisome. The public isn't well-suited to making careful assessments
