The Internet revolution has given rise to yet another new financial term: crowdfunding, "the practice of securing small amounts of money from multiple contributors online."
It's one thing if the risk were limited to blowing $50 on a possible scam, but a bill before Congress was about to allow crowdfunding investments under $10,000 to have little oversight.
IMHO, I was okay with that seemingly high cutoff level. We should allow rapidly changing marketplaces to sort themselves out without "protection" from the government. By the time Americans turn 18, they have had the experience of being approached for money by questionable characters. To turn over $10,000 to an unfamiliar website is like sending it to a Nigerian with a frozen bank account. That's why most of us use the Internet and other information sources to check out charities, stocks, and products before making a significant outlay.
I suppose there's not much downside, though, to amending the bill to protect some Americans from foolishness that could hurt (but not destroy) their finances. I just hope that the cost of the eventual government regulations and bureaucracy doesn't turn out to vastly exceed the benefit.
FYI, here's an excellent description of the various categories of crowdfunding: (1) the donation model, (2) the reward model, (3) the pre-purchase model, and (4) the equity model.
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