The amount of unquantifiable (and avoidable) risk in this security makes it a total gamble; there is a complete lack of rigorous structure you expect in the non-bitcoin investment world. If all bitcoin securities look like this, Bitcoin investment will fail to obtain real traction.
This is a good observation.
LRM, but as well with the larger consumer/economic aspects of bitcoin in general, are 'amateur hour'. I don't say this out of spite, or as an insult. It is simply the way it is.
The bitcoin environment has been like this for years, with little movement forward to add much needed legitimacy to bitcoin's financial/economic/investment infrastructure. The big players are on the exchanges; there is plenty of volatility to make good profits on. They, like you, can see the risk of putting money into amateur hands. So they move elsewhere.
The tragedy is, of course, that this is completely avoidable if the operators got their act together and started acting professionally and responsibly instead of like 17 year-old basement dwellers with delusions of grandeur. (no offense to 17 year-old basement dwellers intended)
People who either don't care about risk, are overly naive, or don't fully understand the risks, pat each other on the back and shovel money into endeavours such as this. Sure, they may get lucky, turn a profit, and come out ahead.
Or they may not. But that isn't the point, is it? That isn't *your* point. The point, as you have realized, is that there are many 'amateur hour' operations around that are asking for investment capital. But shine the light of reason on them, and they fall apart. No true investor would touch something with a wishy-washy 'contract', poor transparency, and 'promises' by anonymous internet personas. This is not what 'professionalism' is; it is 'amateur hour'. This is speculation at best, not 'investment'.
I've asked Lab_Rat various questions early on that were important to me as a potential investor; he chose not to answer them; I did not invest. It was that simple. Did I lose out? Honestly, it doesn't matter. What matters is that I, wearing my 'serious investor' hat, didn't see what I was looking for here. So I chose to move on. No big deal. I wonder how many others have done the same.
You asked in closing whether we, as investors, should allow such
ventures to exist. The truth is that they *will* exist; 'we' have little influence on that. There are too many 'kids' (by 'kids' I mean anyone, regardless of physical age, short on financial investing acumen but long on greed) playing with bitcoin right now.
We are all still learning the ropes, and simply by being involved will be a good educational (if not financial) experience. Personally I have nothing against this reality; I don't see it as a detriment to bitcoin. It is simply the way it is. Go with it and enjoy the ride, but go in with eyes wide open. Just like the 'ignore' button on the forum, if you don't like someone's investment offering, you can simply choose to ignore it.
Eventually, though perhaps slowly, bitcoin will mature and begin to attract different types of investors. For now, there's nothing wrong with kids playing in their sandbox; adults know where it is and how to stay out.
