Topic: Is cryptocurrency a financial pyramid (Read 546 times)

For some reason the link to Quora you posted doesn't work/exist, anyway just based on the title of your thread I want to point out that there is a big difference when we talk about bitcoin and cryptocurrencies: bitcoin is a cryptocurrencies but the cryptocurrencies are not bitcoin, and that is the most important thing. Many cryptocurrencies are scam, bitcoin is not. All cryptocurrencies are centralized, bitcoin is not. We always have to specify what we're talking about.

I don’t seem to understand where the pyramidal nature to cryptocurrency or Bitcoin comes in here but, I don’t subscribe to the idea of it having a pyramidal nature to it.
Pyramid schemes simply refers to a bottle neck system where we have a thick layer at the bottom which continues to accumulate in other to push those at the apex upwards and they continue to archive more for even less work.

This don’t seem to be the case for cryptocurrencies or Bitcoin or perhaps I don’t get you for real.

Fiat or paper money and even the virtual CBDC or Stablecoins just stands as a unit of measure and nothing more. There availability or lack simply defines an investors buying power and not necessarily have an effect on demand and supply.

that's the misconception of a lot of noncrypto users. but once they educate themselves, they will surely change their perspective towards this market. i guess, people should just learn a lil bit about this market and they won't have such notion.
with this market, you can invest independently and you don't need anyone to recruit you or of that sort, who will benefit from your investments. that alone, won't qualify under the pyramid type of investment. here, you can invest at any time at your own accord without bothering anyone.

The demand and supply is like a chain they both work hand in hand to affect the price of any coin. If there is a high demand and high supply the price may not be influenced that much there has to be a high demand and a lower supply to the demand for the price to go up and vice versa for the price to go down.
And OP speaking of financial pyramid, I think you should be more elaborate because it's hardly relate to the body of the post. Bitcoin is a digital asset but some schemes has found a way to take the interest of people to the scam called Ponzi or pyramid scheme.
https://cointelegraph.com/explained/ponzi-vs-pyramid-schemes-whats-the-difference

Thank you for bringing this to the forum. In my own opinion considering what a financial pyramid scheme is all about cryptocurrency particularly bitcoin does not fit into this definition. My little understanding of what the financial pyramid scheme is about is that when you invest in Bitcoin you are required to recruit to other persons whose investment in Bitcoin would give you a certain commission and they are required to recruit two more persons and the pyramid keeps growing and growing.

 
In Bitcoin once you invest in it you do not need to recruit anybody. And even if someone is interested in Bitcoin and invest in Bitcoin there is no commission that is accrued to you. All you need to do is you have the option of holding or trading. This doesn't sound like a financial pyramid scheme to me.

Crypto? In most cases I agree, it's a financial pyramid, a Ponzi scheme. But, with one exception, namely Bitcoin. Unlike other crypto, Bitcoin has no owners, no stakeholders, just a creator, Satoshi, who is not trying to influence his creation in any way. Satoshi owns approximately 1.000.000 coins but none of them have been spent so far and there are no signs this is going to happen in the nearest future.

Yes, I agree with you, usually new projects or tokens that appear promise a profit to an investor, usually they add that for those who invite someone to invest in it, that person gets a coin in return. Yes indeed, not many countries legalize it as payment in their country, only a few countries have fully legalized it like El Salvador, if Bitcoin is accepted by all parts of the continent I think this will be a very valuable asset, and can carry out a purchase transaction. product. Yes, Bitcoin is not part of a pyramid scheme or series, Bitcoin is not led by its leader, namely Satoshi, Satoshi is only fighting against world finance (Fiat), it is from the community that it develops naturally, the concept given by Bitcoin is not regulated by regulations. anybody

Even Bitcoin is not free from this manipulation too, let me start from the adapters, how many people are using decentralized exchange to trade their Bitcoin? They are not much compare to those that entrust their Bitcoin to centralized exchanges, I know manipulation is far from Bitcoin blockchain itself but how people buy Bitcoin is not safe from manipulation, centralized exchanges are easily manipulated and control.

Also till this day, news still effectively affects Bitcoin, either good or bad, and since these news are coming from a centralized empire or world, that's still control to me, I just wish that a true decentralized way of acquiring Bitcoin is available and all people abandon Centralized exchange, because this is the way it was supposed to be, but people are doing it all wrong with Bitcoin.

If truly people understands Bitcoin, no one will dare use centralized exchange to trade Bitcoin because it just doesn't fits in, with what Bitcoin was created for, so my friend, Bitcoin been decentralized doesn't make it completely safe from power and control from the law and the manipulators.

Since you talked about discussing cryptocurrencies, we know that between altcoin and it. We have seen a lot of shitcoins pumping out huge amounts in the past and people treating it as a financial pyramid. All of these sheetcoins provide the most return, when you invest in a project it will be a proprietary coin, and they can manipulate the value of their coins if they want. And altcoins are never like bitcoins, altcoins are centralized currency, and bitcoin is decentralized. Moreover there is no central organization to control bitcoin and no one can control bitcoin, while altcoins have central organization and they can control their coins.

Maybe there is a similarity, but I think it's probably only around 10% because the pyramid scheme has investors who invest, and then in order for them to make a profit, they need to attract investors like them in order for them to make a profit because if they don't do that, they don't have anything to make money, and most of the time, this style is always high-risk.

Here in cryptocurrency, there are also investors who buy assets that they think can give a profit to the market if they hold them for a long time, even though they are not encouraging people to invest in crypto. In short, in pyramiding schemes, the earnings are based on recruitment, while in cryptocurrency, it is not like that.

In my opinion, I do agree that some cryptocurrency are a pyramid scheme, but not all of it. I only consider cryptocurrency that has a useless product, as a pyramid scheme. I think what make a project a pyramid scheme is where the product doesn't really solve any problem, the only people buying it are speculators who wish to re-sell it with higher value to other speculators, none of the buyers actually using the product.

While Bitcoin in nowadays case, people are actually buying it to do a transaction. Not everyone buying Bitcoin only to speculate, most of them buying bitcoin so they can do international transaction, with much less fee, and in less controlled environment. This factor alone already prove that Bitcoin is not a pyramid scheme.

As Coinremitter, a crypto payment gateway, I can assure you that cryptocurrency itself is not a financial pyramid. Cryptocurrencies are digital assets that use cryptography for security and operate on decentralized blockchain technology. They have a legitimate and valuable use case as digital currencies, digital assets, and decentralized applications (DApps).

However, it is essential to be cautious when dealing with certain cryptocurrency projects, especially those that promise high returns or operate in a way that resembles a pyramid scheme. There have been instances of fraudulent projects in the crypto space, and it's crucial for users to conduct thorough research and exercise caution when investing or participating in any crypto-related activities.

https://coinremitter.com/?utm_source=com&utm_medium=bitcointalks is committed to providing a secure and reliable payment gateway service for cryptocurrencies, helping businesses and individuals accept digital payments easily and securely. We encourage responsible and informed use of cryptocurrencies, always emphasizing the importance of due diligence and understanding the projects and assets you choose to engage with.

The modern economic system is akin to a pyramid scheme, when you really think about it. A lot of the value from labor at the bottom gets filtered up to the top. This keeps worsening with inflation to where it's more and more difficult for (even intelligent) people to save and move up. Now, that isn't nearly as bad as medieval times where you had a king and lords who would take all excess value to the point of near-starvation or worse. (Unfortunately in parts of the world it's still that bad, but seemingly improving!)

The world seems to have gradually improved for most as time goes on, overall. It will be interesting to see how the next technological boom affects that trend. A lot of new technologies are being built that allow for individuals to have more power than they otherwise would have to control their destiny, but typically corporations and governments, elitists etc try to keep them to themselves as much as possible, and we're already seeing that with the thought of government licensing for AI's. I wonder if we are headed towards some odd UBI-based future where the economy is largely circular and people's economic positions will be more determined by nepotism due to further concentration of power.

It will be interesting to see what happens with Bitcoin and CBDC's. Bitcoin's hard cap is likely what opens it up to people trying to refer to it as something pyramid-scheme like, due to early adopters being more rewarded than latecomers. However, that doesn't really fit the definition of a pyramid scheme at all, you'd have to say that people deciding to trade with gold was a pyramid scheme a long time ago, too. The way Bitcoin functions is more like a limited natural resource than some kind of organized scam. If you found a gold mine early and decided to learn how to mine it, spent time, energy and money to set up shop and work on mining it for yourself before others saw the value of it, you're not taking advantage of others, you saw an opportunity and leaned into it.

Edit: Fixed a word.

Cryptocurrencies are mostly a speculative asset, often having some application, not a financial pyramid. A pyramid scheme is a business model that recruits members via a promise of future payments. As recruiting multiplies, recruiting becomes quickly impossible, and most members are unable to profit. In the crypotcurrency market, we make our own decisions when we want to buy and sell our assets. We cannot call the laws of supply and demand a pyramid scheme.

I am still unsure about the meaning of financial pyramid. The Quora link shows error, so can't do any research based on that article too. But I searched on Google, and it tells me that it's the same as pyramid scheme. It is only possible other cryptocurrency, but Bitcoin is not effected by this. This happens with newly created projects where they do not provide what they promise and through ICOs they collect money from other and when the coin pumps, they sell all their own holdings to scam people. Another way they do it is they put their own money to artificially pump the price to lure people into investing in their project and when the price pumped enough, they sell their holdings creating a pyramid scheme.
Yes, cryptocurrencies are sometime effected by this, but not every time. Centralized coins fall into these categories the most. But if you choose the decentralized one, you are good here.

You gave an interesting answer in your own way to OP's tricky question, which allowed me to look at the accusations of bitcoin in the pyramid scheme from a different angle.

Indeed, the investment model (precisely what prompts many to compare it with a pyramid scheme) was not initially incorporated into bitcoin at all (there is not a single word about this in the white paper). This is something that users themselves brought to btc themselves. You correctly emphasize that btc is decentralized electronic money and this is the main function.

One of the hallmarks of a pyramid scheme is the presence of a founder of that scheme who is the main beneficiary of the whole scheme. Bitcoin no longer has a founder and has had no influence for many years, as you know. Management, so to speak, is also decentralized and all decisions in the bitcoin network are not made by one person, but by the BTC-community. That is, this is another fact that bitcoin is not a pyramid scheme.

In general, if you read the comments in this thread, then there are much more facts / signs that bitcoin is not a pyramid scheme (if there is any evidence to the contrary).

Actually crypto currency is not a form of financial pyramiding. It is a digital asset that operates independently. There are instances where crypto currency has been used in a pyramid schemes, where individuals are promised with high returns on their investments, but the returns paid out using funds from new investors rather than from actual profit. That kind of scheme is illegal and can result to financial losses for those who are involved. It is important to do thorough research before investing in any type of crypto currency or investment opportunity, and to be wary of promises of high returns with little effort or risk.

Correct, a Ponzi scheme has a few people behind which promise incredibly high profits to anyone which invest with them, then they use part of that money to pay early investors until the whole thing explodes and everyone realizes they were scammed.

Satoshi never promised any kind of returns by investing in bitcoin, in fact he was very open about the possibility of bitcoin not succeeding, and each person decided on their own to invest in bitcoin despite the lack of guarantees given, so it is obvious bitcoin is not a financial pyramid.

All financial pyramids collapse sooner or later. Bitcoin is here since 2009 and it won't be collapsing anytime soon.
There are other scarce resources and assets with limited supply and unstable demand. Does that mean that they are a financial pyramid as well? According to this dumb logic, gold and diamonds can also be considered a financial pyramid.
There are differences between a financial pyramid(ponzi scheme) and a pump&dump shitcoin scam. Those differences have been mentioned multiple times on the forum years ago. Just search for the old forum threads about this topic.
 

In short, you are trying to blame altcoins without questioning why there are scam altcoins. All because of investor greed, if you are not greedy and do not want to get rich quickly, no one can scam you. Your blaming of altcoins is like the government blaming bitcoin because it is used by criminals, and they say bitcoin is involved in crime. You don't profit from altcoins, and you hate them?