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A pyramid scheme involves some form of active (fraudulent) recruitment to help increase the price of the asset. Bitcoin doesn't have this. From what you descri

A pyramid scheme involves some form of active (fraudulent) recruitment to help increase the price of the asset. Bitcoin doesn't have this. From what you described above, every single speculative/overinflated asset would be a pyramid scheme. That's not the case.

pbhjpbhj 9y ago
Have you bought some BTC, I made a killing on it, it's free money, get some now because after the fork you'll be able to bank at least 20% of your initial sum, ... The peons in pyramid schemese usually aren't committing fraud, they don't realise that they're in a scheme, they're not lying, they are really convinced that they found the money tree and if only people buy in it will bear fruit forever. I still think the analogy is useful.
- weddpros 9y ago
  Forks are a corner case. As long as someone is willing to pay for the minority coin, why not sell it: the fact that someone is willing to pay for it makes it valuable. "The peons in Theranos didn't commit fraud, they didn't realise they were in a scheme, they were not lying, they were really convinced that they found the money tree and if only people buy in it will bear fruit forever". You can't call every company that has failed a pyramid scheme. You can't call every company that seeks funds through VC or IPO a pyramid scheme, yet they know that they'll only get rich if others buy in.
zanny 9y ago
It is a bit of a fraud to claim bitcoin can ever replace fiat currencies, though. Its deflationary, has a fixed coin limit, is incredibly centralized, and its tx rate is awful and costs a ton to move any of it around the chain. The only value in bitcoin is in how much it exchanges for at this point, and that is definitionally a pyramid scheme, because current buy-ins need more adoption to drive the price up so they profit off their investment. 3% of all addresses control 97% of all coins. 0.01% of all addresses control 21% of all coins. And bitcoins mint rate is slowing every four years and almost 80% of all bitcoin that will ever exist already exists. Its absolutely a pyramid scheme. Early adopters were incentivized with large quantities of limited coins to persuade them to mine and participate when the value was low. Those really early wallets (circa 09-12) amassed over half of all bitcoin ever and are now worth extreme fortunes. Those fortunes are based on demand for BTC, demand for the tiny amounts actually left circulating. The real question is how much of that old money is actually dead - lost wallets and lost passwords - and how much is just waiting to cash out for absolute fortunes. All it would take is one early wallet carrying thousands of BTC to liquidate to cause a panic.
- SippinLean 9y ago
  What you said still falls quite short of a literal pyramid scheme, which has a pretty specific definition. There is no central organization to recruit new members. People that buy bitcoin receive a real, usable product. Every person holding bitcoin profits when the price goes up. This is all in stark contrast to a true pyramid. The way specific ICOs are structured, I could see an argument for some kind of pyramid; but "bitcoin is a pyramid scheme" is easily proved false.
  - mywittyname 9y ago
    Well, there are two components to a pyramid scheme: 1. returns to early investors are generated by contributions from new investors. 2. Each new investor attempts to recruit two or more new investors. The "profits" for existing investors are paid with money from new investors. So it checks the first requirement to be a pyramid scheme. Now, this isn't explicit, but people still understand that the more BTC investors, the higher the price. And BTC investors go online and evangelize. They talk about how BTC is a full-proof investment that can only go up-up-UP. Even this thread is full of them. So that checks the second requirement to be a pyramid scheme.
    - SippinLean 9y ago
      There are many more components to a pyramid scheme, you've purposefully left out the ones that clearly don't apply to bitcoin and gone with a definition that is too broad to fit. Further, your first component leaves out the necessity of a purposefully fraudulent bad actor to redistribute the new investors' "investments" to old investors, instead of investing them. This is clearly impossible with a distributed ledger. Returns (and losses) to all investors, new or old, are equally distributed. Your second part is clearly much too broad, in a pyramid scheme new members are promised a share of the money taken from every additional member that they recruit. Simply saying "hey, this could be a good investment" doesn't make something a pyramid scheme, unless Apple is a pyramid because my financial advisor told me and one more client to buy shares of it.
      - 9y ago
aw3c2 9y ago
> A pyramid scheme involves some form of active (fraudulent) recruitment to help increase the price of the asset. Bitcoin doesn't have this. Haha, have you ever looked at what Bitcoin owners/speculaters post online?
- coryfklein 9y ago
  More specifically, a pyramid scheme requires that you recruit others to make money. If you bought $10 of bitcoin 5 years ago and never told another soul or recruited another person, then you'd make a profit. The same cannot be said for a pyramid scheme.

pbhjpbhj 9y ago

Have you bought some BTC, I made a killing on it, it's free money, get some now because after the fork you'll be able to bank at least 20% of your initial sum, ... The peons in pyramid schemese usually aren't committing fraud, they don't realise that they're in a scheme, they're not lying, they are really convinced that they found the money tree and if only people buy in it will bear fruit forever. I still think the analogy is useful.

weddpros 9y ago
Forks are a corner case. As long as someone is willing to pay for the minority coin, why not sell it: the fact that someone is willing to pay for it makes it valuable. "The peons in Theranos didn't commit fraud, they didn't realise they were in a scheme, they were not lying, they were really convinced that they found the money tree and if only people buy in it will bear fruit forever". You can't call every company that has failed a pyramid scheme. You can't call every company that seeks funds through VC or IPO a pyramid scheme, yet they know that they'll only get rich if others buy in.

zanny 9y ago

It is a bit of a fraud to claim bitcoin can ever replace fiat currencies, though. Its deflationary, has a fixed coin limit, is incredibly centralized, and its tx rate is awful and costs a ton to move any of it around the chain. The only value in bitcoin is in how much it exchanges for at this point, and that is definitionally a pyramid scheme, because current buy-ins need more adoption to drive the price up so they profit off their investment. 3% of all addresses control 97% of all coins. 0.01% of all addresses control 21% of all coins. And bitcoins mint rate is slowing every four years and almost 80% of all bitcoin that will ever exist already exists. Its absolutely a pyramid scheme. Early adopters were incentivized with large quantities of limited coins to persuade them to mine and participate when the value was low. Those really early wallets (circa 09-12) amassed over half of all bitcoin ever and are now worth extreme fortunes. Those fortunes are based on demand for BTC, demand for the tiny amounts actually left circulating. The real question is how much of that old money is actually dead - lost wallets and lost passwords - and how much is just waiting to cash out for absolute fortunes. All it would take is one early wallet carrying thousands of BTC to liquidate to cause a panic.

SippinLean 9y ago
What you said still falls quite short of a literal pyramid scheme, which has a pretty specific definition. There is no central organization to recruit new members. People that buy bitcoin receive a real, usable product. Every person holding bitcoin profits when the price goes up. This is all in stark contrast to a true pyramid. The way specific ICOs are structured, I could see an argument for some kind of pyramid; but "bitcoin is a pyramid scheme" is easily proved false.
- mywittyname 9y ago
  Well, there are two components to a pyramid scheme: 1. returns to early investors are generated by contributions from new investors. 2. Each new investor attempts to recruit two or more new investors. The "profits" for existing investors are paid with money from new investors. So it checks the first requirement to be a pyramid scheme. Now, this isn't explicit, but people still understand that the more BTC investors, the higher the price. And BTC investors go online and evangelize. They talk about how BTC is a full-proof investment that can only go up-up-UP. Even this thread is full of them. So that checks the second requirement to be a pyramid scheme.
  - SippinLean 9y ago
    There are many more components to a pyramid scheme, you've purposefully left out the ones that clearly don't apply to bitcoin and gone with a definition that is too broad to fit. Further, your first component leaves out the necessity of a purposefully fraudulent bad actor to redistribute the new investors' "investments" to old investors, instead of investing them. This is clearly impossible with a distributed ledger. Returns (and losses) to all investors, new or old, are equally distributed. Your second part is clearly much too broad, in a pyramid scheme new members are promised a share of the money taken from every additional member that they recruit. Simply saying "hey, this could be a good investment" doesn't make something a pyramid scheme, unless Apple is a pyramid because my financial advisor told me and one more client to buy shares of it.
    - 9y ago

aw3c2 9y ago

> A pyramid scheme involves some form of active (fraudulent) recruitment to help increase the price of the asset. Bitcoin doesn't have this. Haha, have you ever looked at what Bitcoin owners/speculaters post online?

coryfklein 9y ago
More specifically, a pyramid scheme requires that you recruit others to make money. If you bought $10 of bitcoin 5 years ago and never told another soul or recruited another person, then you'd make a profit. The same cannot be said for a pyramid scheme.