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For those confused about the difference: A Ponzi scheme "pays profits to earlier investors with funds from more recent investors" A pyramid scheme "recruits m
by sodality2 5y ago
For those confused about the difference:
A Ponzi scheme "pays profits to earlier investors with funds from more recent investors"
A pyramid scheme "recruits members via a promise of payments or services for enrolling others into the scheme, rather than supplying investments or sale of products"
- golemotron 5y agoThat isn't much difference. If there is a promise of payments for enrolling others, that is still a subsidy from later to earlier investors.
- jcfrei 5y agoSo any SaaS startup that offers referral fees is now a pyramid scheme?
- DanHulton 5y agoIf a SaaS provides services it doesn't fit the definition of a pyramid scheme, no.
- dvt 5y agoAnd Axie provides the service of "fun," no? I fail to see how there's any difference here.
- roywiggins 5y agoIf you can earn referral fees for your referred people's referrals, then it starts to get into pyramid territory.
- IanCal 5y agoThere's a big difference between "If you join, you can try to sign up others" and "Pay me $X and get a return of Y%".
- JohnJamesRambo 5y agoCan anyone outline how either of those are different than pre-IPO investors in WeWork etc cashing out on the retail masses? Or pretty much any non-dividend stock that exists?
- 4512124672456 5y agohttps://en.wikipedia.org/wiki/Stock https://en.wikipedia.org/wiki/Stock
- IanCal 5y agoIf wework took the money from new investors and used it to pay dividends to previous ones, that would be much more like a ponzi scheme. Using the money to try and grow a business and a share of that business being deemed to be worth more is very different.
- anm89 5y agoYou just conceptually don't like markets. If you think the whole concept is a scam then just don't put your money in financial markets. According to history this is not a wise move.
- lima 5y agoWith an IPO, there's the expectation of eventually paying dividends from real revenue.
- hogFeast 5y agoSaying that a non-dividend stock is a Ponzi is like saying a private business that doesn't pay dividends is a Ponzi...it misunderstands how a company works at a fundamental level.
- ivalm 5y agoBuybacks are examples of return of money to investors without dividend. In fact, this is a more tax-efficient way to return money. But return to investors is not even the important thing, it is that normal businesses should get outside money by providing some kind of goods or services. The problem with axies is that they claim everything is exchangeable back into money so there is essentially no “outside” money.
- Animats 5y agoThis seems to be a Ponzi, in that payouts come from the pay-in of later users. Axie itself does not seem to be paying users to recruit more users. There's nothing like the "downline" of a multi-level marketing scheme. Users are independent players.