Bitcoin is a Pyramid Scheme or Scam
A closer look at this falsehood shows how liberal the word "scheme" is used
“There is no way I’m going to invest or buy Bitcoin; it’s just a pyramid scheme for suckers.”
Whether I’m on a panel, speaking, or meeting a new prospective client this misnomer is in someway thrown out. Certainly, Bitcoin has been wrapped up in scams in some respects; sometimes it’s the underlying structure or maybe the dynamic that is marketed, but in every case, Bitcoin is just an innocent bystander in whatever gets cooked up.
Let’s look at the definition and a quick visual first:
A pyramid scheme is a form of investment (illegal in the US and elsewhere) in which each paying participant recruits two further participants, with returns being given to early participants using money contributed by later ones.
In order for a pyramid scheme to be successful someone at the top of the pyramid has to benefit from the type of behavior that is being promoted. In Bitcoin’s case, there is NO ONE at the top. No CEO, no President, no government, no marketing department, no corporation, no entity of any type benefits from Bitcoin directly unless you are securing the network. The engineering department is made up of 30 (or so) developers that work on the code without any direct incentive. The accounting department is a distributed, worldwide network of computers solving a math problem in order to verify transactions in blocks. That department is incentivized or rewarded Bitcoin, but to do so significant upfront capital must be spent. Bitcoin doesn’t have a cleaning crew, corporate headquarters, or customer support. So this theory is absolute “No Bueno.”
Instead bad people have created their own pyramid scheme and used Bitcoin as the “currency” or marketing ploy of that scheme. Bitconnect is one of the most notable schemes that utilized BCC (a copycat of Bitcoin) in order to promise outrageous returns to unyielding prospects.
It’s important to understand this distinction and poor reporting that has been applied to this erroneous myth.
Onwards & upwards!
Bly 🏁
📊Charts of the Day📊
📺 Must Watch 📺
⚠️Infographic⚠️
📜Random Interesting History 📜
October 24, 1929
October 24, 1929, was known as “Black Thursday,” as the Dow Jones Industrial Average dropped 11 percentage points at the bell. This was the start of the Great Wall Street Crash of 1929, which helped start the Great Depression. By the time the Dow bottomed out at 41.22 in July 1932, it was down 90% from its previous high of 381.2 in September 1929. It would not reach that high again until 1954.
🎧Podcast of the Week🎧
In this interview, Peter McCormack is joined by Eric Voskuil, who John Carvahlo described as Bitcoin’s most rational thinker. After starting his career as a software developer, he took a 10-year hiatus flying fighter jets in the U.S Navy before returning to software engineering and Bitcoin. They discuss libertarianism and anarchy versus minarchy, fractional vs full reserve banking and remaining a rational Bitcoiner.
“There are unique aspects about Bitcoin. The fact that the cost of using it rises when other people are using it, is unique to everything in the world, and people don’t look hard enough at that and the consequences of that.”
— Eric Voskuil
🔥Tweets of the Day🔥
📰What happening; News that Matters📰
Intercontinental Exchange to Launch Bitcoin Options Through Subsidiary Exchange Bakkt
US Regulatory Agencies CFTC, FDIC, OCC, SEC Join Global Financial Innovation Network
Former World Gold Council Executive, Jason Toussaint, Develops New Bitcoin ETF
Goldman Sachs Veteran and Yale Professor Planning to Launch Blockchain-Based Facebook Rival in 2020
Stephen Moore Announces Plan to Launch Frax As Stablecoin Backed by US Dollar
Opera Adds Support for Bitcoin in Crypto Wallet in Opera for Android
Bitmain Launches Bitcoin Mining Facility in Texas
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Disclaimer: None of the content in this newsletter is meant to be financial advice. Please do your own due diligence before taking any action related to content within this article, and yes I am personally invested.