The Multi-level Marketing scheme argument

[PinkiePie]

Wait, I'm still new to this stuff. What's the Coca-Cola in this example, the Bitcoin or the Dollars?


The Bitcoins. Although really it doesn't matter, because you could look at either the dollar or the Bitcoins as commodities that one might exchange for the other. When we talk about MLM, we're talking about selling a system of selling a system. When we talk about Bitcoin, we're talking about a digital commodity whose value depends (just as any other commodity) on supply and demand. I can't profit directly just because I get 100 friends to use Bitcoin who then each get 100 of their friends to use Bitcoin.

Oh, see that makes a lot more sense.  I got confused by the Coca Cola example because beyond being a commodity, it is also a consumer product.  The relationship between Bitcoin and Dollars is more like the relationship between Gold and Dollars.  

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[Bitcoin Swami]

Please tell me the different % payouts I get from the different levels of referrals.  Thanks.

I dunno, depends on what you get from CampBX, apparently.

Even better.  Apmex pays me for referrals, therefore gold is a MLM.

[Lupus_Yonderboy]

Ok so Camp bx pays for referrals therefore bitcoin is a MLM... got ya.

 

I was simply highlighting the irony there, that's all

[Synaptic]

Bitcoin's requirement of a continuing injection into the market for a currency which isn't used as one, bears similarity to the token-product, recruitment-focused nature of MLM schemes.

Bitcoin is not multi-level marketing. Triplemining is.

Isn't that how any commodity works? Somebody exchanges dollars for something that isn't currency (like Coca Cola) only to later exchange it back to dollars.

Wait, I'm still new to this stuff. What's the Coca-Cola in this example, the Bitcoin or the Dollars?

The Bitcoins. Although really it doesn't matter, because you could look at either the dollar or the Bitcoins as commodities that one might exchange for the other. When we talk about MLM, we're talking about selling a system of selling a system. When we talk about Bitcoin, we're talking about a digital commodity whose value depends (just as any other commodity) on supply and demand. I can't profit directly just because I get 100 friends to use Bitcoin who then each get 100 of their friends to use Bitcoin.

Again, I said closely resembles an MLM scheme, not perfectly mirrors it.  It's unique in that the "profits" are distributed, not singular.

Unlike a regular commodity, there is no value inherent to bitcoins, so it's actually even worse of a scheme than true MLM's where you at least end up with some token crap to play around with.

It can be argued that any commodity is merely what people will pay for it, and the next phrase usually involves some assessment of how gold isn't anywhere near as valuable as it's spot price. However, stripped of all speculative value, it DOES still have value.  Any tangible asset does.  Even Beanie Babies are still fun for children to play with...

However bitcoins only have value relative to real currencies as long as people keep injecting value from real currencies.

[Synaptic]

I've edited my OP to more clearly illustrate the parallels.

[Serge]

Profits are not distributed, whoever finds solution first to the next block gets reward.  Bitcoin is and was never intended solely for mining. As Bitcoin grows and matures miners will be minority group performing a task of processing transactions and being rewarded for their effort.

[Synaptic]

Profits are not distributed, whoever finds solution first to the next block gets reward.  Bitcoin is and was never intended solely for mining. As Bitcoin grows and matures miners will be minority group performing a task of processing transactions and being rewarded for their effort.

Yeah but what gives the blocks any actual value?

Answer: New blood injecting real currencies into the markets.

[Synaptic]

I eagerly await someone's attempt to refute my revised OP.

[Distribution]

I've edited my OP to more clearly illustrate the parallels.

Your parallels make very little sense.

"price-fixing of products (BITCOIN BOTS, "EARLY ADOPTERS," EXCHANGE OPERATORS MANIPULATING MARKET PRICE)" Early adopters have fixed the price? Did they fix it to the 25 dollars it was a few weeks ago or the 13 it's at now?

"emphasis on recruitment of lower-tiered salespeople over actual sales (RAMPANT SPECULATION VS. REAL ECONOMY)" So Bitcoin users are encouraged to get new people involved rather than use their Bitcoins.

Oh, wait, Bitcoin users ALSO encourage each other to spend Bitcoins to support Bitcoin businesses: "encouraging if not requiring salespeople to purchase and use the company's products (BITCOIN "ECONOMY")" Scandalous

I would continue, but it would take me all night to go point by point. So goodnight my brothers in Bitcoin, may the Bitcoins shine on you in the morning and may we all bathe in the glorious light of the future with which Bitcoins will blanket us. All hail Bitcoins!

(NEED I SAY MORE)

[Serge]

Profits are not distributed, whoever finds solution first to the next block gets reward.  Bitcoin is and was never intended solely for mining. As Bitcoin grows and matures miners will be minority group performing a task of processing transactions and being rewarded for their effort.

Yeah but what gives the blocks any actual value?

Answer: New blood injecting real currencies into the markets.

No. Demand for Bitcoins sets  any real value to it. You don't have to inject real currencies to acquire them, you can sell products or provide service in exchange for bitcoins.

[Synaptic]

Profits are not distributed, whoever finds solution first to the next block gets reward.  Bitcoin is and was never intended solely for mining. As Bitcoin grows and matures miners will be minority group performing a task of processing transactions and being rewarded for their effort.

Yeah but what gives the blocks any actual value?

Answer: New blood injecting real currencies into the markets.

No. Demand for Bitcoins sets  any real value to it. You don't have to inject real currencies to acquire them, you can sell products or provide service in exchange for bitcoins.

Which very few people chose to do because it makes no sense to take the unnecessary risk and put up with the associated problems inherent to the medium.

[Serge]

Which very few people chose to do because it makes no sense to take the unnecessary risk and put up with the associated problems inherent to the medium.*

* at this very early stage.

[Mousepotato]

Don't really need an argument on /. for this one, as it's obvious and should be apparent to anyone who's ever read:

http://en.wikipedia.org/wiki/Multi-level_marketing

From the wiki:


"Criticism has focused on their similarity to illegal pyramid schemes, price-fixing of products (BITCOIN BOTS, "EARLY ADOPTERS," EXCHANGE OPERATORS MANIPULATING MARKET PRICE), high initial start-up costs, emphasis on recruitment of lower-tiered salespeople over actual sales (RAMPANT SPECULATION VS. REAL ECONOMY), encouraging if not requiring salespeople to purchase and use the company's products (BITCOIN "ECONOMY"), potential exploitation of personal relationships which are used as new sales and recruiting targets (DITTO), complex and sometimes exaggerated compensation schemes (DITTO), and cult-like techniques which some groups use to enhance their members' enthusiasm and devotion (NEED I SAY MORE)."

AND:

"Independent, unsalaried salespeople of multi-level marketing, referred to as distributors (or associates, independent business owners, dealers, franchise owners, sales consultants, consultants, independent agents, BITCOIN MINERS, BITCOIN EVANGELISTS, etc.), represent the company (BITCOIN P2P NETWORK) that produces the products or provides the services they sell (ONLINE TRANSACTION PROCESSING, COMMODITY SPECULATION). They are awarded a commission based upon the volume of product sold through their own sales efforts as well as that of their downline organization (USD ENTERING THE MARKETS).

Independent distributors develop their organizations by either building an active customer base (BITCOIN EVANGELIZING), who buy direct from the company (BITCOIN EXCHANGE OPERATORS), or by recruiting a downline of independent distributors who also build a customer base (BITCOIN MINERS, BITCOIN MERCHANTS) thereby expanding the overall organization. Additionally, distributors can also earn a profit by retailing products they purchased from the company at wholesale price (EARLY ADOPTERS, BITCOIN MINERS)."

I'm not sure I'm following you.  The part you quoted is full of references to Bitcoin, but the link you provided has absolutely no mention of it.  Or did you interject Bitcoin references into the original text to effect some kind of Weird Al Yankovic parody of the actual definition?  It almost looks like you're trying to link the Bitcoin cryptocurrency to MLMs through a painful path of logic based on barely analogous points.  Almost...

[Synaptic]

I've edited my OP to more clearly illustrate the parallels.

Your parallels make very little sense.

"price-fixing of products (BITCOIN BOTS, "EARLY ADOPTERS," EXCHANGE OPERATORS MANIPULATING MARKET PRICE)" Early adopters have fixed the price? Did they fix it to the 25 dollars it was a few weeks ago or the 13 it's at now?

The "early adopters" (I prefer Bitcoin Oligarchy) easily manipulate the market by leveraging their large bitcoin reserves to stabilize prices and/or maintain the appearance of a functioning economy.

"emphasis on recruitment of lower-tiered salespeople over actual sales (RAMPANT SPECULATION VS. REAL ECONOMY)" So Bitcoin users are encouraged to get new people involved rather than use their Bitcoins.

Bitcoin doesn't really have users, it has miners and speculators. A real bitcoin user is someone who BOUGHT a bunch of bitcoins SOLELY to trade for goods and services, and never turn them back into real money again, nor use them to "send" real currency to other people. I'd assume there's likely less "users" than regularly post on this forum.

So, the emphasis on expanding bitcoin's monetary value is in recruiting more people to speculate with it or use it as a medium of financial exchange, or in the trade for goods and services. The primary emphasis PRESENTLY though is recruiting speculators, as both payment processing and trade would only impart a tiny fraction of it's current fiat value

Oh, wait, Bitcoin users ALSO encourage each other to spend Bitcoins to support Bitcoin businesses: "encouraging if not requiring salespeople to purchase and use the company's products (BITCOIN "ECONOMY")" Scandalous

Is Mary Kay scandalous?  Is Amway? Is VitaLife?  No, but they're bullshit MLM schemes just the same.

I would continue, but it would take me all night to go point by point. So goodnight my brothers in Bitcoin, may the Bitcoins shine on you in the morning and may we all bathe in the glorious light of the future with which Bitcoins will blanket us. All hail Bitcoins!

(NEED I SAY MORE)

emphasis on my remarks.

[Synaptic]

Which very few people chose to do because it makes no sense to take the unnecessary risk and put up with the associated problems inherent to the medium.*

* at this very early stage.

*inherent to the medium.

[Synaptic]

I'm not sure I'm following you.  

That's entirely unsurprising to me.

[julz]

Yeah but what gives the blocks any actual value?

Answer: New blood injecting real currencies into the markets.

As a comment on the current state of bitcoin - I wouldn't argue against this except to say it seems highly likely that some small fraction of this value is actually directly related to the use of bitcoin in trade. It might be that this proportion of the value is a USD cent or much less per bitcoin and all the rest is the speculative value.

It also seems reasonable to me that in the long term, the proportion *could* shift dramatically such that the speculative component is the smaller part.
While bitcoin's future as a powerful widespread currency remains 'possible' in my mind..  I think I differ from many on this forum in thinking that the timeframe for this might be on the order of decades or more.

The technology moves quickly - but that may only help bitcoin to operate in it's little niches.
There is 'distribution friction' which means that there's really nothing driving the desire for the average consumer to hold some tiny fraction of a bitcoin.
To overcome that distribution friction and allow bitcoin to be useful more widely, the per bitcoin value would have to be astronomically higher than it is today.
So what's going to drive bitcoin to even crazier high values? Rampant speculation might spike it up now and then.. but I don't see it holding it there.

[whenhowwho]

lol. Seriously though a lot of your posts on this forum revolve around how you dislike everything. One would have to stretch quite a bit to find any "real" similarities between bitcoin and MLM. Sure the early adopters may appear to be an advantage but it isnt really much of one other than on paper. If I happened to be an early adopter I may have 50000 bitcoins but I do not have liquidity in those bitcoins. I cannot sell them all because the markets are too small and the value would plummet.

There are no residuals associated with bitcoins. MLM has this factor in just about every instance of it. There is no direct incentive to get "new blood" . I don't get paid when somebody new adopts bitcoin. Neither do the early adpoters. Although if you stretch enough I suppose you could argue that everybody gets some value when a new person adopts bitcoin. You cannot really cash in on that value though.

I believe that you are perhaps the ultimate forum troll or at least you are a legend in your own mind.

[Synaptic]

lol. Seriously though a lot of your posts on this forum revolve around how you dislike everything. One would have to stretch quite a bit to find any "real" similarities between bitcoin and MLM. Sure the early adopters may appear to be an advantage but it isnt really much of one other than on paper. If I happened to be an early adopter I may have 50000 bitcoins but I do not have liquidity in those bitcoins. I cannot sell them all because the markets are too small and the value would plummet.

There are no residuals associated with bitcoins. MLM has this factor in just about every instance of it. There is no direct incentive to get "new blood" . I don't get paid when somebody new adopts bitcoin. Neither do the early adpoters. Although if you stretch enough I suppose you could argue that everybody gets some value when a new person adopts bitcoin. You cannot really cash in on that value though.

I believe that you are perhaps the ultimate forum troll or at least you are a legend in your own mind.

The parallels are only tenuous in the minds of those trying their best to defend it. To neutral parties who aren't unnecessarily inclined to negative associations (which doesn't include myself, since I've obviously become a staunch opponent), it's a natural comparison.  In fact that is the most oft used description of Bitcoin among people who research it and decide not to "invest" in it ("Seems like a pyramid scam to me").

Yes, I am an iconoclast.  I come here to represent the harsh realities of the medium and vacuum up everyone's fairy farts and sop up the rainbows from their humid pussy parties.

And the only place I'm considered a legend is in my bedroom...







...I've broken three fleshlights this year alone, I'll have you know goddamnit.

[Mousepotato]

Synaptic's path of logic to how Bitcoin = MLM...

Bitcoin = 8 characters long
MLM = 13-12-13 alphabetic index

Now, if you drop the "1" digit you end up with 3-2-3.  The sum of which is 8.  Therefore BITCOIN IS AN MLM!!!