Bitcoin is a pyramid scheme

[Daichi]

I am new to Bitcoin, so I wanted to learn what this is all about.

My conclusion is the Bitcoin scheme is a pyramid scheme.

Bitcoin can be separated into 2 components:
A) the distributed peer-to-peer payment technology
B) monetary, the Bitcoin scheme, method of creation and issuing new coins.

The technology part is not the problem. You can have a pyramid scheme over the postal mail system, something like Mailcoin, but it would not be as fast and efficient. The decentralized peer-to-peer payment system shows promise as a technology.

The monetary part is where the pyramid scheme for Bitcoin is concocted. The early adopters control a huge percentage of BTC and the Pharaoh, Satoshi, controls the most BTC. Immediately that should give an objective person alarm bell that there is something wrong with this picture.

If a new participant were to enter Bitcoin, mining for BTC is astronomically difficult. A new participant would take more than a million years to get 50 BTC compare to what Satoshi gets in 10 minutes at the beginning. That is not how money should work. New participants have to use real world currency to buy into Bitcoin, this is where value is flowing up the pyramid.

This forum will fill with people that have 1 or more BTC. They have some skin in Bitcoin, so this make it diffcult for some to be rational and objective about the Bitcoin scheme. I hope some will step back, step outside the box, and take a hard look at it. For new people that want to get in on Bitcoin, I hope you take an objective view of Bitcoin. If you do choice to buy into Bitcoin with real world currency, just hope you are NOT one of the many at the bottom of the pyramid left holding the bag when this thing collapses.

[samsam]

It is not difficult to have a rational discussion. I fully realize the problems with bitcoin.

I mainly see it being used as a money transfer system, especially if the USA or the EU ever institute capital controls. I don't recommend people to be too invested in bitcoin. It is a very risky investment and could easily go to zero value in the future.

[terman45x]

If it was easy to get 50 BTC, Bitcoin couldnt have cap of 21 Million coins when going mainstream.  

And yes, it is depressing not be the one who helped Bitcoin technology grow from early days

[Birdy]

You could make the same argument about company shares.
It was so easy to get a share of google in the early days.
And when google collapses one day, their shares would share some attributes of an pyramide scheme.

Early adopters also had a higher risk to lose their investments (time and money, the really early adopters only time). Also there needs to be an incentive to attract people to use Bitcoin.
You may argue that the reward is too high for them though, but it won't stop Bitcoin.

There is another big difference between pyramid scheme scams, it doesn't have to collapse. The price can stay the same forever and it wouldn't matter to the people using Bitcoin.

[Wipeout2097]

Yes, the early adopters have fortunes and I wish I was one of them. Did/do they make them at other people's expense (unlike some banks and armies out there) ? While the answer is no, I can only say good for them. Use some BTC to travel to the edge of space on Virgin Galactic, buy a supercar and private island, enjoy your life, contribute to charity and good causes like finding a cure for cancer, that's the kind of stuff I recommend

Bitcoin is a pyramid scheme (in the sense of being a ponzi)? No.

[Buffer Overflow]

Bitcoin does not qualify to be a ponzi or pyramid because it still functions if new participants don't enter the market. It still does what it says on the tin.

 

[PenAndPaper]

Because some people have more bitcoins than others doesn't make bitcoin a pyramid scheme whatsoever.
Go read again that article in wikipedia.  

[dancupid]

Who did the people who bought bitcoins at $1, $3, $5, $20, $50 buy them from?

The earlier adopters only benefit if they didn't sell them. By not selling they took a massive risk.
Anyone can sell their bitcoins at any time
Many of them did sell otherwise how did we get our bitcoins?

Whenever anyone buys bitcoins for the first time they are buying them from an earlier adopter who then ceases to own those bitcoins.

[Knicknac]

I heard about Bitcoin when it began, I just blew it off. I didn't see the future relevance of this. I've chosen to "invest" which is to say I believe in what Bitcoin represents. I've been mining for about a year now and I see that I'll never be able to afford to mine with the big boys but that's ok, there are many ways to invest. Bitcoin is not a pyramid scheme, everyone has the same chance to acquire more bitcoin than everyone else. There isn't a guy at the top getting a piece of everyones take.


                 Knicknac

[GriTBitS]

So i guess originally when the Fed reserve note was created and ppl exchanged all the gold they had for them were part of a pyramid scam because most ppl didn't have gold and now these people have all the new dollars.     Bad thing for them is, they really did get screwed though because they were never able to get their gold back! Buy bit coin for cash,, want cash back, Sell Bitcoin!!!! Pretty easy!

[beetcoin]

i agree with what OP is saying except for his definition of pyramid scheme. see the wikipedia page here http://en.wikipedia.org/wiki/Pyramid_scheme

i think you are incorrectly using the term. there are issues with BTC.. such as parity, liquidity, and a few other things i can't remember to name right now.. but it is not a pyramid scheme. when i was 19 i lost $400 to a pyramid scheme.. and this is not the same thing.

it is also not a ponzi scheme.

[tejon]

I agree to some extent with the OP, however my understanding of a pyramid scheme is that the participants are required to recruit to directly benefit and this is not necessarily the case with BTC.

Also the value to enter the scheme fluctuates with BTC and again this is not the case with your typical pyramid scheme.

[beetcoin]

I agree to some extent with the OP, however my understanding of a pyramid scheme is that the participants are required to recruit to directly benefit and this is not necessarily the case with BTC.

Also the value to enter the scheme fluctuates with BTC and again this is not the case with your typical pyramid scheme.

the main component, to me, is selling/promising commission, a good or a service without actually following through. they also require "investors" to refer other people, particularly by showing your rags to riches lifestyle. that is not bitcoin at all.

when i was 19, i "invested" in a website management service.. it cost $400 for the "setup" fee ($39.95 billing monthly to your credit card) and all you got was access to a stupid website. you then had to sell to other small businesses looking to build their own website for the same fee.. and you were to recruit your friends/family to do the same (including the $400 fee). after a while, most people did not see any of their commissions and the service went bellyup.

that's what a pyramid scheme is.

[btcton]

Think about the USD. It started off with a value much higher than it is today. Early hoarders actually got hurt. Bitcoin is the other way around, but is it really a pyramid scheme? If it stopped expanding, it would probably retain its value, but definitely not lose it. Expansion does help early adopters, but it is not required.

[lambdaE]

Buy bit coin for cash,, want cash back, Sell Bitcoin!!!! Pretty easy!

So far it works this way, but Im afraid not many will want cash anymore when all could be bought with BTC when Bitcoin become mainstream