If a pyramid runs forever, is it still a pyramid?

[Vishnu.Reang]

The question is basically wrong, because no pyramid can run for the infinity. Eventually the bottom tier investors need to get returns to their capital. Either they should convince new investors to join the scheme, or they should get it forcibly from those higher up. If they are able to do the first option, then the new tier of investors will face the same dilemma eventually. 

[jseverson]

Mathematically speaking, pyramids can't last forever. Each new layer requires an exponential amount of money, and it doesn't take a lot before it starts requiring money the entire world doesn't even have. The only reason why Madoff's lasted as long as it did is because people didn't cash out; people trusted him completely, but he very easily could have been exposed sooner.

If it runs forever, then it's not purely a pyramid/ponzi scheme. One example is Herbalife, which is heavily based on a pyramid structure, but does enough legitimate selling that it is able to sustain itself.

[audaciousbeing]

I have been wracking my head trying to figure this out. I've been watching some schemes on cryptocurrencies and even though their complexity is very high, many all boil down to the same basic principle: a ponzi.

What my question is seeking to address is whether these ponzi schemes are indeed ponzi if a surrounding business takes advantage of it.

Ok, I did not make myself clear.

Let's think 3Dimensionally beyond the simple MLM, ponzi.

1. The pyramid is a hierarchical structure right? Now, imagine it being surrounded by legimate businesses. I mean most "complicated" and smart ponzis are like that and can run for decades. Think Bernie Madoff.

2. From the Ponzi, legitimate and real businesses are ran. In fact, an entire eco-system can be built around the simple ponzi. From investing in other legitimate investments to small brick and mortar SMEs, ponzi money can "expand" to so many horizons.

What are examples?

- apparel
- consulting services
- video content
- tradeshow and "TEDtalk" like events with pricey tickets
- VPN hosting services, etc, etc.

These allied businesses, are not in and of themselves "ponzi" but may have been capitalized with ponzi money. Now, if any of these endeavors "takes off" and perpetuates the ponzi or prolongs it, doesn't that make the ponzi not a ponzi?

Based on facts so far the scheme is a pyramid scheme, no matter how long it manages to stay afloat, its still going down and the number of years does not matte. But for those likening bitcoin to such scheme, what they have failed to do is to understand whats its all about which will still be responsible for them to wait till eternity because it wont fail that does not absolves the possibility of challenges being faced every now and then but its not going to crash like a regular pyramid scheme...

[beerlover]

That's the bad part of pyramid, technically speaking it can't run forever because there is a limited amount of money plus limited amount of people. So, no matter how long it goes on in the end every single person would be involved in that pyramid and then there won't be a new person to join.

I know it makes no sense that 8 billion people would join a new pyramid scheme but in the end that is what a pyramid scheme is, even if 8 billion people joins the last ones will be the ones that will hold the loses. So no, a pyramid can't run forever and yes no matter how big it is in the end a pyramid is a pyramid and its a scheme that will end with people losing because that is how the system works, the last of the line will hold the losses. There is no way around it or a solution for it.

[South Park]

I have been wracking my head trying to figure this out. I've been watching some schemes on cryptocurrencies and even though their complexity is very high, many all boil down to the same basic principle: a ponzi.

What my question is seeking to address is whether these ponzi schemes are indeed ponzi if a surrounding business takes advantage of it.

Ok, I did not make myself clear.

Let's think 3Dimensionally beyond the simple MLM, ponzi.

1. The pyramid is a hierarchical structure right? Now, imagine it being surrounded by legimate businesses. I mean most "complicated" and smart ponzis are like that and can run for decades. Think Bernie Madoff.

2. From the Ponzi, legitimate and real businesses are ran. In fact, an entire eco-system can be built around the simple ponzi. From investing in other legitimate investments to small brick and mortar SMEs, ponzi money can "expand" to so many horizons.

What are examples?

- apparel
- consulting services
- video content
- tradeshow and "TEDtalk" like events with pricey tickets
- VPN hosting services, etc, etc.

These allied businesses, are not in and of themselves "ponzi" but may have been capitalized with ponzi money. Now, if any of these endeavors "takes off" and perpetuates the ponzi or prolongs it, doesn't that make the ponzi not a ponzi?

Interesting question but no pyramid scheme can run forever, if we take your mental experiment to the extreme you will get the whole humanity participating in a single ponzi scheme, the organizers could have at their disposal all the money of the world and it will still crash since they will owe their participants more than what they can generate each month, also it is important to note that someone that deceived their investors with false promises is still a criminal even if he somehow found a way to prolong the ponzi since at the end there are going to be people that will lose everything they invested with him.

[Oilacris]

Nothing runs forever specially on a pyramid structure type of business.Basing on the examples given on op like apparels and other related stuff.

They are indeed on multi-level networking structure the thing here on why they do sustain on running up for long? They had sustained or established themselves regarding on their business which its hard for them to collapse yet they do have working product unlike on typical Ponzi scams that only funds are circulating which doesn't have any products.

[gunhell16]

Pyramid system needs to have a good underline and as we know that the pyramid has a pointed top.
Which means every level we go down we need more people and we have numbers to produce.
This pyramid will actually be destroyed once theres no new members to join. there are no forever in pyramiding.
The first to enter will gain a lot and a sad story for the late comers.

[Oceat]

Pyramid system needs to have a good underline and as we know that the pyramid has a pointed top.
Which means every level we go down we need more people and we have numbers to produce.
This pyramid will actually be destroyed once theres no new members to join. there are no forever in pyramiding.
The first to enter will gain a lot and a sad story for the late comers.

Pyramiding is quite a bias for people who's on the top of the list, therefore, it's like you're working on your own so they can earn. I've seen it so many times even though they did not make some effort to sell their product by just only inviting more people to join in and if there are more people meaning they will earn more. And the ones who will benefit it all was the person on the very top. So, therefore, it will not gonna last forever.

[BitHodler]

Some cloud miners may fit in that category. Not necessarily because they will last for ever, but more so because of how some of the bigger ones (Genesis Mining for example) used the funds to buy mining hardware.

I'm sure they will eventually have to pull the plug because of how unprofitable it becomes for them, but as long as we go through bull markets they might be able to last long enough to not bust during a bear market.

Another thing is that they could use people's funds to speculate with on the market, which if it goes well for them might help bring in some more profits they can use to pay out mining contracts with. They have several options.

[DarkDays]

Short answer no. Like many have already pointed out.

It still starts with 1 man and then it trickles down into multiple levels of referrals. Eventually, you will run out of people on the planet. That too in just 15 cycles if all you had was 5 people under you and wanted each one of them to refer 5 people each and so on.

In genealogy, we have this as the concept of pedigree collapse. Look into it.

It's the same trick that every person falls for because we are naturally afraid of doing just a little bit of maths. That being said, a true multi-level marketing scheme or Ponzi cannot run forever by definition, since there has to be an exhaustion of available fools to bring into the program, unless it expands slower than the growth rate of the human population.

[Twinkledoe]

Short answer no. Like many have already pointed out.

It still starts with 1 man and then it trickles down into multiple levels of referrals. Eventually, you will run out of people on the planet. That too in just 15 cycles if all you had was 5 people under you and wanted each one of them to refer 5 people each and so on.

In genealogy, we have this as the concept of pedigree collapse. Look into it.

It's the same trick that every person falls for because we are naturally afraid of doing just a little bit of maths. That being said, a true multi-level marketing scheme or Ponzi cannot run forever by definition, since there has to be an exhaustion of available fools to bring into the program, unless it expands slower than the growth rate of the human population.

I definitely like this point of view. Exhaustion of available fools! LOL  I don't understand why MLM schemes are still proliferating nowadays. Maybe, hoping that someday they will get rich from their downlines? But it is like taking advantage of those gullible people who are now stuck to the idea that they will get rich also from their future referrals. 

[Finestream]

Short answer no. Like many have already pointed out.

It still starts with 1 man and then it trickles down into multiple levels of referrals. Eventually, you will run out of people on the planet. That too in just 15 cycles if all you had was 5 people under you and wanted each one of them to refer 5 people each and so on.

In genealogy, we have this as the concept of pedigree collapse. Look into it.

It's the same trick that every person falls for because we are naturally afraid of doing just a little bit of maths. That being said, a true multi-level marketing scheme or Ponzi cannot run forever by definition, since there has to be an exhaustion of available fools to bring into the program, unless it expands slower than the growth rate of the human population.

Right.Pyramids do not last for a long time since they immediately vanish after they have scam those who invested in it.But if the said pyramid refers to crypto wherein most people have believed in the first place that crypto is just a scam,then they are very wrong because crypto is very legit ever since and having the fact that it has existed for 10 years giving profits to people.

[nydiacaskey01]

There are MLM or Multi Level Marketing out there that is still around for more than 100 years and one of the most popular is Avon products which started way back 1886. They we're able to stay in business because they have a product that people actually use, unlike other MLM out with their main goal is to recruit people to invest and not to sell products, products that are useful and not just to say that they have a product.

[NathanJB]

Ponzi is simply taking the investment of a person to pay for the investment return of another person. If there are no more investors, their capacity to pay for the returns of their earlier investors will die. That is Ponzi scheme. But if the scheme is going to be mixed with registered and legit businesses with products, it is not Ponzi scheme anymore. That is what networking businesses are using as a strategy. And they are not considered illegal anymore simply because of their business products, which are actually fronts.

[Cnut237]

If a pyramid runs forever, is it still a pyramid?

A pyramid scheme can't run forever. Equally if something runs forever, it is not a pyramid scheme.

A pyramid, no matter the complexity, always involves getting more people/investment in at the lowest level. Anything that is structured like that will eventually reach the point where it runs out of new input, at which point it collapses and those who got in late will get stung.

[Linkkoin]

I think there is no pyramid that will run forever, either they get bankrupt in the long run or they get stopped by the government.
I know some long run ponzi scheme which ran for 5 years already with millions of members, they give a return of at least 30% per month and they have a lot of business under the name of the investment scheme, there was no complaint from clients but the government sees this is a big risk as they offer a big percentage which they cannot justify properly, the stand of the government is no investment can give you a consistent 30% per month.

The government job here is to prevent if it's still possible so stopping a ponzi could end it's operation abruptly.

But there are countries, where there are Ponzi schemes, are even state-owned like the pension systems!

[Ucy]

I have a grandmother (who owns a small factory) and uses/used this kind of scheme to improve her workers wages and the workers were/are actually doing well. I know one of her male worker who lived quite comfortably compared to his neighbors.

I learned the so called pyramid/ponzi scheme is ancient to our culture and that it was used to sustain communities in difficult times. It still works for them to thesedays.

So, would you encourage me to go tell my grandmother to abandon this scheme because government and Internet people think it is evil or illegal? Well, thank goodness the local authorities do not interfere too much in the people's lives and culture there. And it is a thriving community that depends less on government,

I think such scheme could be ran properly and sustainably if done right

[Thirdspace]

2. From the Ponzi, legitimate and real businesses are ran. In fact, an entire eco-system can be built around the simple ponzi. From investing in other legitimate investments to small brick and mortar SMEs, ponzi money can "expand" to so many horizons.
~
These allied businesses, are not in and of themselves "ponzi" but may have been capitalized with ponzi money. Now, if any of these endeavors "takes off" and perpetuates the ponzi or prolongs it, doesn't that make the ponzi not a ponzi?

ponzi only relies on cash inflows from new investors to pay the investment interest of old investors
we would not call it a ponzi scheme if it has real business activities that can generate income
and a long lasting pyramid is just a ponzi that runs with good cash management
sooner or later, as more investors cashing out their money, the pyramid will collapse

[Freshmen]

Lol, maybe after building those legitimate businesses, those that are behind the ponzi scheme might decide that it is time they stop this ponzi thing and focus on the real business… so what do you think is going to happen when they decide to make this kind of decision? A ponzi is still what it is, though there is the possibility that it can run for a long time, but if these business decides that they are no longer going to be part of it, then that means that it is over… unless that community continues to grow. Take for example – Bitcoin. The thing that is holding Bitcoin is the strong community… and since it keeps on growing, it will be difficult for Bitcoin to stop.

[FanEagle]

I have seen plenty of mlm type of ICO as well and nobody talks about that, it was the worst type of coin offering I have seen and nobody really cares about it. You pay a certain amount of money to get that coin from another person and then that person keeps their coin plus gives you their coin, then you sell it to someone else and you keep yours but get your money back and you can sell it to as many people as possible.

It is literally that way that they are getting funded as well as mining that as well. It is the worst thing that happened to crypto currency because we already have the ponzi schemes in the world as of right now and we do not need it to come to crypto as well, we have something good here and we do not want it to get blown off neither, we just want to keep it as it is.