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Is Bitcoin a Pyramid Scheme?

Do you find yourself asking the question: Is Bitcoin a pyramid scheme? When it comes to people wanting to make money as quickly as possible, not even a pandemic can change that. The problem with this desire to make it big in a flash is that people can become prey to frauds and scams. This is especially true of cryptocurrency.

Before we unpack if it is or isn’t, let’s look at what a pyramid scheme actually is.

What is a pyramid scheme?

When it comes to pyramid schemes, you need to know that it’s an investment model that relies on recruiting new investors to make money. The thing is, these schemes usually promise high returns for little or no risk.

In most cases, the people at the top of the pyramid are the only ones who make any money and the people at the bottom of the pyramid most often lose their investment.

Let’s answer the important question: Is Bitcoin a Pyramid Scheme

Can you put cryptocurrency such as Bitcoin and pyramid schemes in the same bucket?

Some are wary of cryptocurrency as a result of much speculation in the market. The reality  is that Bitcoin is in fact NOT a pyramid scheme and here’s why:

Bitcoin never promised buyers any investment return

Watch out for a promise of abnormally high or consistent returns to investments. Satoshi Nakamoto, the inventor of Bitcoin Cryptocurrency, never gave a promise like that.

There isn’t any secrecy or behind the scenes activity with Bitcoin

With most pyramid schemes, the distribution of information is on a need-to-know basis. There are always people in the loop that know more than others. As a result, this creates an air of mystery and makes people more susceptible to scams.

With Bitcoin, all the information you need is readily available online. Nakamoto’s white paper is there for anyone to read and the code is open-source and available for anyone to review.

Transactions are public and transparent

On the blockchain, all transactions are visible to everyone. This means that it would be very difficult for someone to funnel money into their own pocket without anyone noticing.

There was no pre-mine with Bitcoin 

Nakamoto mined the first block himself and there was no pre-mine where he allocated a larger number of coins to himself.

Bitcoin was actually developed by a voluntary user donation and revolving group of major stakeholders. So, there was no pre-mining.

It doesn’t have ‘one leader’

There is no one person or group in control of Bitcoin. It’s the consensus of the community that makes decisions.

This is unlike pyramid schemes where there is always a central leader that calls all the shots.

Bitcoin is not a pyramid scheme

So, there you have it, clarity on this important question that many people ask. The reality is that Bitcoin is an excellent investment and one that you should consider.

Jason Conor Verified

Editor-in-Chief of the BitcoinWisdom site, I'm responsible for ensuring all the content on our website is accurate, relevant, and helpful. I am a cryptocurrency advocate and I have been following the crypto space since early 2012. I have written extensively about Bitcoin and my work has appeared in some of the most respected publications.

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