Is Bitcoin a pyramid scheme? Automatic translate

Bitcoin suddenly burst into our lives. Many people are suspicious of cryptocurrency and consider it a financial pyramid. Are such fears justified? Is it safe to buy cryptocurrencies on Bitcoin exchanges ? (Follow the link for ratings of such exchanges). ₿itcoin is not a scam or a financial pyramid and should be purchased on specialized exchanges. Now about everything in more detail.

What is a financial pyramid?

A financial pyramid is a fraudulent organization. It, like an ordinary bank, attracts money from the population, promising to pay income to depositors in the future. At the same time, incredibly high interest rates are promised, which can reach 100% per month. Often a special legend is composed for clients, explaining where such incredible profitability comes from. For example, recently the organizers of pyramid schemes say that they are using robots for currency trading.

In reality, the first clients are paid interest from the money that other investors carry after them. As long as more and more people bring money into the financial pyramid, it can function. But inevitably there comes a time when the incoming money is not enough to pay interest. Then all the organization’s offices are closed, its “managers” stop communicating, and the organizers of the pyramid disappear along with the clients’ money.

Comparison of Bitcoin with a pyramid

Any pyramid is an organization. But is there any company that produces bitcoins and sells them to people? No. Bitcoins can either be purchased on an exchange from other people, or obtained through mining. The entire system is completely decentralized; there is no single organization responsible for the circulation of Bitcoin. All owners of Bitcoin wallets are in an equal position.

But someone created the Bitcoin system? Yes, its creator is a certain Satoshi Nakamoto. Most likely, this name is just a pseudonym, behind which lies not even one person, but a group of people. They created the necessary software. Maybe there are some loopholes in the program that give its creators privileges and opportunities for fraud? No, because the source code of these programs is open. Anyone with a fairly good understanding of programming can look at the code and find loopholes in it. If they existed, they would have been discovered long ago.

The next feature of pyramids is the guarantee of high interest rates. But in this case it is not there. Bitcoins were not initially positioned as a means of generating income; they were only a convenient means for money transfers around the world, and nothing more. When a person buys bitcoins, he simply receives a digital product. No interest is accrued to his account. You can make money by selling bitcoins, but none of the creators of the cryptocurrency ever guaranteed that its rate would rise!

Pyramids are also distinguished by an aggressive advertising campaign - this is how they attract investors. The growing popularity of Bitcoin has caused an abundance of publications about cryptocurrency, but is there advertising among them? Does any company offer Bitcoin related services? No, such advertising almost never occurs.

At its core, Bitcoin is simply a commodity traded on exchanges, just like gold, silver, platinum, oil, and grain. Critics say that, unlike regular goods, cryptocurrency has no real value, but this is not true. Bitcoins are an incredibly convenient means of payment. Already, many migrants from Mexico working in the United States are transferring money home using cryptocurrency. Even with a commission-free transfer, the money will reach the recipient in just a few hours.

Conclusion

Bitcoin is not a financial pyramid, but a convenient means of payment. Most people use it to transfer money, not as a source of wealth. The possibility of making money on cryptocurrency rate fluctuations is only a secondary feature of Bitcoin, which is also characteristic of more familiar currencies.