Bitcoin is a pyramid scheme

On January 2, economist Tendayi Kapfidze claimed that Bitcoin is a pyramid scheme. He stated that people can only earn money based on the number of new incomes.

Kapfidze also claims that Bitcoin

“It has no real utility in the world. For ten years he has been trying to create a utility for them. It is a solution in search of a problem and has not yet found a problem to solve. “

Of course, the whole world has taken over the news including the Romanian publications Digi24 and WS.

What is Bitcoin?

Bitcoin is a peer-to-peer electronic money system (P2P). The basic principles were introduced in the whitepaper published by Satoshi Nakamoto on October 31, 2008. Officially, the first Genesis block was generated on January 3, 2009.

Over the years, Bitcoin has attracted new users, traders and investors. Most of them were attracted to the idea of ​​a global network, without borders, decentralized, which allows anyone to send money to someone else at any time. Moreover, due to its decentralized nature, Bitcoin also increases the security and speed of the transaction.

As the popularity of Bitcoin increased, and the currency reached the maximum value of $ 20,000 at the end of 2017, institutions began to pay attention. It is the first application of blockchain technology and the best alternative to digitizing the global financial system. It has the potential to enter the mainstream as the first global currency.

Bitcoin is not perfect – it is still young and unable to expand as well as highly volatile, but it is certainly not a pyramid scheme.

What is a pyramid scheme?

According to the US SEC definition, a pyramid scheme works based on the idea that participants earn money only by recruiting new members to the program. These systems promise extremely high profitability in a short period of time. A pyramid scheme only requires participants to contribute money and convince others to do the same.

The money that comes from new recruits is used to pay early-stage investors. This means that the scheme will collapse when the expenses cannot be covered by the contributions of the new members. This system is met at the OneCoin project.

Is Bitcoin a Pyramid Scheme?

Bitcoin does not work this way. Cryptocurrency has attracted users looking to exploit price changes for quick profits, but the project has never invited them to invest solely for this purpose. Bitcoin has emerged as a decentralized and transparent payment system, which returns power in the hands of people. It has connected the world with its blockchain network and has become one of the most efficient money transfer services in the world.

It is true that it still has problems with scalability, but the core technology – blockchain – and the ceiling of 21 million units prevent problems such as inflation. This ceiling is responsible for the price increase. As demand increases, so does the price of Bitcoin.

Meanwhile, Bitcoin has also led to the creation of countless other cryptocurrencies (altcoins). They have developed solutions for a wide range of use cases in the real world, from improving the supply chain management to developing smart contracts.

They also provided a solution for those who do not have access to banking services and bring transparency and immutability to transactions. Removed intermediaries from financial transactions. Put simply, Bitcoin promises security and financial change, rather than big profits for small amounts of money, as a typical pyramid scheme would.

It is understandable that the “experts” from Digi24 and WS are in Goa after Traffic! That is why it is essential to make our own documentation and to question any information that appears on the big publications.

So, is Bitcoin a pyramid scheme? Tell us your opinion in the comment box.