DeutschReports about pyramid schemes or snowball systems do not only exist in the field of cryptocurrencies. The term is derived from the geometric shape of a pyramid. In the figurative representation, the gradual increase in the number of investors, i.e. the participants in the business model, leads to a widening of the graphic. Pyramid schemes are characterised by the fact that investors recruit other investors, resell products and prices for products constantly increase. The system collapses when a certain price is reached. This ultimately affects all those buyers who joined in the last phase before the collapse.
Is Bitcoin a Pyramid Scheme?
While critics repeatedly refer to Bitcoin as a pyramid scheme, this is not the case. This is because there is no higher authority in Bitcoin for which the development of the Bitcoin price is important. The Bitcoin protocol continues to run as long as transactions are possible on the network. The level of the Bitcoin price is irrelevant for this.
