Cryptocurrency pyramid financial bubble. Is Bitcoin reliable, is it a pyramid, is it not a bubble - can Bitcoins disappear? Exchange trading cryptocurrency

05.11.2017 17:46

Even children today talk about cryptocurrencies, discussing the rise in their prices and other aspects. Numerous experts, bankers, and investors do not stand aside either. At the same time, all people are divided into two large groups: those who consider Bitcoin and similar currencies to be the future, and those who consider it a scam. At the same time, many factors today indicate that this is precisely financial Pyramide, which will collapse very soon.

What is Bitcoin?
Bitcoin is new payment system, the so-called cryptocurrency. In this case, the funds are electronic, but if necessary, they can be exchanged for real money. The system was developed by an unknown and mysterious character named Satoshi Nakamoto back in 2009. Then the creator simply posted information on the website about the new currency and the principle of its operation. Then other people were involved in the development and promotion of this phenomenon. Moreover, even then they said that it was all a complete scam, and it was not worth investing in it. But there were a considerable number of enthusiasts who began to shout about the great future of cryptocurrency.

The essence of the system:
Regular user, such terms as bitcoin, mining, cryptocurrency are shocking. Not everyone can fully understand what it is and how to use it. This system is a kind of peer-to-peer network that operates at the expense of new participants. Computer solves complex problems computing tasks, thus creating some blocks. Anyone can engage in mining if they have a basic set of tools:

Hardware part. Computers, or rather video cards, are used to mine cryptocurrency.
Software.
Source of energy.

It is worth noting that electricity costs a lot of money, since the system must operate around the clock to extract currency.

Signs of a scam:
Initially, when this system appeared, experts began to say that it was a financial pyramid that would collapse sooner or later. Even today, participants’ reviews can be found very different. Some will argue that electronic currency the future, while others are sure that this is all a deception and a scam.

There are some serious signs that Bitcoin is another pyramid scheme that will collapse pretty soon:

The system does not have a headquarters, office or any governing body. Many consider this a plus, but do not think that any currency and funds must be backed by something. There must certainly be a body that will control the exchange rate, its turnover and many other factors. Bitcoin has none of this.
Any pyramid is built on the basis that the number of participants should constantly increase. This main principle any pyramid. In the same way, making money on bitcoins is based on attracting new participants. People who are just starting to mine, that is, extract cryptocurrency, thus pay for the needs of the previous ones.
Bitcoin, like any cryptocurrency, has no expression. If you compare it with the dollar, for example, then there is nothing in common. Any national currency reflects the state of the economy, GDP volume and other factors. Bitcoin has no confirmation behind it.

Thanks to these factors, many experts say that Bitcoin is nothing more than a deception of users. Sooner or later the system will reach its limit and collapse will occur. At the same time, it is difficult to predict what will happen to the owners of bitcoins, who at one point realize that they have no funds and cannot exchange or sell them.

Legal aspects
There are different currencies in the world according to the intensity of their circulation. So, there are popular currencies, such as the dollar, which can be bought in any country in the world, and there are less popular ones. Moreover, these currencies are guaranteed by the state as a banknote. Any currency can be exchanged for another unit, or goods can be purchased for them. With Bitcoin, everything is different; it is not provided by the state in any way. On this moment Most countries have not yet decided for themselves how to treat cryptocurrencies, whether to recognize them or not. But the main aspect is that bitcoins are not guaranteed by the state or law. Therefore, if a person loses all his savings in cryptocurrency, then no state will be able to do anything in this case, since such systems are not legally a currency.

Prospects
It is difficult today to say exactly how the story with cryptocurrencies will develop. At the same time, more and more new systems are constantly appearing that compete with each other. Thus, the growth factor in their number also indicates that these are financial pyramids that will collapse sooner or later. But the most popular cryptocurrency today is Bitcoin, the collapse of which will be the loudest and most noticeable for many participants.

IN Lately rumors persist that bitcoin pyramid similar to MMM, which means it is another “scam”.

In this case, the question arises whether you need to invest your savings in electronic money or is it worth remembering old story and think three times about how to make such a decision? Let's try to figure it out.

The similarity of Bitcoin to previously known financial pyramids

Bitcoin is often compared to the once sensational MMM company. It all started in the 1990s. The Mavrodi brothers played on the desires of lovers of “easy money” and organized the largest financial pyramid in the last 100 years.

What is the essence of the pyramid? Let's assume that there is an organization that allows you to earn money on your savings if you invest them at very high interest rates, for example 1000% per annum. For this you become the owner of shares in the company. Shares are constantly growing, interest rates are becoming simply cosmic. Naturally, the thought of returning the shares does not even occur to you.

It's a shame, but MMM is not the first large-scale fraud in human history. Such games appeared much earlier electronic money and televisions. Everyone knows the story of tulip mania in the Netherlands. In the 17th century, the cost of tulip planting material reached the point that a few bulbs could buy a fortune. But speculators moved in and prices collapsed. Many lost not only money, but also property.

MMM shares grew by 100% in a month. You can see the rate for today. Bitcoin is growing at no less speed. Isn’t that fantastic for a few hours to go up in price by $2,000? So is it worth investing your savings in new currency? What is the risk of losing money? Is Bitcoin a pyramid or a real reliable currency? There are many questions, and it is very difficult to give a definite answer to them

Bitcoin is indeed somewhat similar to MMM, but still they are different things.

A financial pyramid represents raised funds, and the payment of income occurs at the expense of early cash investments.

Cryptocurrency does not have a guaranteed return since it does not consist of funds that investors invested in it at an earlier stage.

However, pyramid schemes involving Bitcoin can still take place. Therefore, you should not go to sites where you need to invest electronic money and invite many friends to generate income.

Bitcoin financial pyramid or reliable investment

Behind any pyramid there are always people who have only one desire - to take your money.

Things are completely different with Bitcoin.

Considering that cryptocurrency is decentralized and has great importance as a means of payment, it can easily be invested in. Large firms accept bitcoins as payment for goods or services. They are recognized by world banks.

All these factors bring us to another difference. After all, many people believe that electronic money is not secure. This is very reminiscent of the MMM company, in which the value of shares grew simply out of nowhere. And if we take the classical understanding, then Bitcoin is really not backed up by any gold and foreign exchange reserve. However, to be fair, buying a gold bar from a bank with dollars is also impossible.

The value of electronic money is that it is accepted as payment for goods or services. We can say that their security is confirmed by such physical quantities such as labor resources, electricity and computing power.

Experts say that if MMM simply scammed citizens out of money, then cryptocurrency is the economy of the future. So, the assertion of some skeptics that bitcoin new pyramid highly doubtful. In any case, electronic money will be used for decades to come.

However, it still somewhat resembles a pyramid. I still remember the huge speculation on the stock exchange, the very significant growth and the terrible hype around this currency. After all, with an increase in growth rates, the number of people wanting to earn money increases, and not always honestly and according to the rules.

There is another fact that makes Bitcoin look like a pyramid: risk. After all, many people want not only to invest their money in cryptocurrency and wait, but to make money on a floating exchange rate. Experts say: “Investing money in Bitcoin always carries a lot of risk.” And you shouldn't neglect this. After all, any cryptocurrency can collapse at one moment. The exchange rate drops sharply and the natural reaction of a person who knows little about this is to quickly sell everything he has so as not to be left “penniless.”

But you can also make money from this. After all, after a while the exchange rate, as if nothing had happened, will begin to rise. The main thing is to wait and not panic. And even if skeptics say that Bitcoin is a pyramid that will collapse, there is still no reason to say this.

Based on this, we can answer, why bitcoin is not a pyramid:

Lack of guaranteed income.
Lack of people behind it.
Security is confirmed by physical quantities.

What is the risk of investing in cryptocurrency?

No matter what they say, Bitcoin continues to grow and breaks all records. Let us recall, for example, November 17 of this year, when the rate rose to $8,000. This year it has grown by 740%.

The balance between supply and demand is always important. If there is such a demand for cryptocurrency that leading companies and investors are willing to pay $8,000, then at this stage Bitcoin collapse is almost impossible.

Of course, one should not discount the fact that it is possible that Bitcoin is a financial pyramid that will one day collapse miserably. But you shouldn’t dwell on it either.

Investing always involves risk and that's completely normal. The main thing is to always remember that you can invest only those funds that you are not sorry to lose.

And yet, no matter how they consider whether Bitcoin is a financial pyramid or the currency of the future, its rate is growing, and many will still be able to make money on it.

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As for the first statement, the Ministry of Finance of the Russian Federation, supposedly after a long and persistent search, found convincing evidence of a grandiose pyramid of tokens in their Bitcoin-based trading, when last week there was a sharp drop in the value of this cryptocurrency. Deputy The Minister of All Centralized Russian Finance found confirmation of this thesis, looking at the Bitcoin exchange rate chart, and expressed condolences to Bitcoin investors, who, in his opinion, were unlucky.

He even advised those who have not yet decided on their relationship with cryptocurrencies that it is futile to try to buy them at the lower exchange rates and sell them at the peak of the exchange rate. With this statement, of course, the official Alexey Moiseev definitely opened a new financial America.

True, a certain incident happened here, and the inconsistency of the opinions of this deputy was revealed. minister and head of one of the departments in charge of customs and tax policy in the Ministry of Finance, who sent out a letter explaining that when carrying out transactions of purchase and sale of bitcoins and other cryptocurrencies, a special procedure for their tax administration is not provided. The amount of tax payments on such transactions is determined by individuals and legal entities independently.

Another representative, not of the executive, but of the legislative branch of the Russian Federation, who, by the way, works in the State Duma financial markets a certain Anatoly Aksakov previously stated that there is an amazing similarity between Bitcoin and a financial structure in the form of a “pyramid” created by Mavrodi. It is also absolutely unsecured and is of interest only among illiterate investors. Like, no matter how much you tell them or explain it to them, but people are blinkered by the desire to earn money right away and, moreover, a lot. And those who are interested in this deliberately create a stir through various PR events in order to maintain a high degree of attention to Bitcoin. But they have one goal - they need to throw off their future useless token assets to the simpletons.

To clarify the situation in which these judgments were made by representatives of both the executive and legislative Russian authorities Let us recall that after the announcement of the cancellation of one of the “cue ball” hard forks, its rate from Wednesday, when it reached 7 thousand 900, fell by Friday to 5 thousand 500 American fiat money. But since Monday, his “health” has improved to 6,700, and is now at the level of 6,500 American Reserve Banknotes.

Not all ICOs are created equal

Regarding real “pyramids” with all the ensuing circumstances of deception and fraud, there are examples, as they say, a dime a dozen. One of these followers of the great schemers - one literary, and the second - quite physically tangible, who had the names of Ostap Bender, as well as the vainly mentioned Sergei Mavrodi, is a certain Pavel Krymov. He, as they say, without any doubt, immediately announces four ICOs. Moreover, they are so scammy, or have all the signs of “pyramids”, that anyone who understands ICOs at least at an initial level is convinced of this.

First of all, any potential investor in a crypto project studies the documents of the initial token offering company. And what do we see as a result on the pyramid builder’s website? Instead of a whole mountain of documentation, ranging from registration documents, a list of key persons, the results of the company’s financial audit, as well as the presence of a “white paper”, where plans and schedules for the need to receive certain amounts of investment should be clearly written out. There must be a clear explanation of where they will be spent and when and what payments on tokens are expected, and how they will grow. The company has only a vague explanation about dreams of collecting, out of fear, 15 million US dollars.

As for the history of the company’s activities, it can be imagined in such a way that a small company with Ukrainian roots, but registered in the Czech Republic, lived unsteadily. She lived and lived, regularly paying taxes and even paying salaries as much as... How many employees would you think? But in fact, two of his hired employees.

And then in 2016, with the arrival of Krymov, this little company becomes a company and begins to stir up the crypto movement. And off we go - banners for crypto projects, PR - companies promoting them and other gimmicks that create the appearance of seriousness of intentions.

And in the end - as happens with the next suckers - plans that were not plans at all collapsed, and there was nothing for the tokens to gain strength from. In short, the Crimean ICOs failed without, in fact, even starting.

Are Bitcoin and other cryptocurrencies pyramid schemes? All the pros and cons

The cryptocurrency segment is developing rapidly, but experts still disagree on the prospects. Some people are inclined to believe that cryptocurrencies are a financial pyramid, others dispute this point of view. The arguments of both sides are convincing, so it is impossible to give a definite answer to the question of what future awaits this area.

Today the market is showing rapid growth. The Bitcoin rate, which was less than $1,000 at the beginning of 2017, jumped to $6,000 in October. Bitcoin capitalization has already exceeded $100 billion, and in the market as a whole - $167 billion.

What falls under the terms “pyramid” and “Ponzi scheme”

The US Securities and Exchange Commission (SEC) defines the terms "pyramid" and "Ponzi scheme" as a type of fraud. It involves the payment of promised income to project investors through the following investments.

“The organizers persuade new investors to participate in the business, promising to invest their money in profitable projects with minimal or no risks. Fraudsters seek to attract new resources to make payments to previous participants, creating the false impression that they are profiting from a legitimate business,” the SEC explains.

British regulators define a pyramid scheme as an unviable fraudulent scheme in which some people involve others in a business based on a non-existent or worthless product.

The following can be distinguished key characteristics pyramids:

Managed centrally. At the core there is a certain company that can “burst”, leaving investors with nothing.
High incomes are promised.
The product it produces is unlimited in volume.
Such a product is usually useless and has no value.
Collapses when the investor base stops growing.

Supporters virtual currencies disprove the presence of each of the five characteristics.

If you evaluate cryptocurrencies according to these five points, it turns out that they have nothing in common with financial pyramids.

According to paragraph 1, in their favor is the fact that the platforms on which they are based are decentralized and do not have an organizer who could lead the system to collapse and disappear along with the remaining funds. The winners in this environment are traders who successfully played on the difference in the exchange rate, or miners who spend resources on mining and receive incentives in the form of a certain number of coins for trusting the system and ensuring its security.

According to paragraph 1 Such projects do not promise large profits. Cryptocurrencies are not considered an object of investment, remaining only a payment mechanism. Although some of their holders are trying to play on price fluctuations. In addition, the platforms are based on open source code, which is available to every interested party.

According to paragraph 1 The issue of cryptocurrencies is limited. The final number of bitcoins will be about 21 million, and, for example, litecoins - 84 million.

According to paragraph 1 Cryptocurrencies are far from being a useless product: many of them are actively used as a mechanism for transferring funds by both individuals and businesses. They have competitive advantages compared to other types of payments. This is especially important in cross-border settlements, which in the case of traditional currencies are complex and costly.

According to paragraph 1 If the base of participants in a certain cryptocurrency system stops being replenished with new ones, it will not collapse. Holders digital coins will also be able to use them. The price will just stop rising.

International Monetary Fund (IMF) Managing Director Christine Lagarde has spoken out in support of the sector. According to K. Lagarde, there is no point in rejecting virtual currencies. The day may come when people will prefer them.

Why is there an opinion that cryptocurrencies are a pyramid?

Many traditional financial experts view this market with distrust. The very fact that the founder (or group of founders) of the first cryptocurrency, Bitcoin, is unknown and hides under the pseudonym Satoshi Nakamoto, makes many doubt the transparency and reliability of the system.

As a feature of the pyramid inherent in cryptocurrencies, experts note the fact that the founders of the platform usually own a disproportionately large share of future income. In the case of Bitcoin, its creator S. Nakamoto was the only miner for some time. According to experts, he owns at least 1 million BTC. Considering that the Bitcoin rate has increased many times since its inception in 2008, S. Nakamoto’s profit can be calculated in incredible amounts.

If at first mining was a simple matter, then later the complexity increased significantly, and the reward for creating a block was constantly decreasing. Thus, mining becomes less profitable for subsequent participants.

As with the traditional pyramid, similar problems in cryptocurrencies are solved by moving away from old scheme and launching a new one. New projects in this area began to appear when participants considered the launch of other cryptocurrencies more profitable than mining existing ones.

CEO of JPMorgan Chase & Co. James Dimon said that Bitcoin, in his opinion, is a scam. A business in which currency “emerges out of thin air” cannot be done.

Another well-known figure in the financial world, the head of Oaktree Capital, Howard Marks, warned his clients against investing in cryptocurrencies. According to him, they are “another eccentricity or even a pyramid.”

According to G. Marx, in in this case people try to assign a price to something that, in principle, has no price.

Both experts emphasize that there is nothing behind cryptocurrency. Its value is zero, and this main characteristic pyramids. This view is widely supported in the financial community.

For example, shares have value because they represent a right to an interest in a company. Bonds are a promise by a government or company to pay income to paperholders upon maturity. Traditional currencies can always count on government support.

As for cryptocurrencies, they do not have support from a central authority. People buy them with the expectation that in the future they will be able to use them as a means of payment or receive money for them. If the only argument for investment is the unsupported expectation of making a profit in the future, then the value of such coins is called into question.

Many experts also dispute the fact that there is a limited supply of virtual currencies, noting ample opportunities to create the following projects with minor changes to existing algorithms.

And in fact? Authoritative opinion.

The existing knowledge base does not allow us to clearly determine whether the concept of “pyramid” can be applied to cryptocurrencies. Investments in this segment entail high risks for the user from a financial point of view.

12.10.2017

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There is a lot of skeptical talk about cryptocurrencies in general and Bitcoin in particular. What happens is that under the next news about the success of Bitcoin, someone writes an angry comment that Bitcoin is a financial pyramid, and you have to be a complete fool to invest your money there. They say that the bitter experience of MMM and others like it has taught no one anything, and they are again ungodly profiting from gullible investors.

Well, let's find out. First I'll give you financial pyramid definition, which gives the US Securities and Exchange Commission (SEC):

“A pyramid scheme (Ponzi scheme) is a form of investment fraud that involves paying purported profits to existing investors from funds collected from new investors. Ponzi scheme organizers often attract new investors with promises to invest the collected funds in projects with a high return on investment and minimal risk. In many Ponzi schemes Instead of full-fledged investment, scammers are busy attracting new Money, through which they will make promised payments to early investors and appropriate a portion of these funds for personal use.”

From this definition it follows that important factor for the pyramid is that past participants receive money not from an objective increase in value, but just money from new members. In addition, there is a certain central link in the pyramid - scam beneficiary which ultimately benefits the most.

I would further expand this with the thesis that the most important thing when identifying a pyramid is total mass of liabilities and total mass of value.

Let's take the same MMM as an example. New people join there and are promised that they will receive millions of percent interest on their deposits - accordingly, the total number of obligations of this pyramid to the participants grows. And the value of MMM is zero, because money is not multiplied there in any way, but is only redistributed between participants within the system. Thus, the value does not grow, and the imbalance between obligations and value becomes greater, since obligations are constantly growing and more and more new participants must be attracted to cover them.

As a result, there comes a moment when the pyramid is destroyed because it becomes unprofitable for the beneficiary. Judge for yourself: he has access to a supply of money with which he can escape. This money supply becomes more and more, and then the influx of users ends and the money supply begins to become smaller. At this point, there is no point for the organizer to continue playing the pyramid game, since his money is disappearing before his eyes. Therefore, he simply collapses it and runs away with the money, and 99% of investors, in general, are left with nothing. Here all factors converge: the mass of obligations has grown to enormous proportions, no value has appeared and the beneficiary is interested in escaping.

If we talk about cryptocurrencies in general, it would be more correct to immediately separate Bitcoin and all other cryptocurrencies, the so-called altcoins.

So, one cannot deny the fact that Many ICOs for alternative cryptocurrencies today are forms of financial pyramids. The cryptocurrency market is still largely unregulated, and there are many scammers who profit from popular topic, building financial pyramids or fraudulent schemes under the guise of new revolutionary companies that are developing fantastic technologies of the future. Most often, the price of such cryptocurrencies is based solely on speculation and deception.

However, this does not mean that absolutely all alternative cryptocurrencies are a scam. Some altcoins have a very clear and transparent pricing model. And in fact, today, in my opinion, cryptocurrencies like Ether do create value, and their price is not just driven by pure speculation.

Regarding Bitcoin– the fantastic increase in its value recently, of course, never ceases to excite the minds of critics, but in fact, everything with it is quite simple.

The first and most obvious difference between Bitcoin and a financial pyramid is no central beneficiary. Theoretically, of course, there are very old wallets with very big amount bitcoins, which in some sense can be considered such a beneficiary. However, initially there was and still is no official central beneficiary, and without his presence the pyramid does not make sense.

Second important difference– for Bitcoin with the growth of the user base and with the growth of pumped money value increases, because any economic system this value is directly related to the number of participants in this system. Moreover, given the fact that the size of the economy is always proportional to the square of the number of participants, and not to the number itself, the value of Bitcoin is growing much faster than the user base is growing, and there is no talk of inflating any kind of bubble.

And finally, another factor is that Bitcoin no obligations to anyone. That is, Bitcoin never promised anything to anyone, so Bitcoin, like a pyramid, in general, cannot collapse. Bitcoin is just a financial protocol for completing, validating and storing information about transactions among network participants. The Bitcoin code is in open access, each participant can examine the logic of the entire network, and some participants cannot simply appropriate the bitcoins of other participants.

Taking into account all of the above, we can come to the conclusion that Bitcoin does not fall under the definition of a financial pyramid. This is essentially a form digital currency, which is used by network participants, and the number of virtual ones for storing it today already exceeds 11 million around the world. There are many factors that determine the price of a currency, but one of the main ones is the volume of demand for the currency and the number of users of the currency. Therefore, it is only natural that as the network of users expands, the price of Bitcoin continues to rise. This is natural for any currency, and Bitcoin should not be considered a particularly suspicious anomaly.