Pyramid trap? Pyramid quagmire? IDK, but "scheme" implies something I don't think is there - control.
People buy it because they expect the price to go up. The price goes up so more people buy it expecting further gains. The fundamentals arguably don't justify such a high price, and so you have a speculative bubble. Eventually, the bubble will pop and most investors will lose money.
I suspect BTC is a bubble because everything it does can be done better by other things. I also suspect that Lightning is fundamentally insecure. If you analyse the true intentions of the people who use it, there's no sober purpose; they just want it because they expect the price to go up. It's not about helping the developing world; because if it was, then there are better but more boring ways of doing it. Hence, it's a bubble built from speculation.
The phrase is "financial market"
I believe that bitcoin began as a straightforward "pump and dump" scheme, dressed up in a techno-libertarian narrative to appeal to its intended marks, young tech males with disposable income. As the size of the market has grown, I suspect the original cartel holds a smaller percentage of the outstanding supply, but I'll bet it's still enough to move the market deliberately when they choose.
Then again, I also think most tech stocks are just stupid. Especially Tesla, but thankfully I'm not either betting against them. Let's see if I'm proven correct in long run.
If you think about it, many people make several million dollars over their life time but see it as to high of a risk to put 10k into something that could go to zero but it also could go to 100k or even more. That does not make much sense. The question should not be "should I risk the 10k? The question should be "am I in a financial position that allows me to lose 10k?" If the answer is "Yes" then consider doing it, you will not miss the 10k at the end of you life but you will remember what you did with the 100k if it happens.
I don't think it's about risk, it's that if you hold stocks or crypto or many other kinds of investment, and your holding is worth $x right now, if you're a believer in the efficient markets hypothesis, you have no real idea whether it's going to go up or indeed down in the future.
I bought a house because it's a place for our family to live, not because I belive it's going to appreciate in value. If you buy ten houses, you need to have information - or sheer belief - that your investment is going to pay off.
It’s a use case I didn’t consider a decade ago.
But gold is also a commodity, and I don't think I've ever heard it called a pyramid scheme.
Source: https://grow.acorns.com/warren-buffett-why-gold-is-an-unprod...
Crypto isn’t so much a commodity as a collectible like a stamp or a beanie baby.
But it IS a currency.. It is uses for daily payments and legally considered a currency in multiple countries today. I fully expect that list to balloon up over time.
You're talking about USA in 2022 and not the rest of the world or the future.
According to current (May 2022) regulatory framework in the USA. In other countries it is currently a currency.
- Donald Trump
Not really but I am sure he is a practitioner of the philosophy. The actual quote is from H. L. Mencken and applies to both money and politics (which might be the same thing:)
No one in this world, so far as I know—and I have searched the records for years, and employed agents to help me—has ever lost money by underestimating the intelligence of the great masses of the plain people. Nor has anyone ever lost public office thereby. The mistake that is made always runs the other way. Because the plain people are able to speak and understand, and even, in many cases, to read and write, it is assumed that they have ideas in their heads, and an appetite for more. This assumption is a folly.
I know there are stocks that don't do either of those things (although rare) but the idea is they will one day in the future. You're still paying now for a piece of future profits. That's very different from a pyramid scheme.
We've spent many years learning exactly what those things are thanks to all this insufferable nonsense. I know more about crypto than practically 90% of the crypto community. I know all the personalities, the history, the fraud, the crime, the grift. I've read countless whitepapers. I've learned about 'traditional' finance.
All because of the brigading army of the insufferable.
