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Comment by gruez | Hacker News Reader

sorry to be pedantic, but it's literally not multi-level-marketing? Specifically, it's missing the multi-level part. Your upline isn't getting $$$ when you sell a NFT. I suppose you can make the argument that if you then take the money and buy more stuff, then your upline gets paid, but that describes most distributor arrangements. Come to think of it, there isn't really even an upline. It's just a network of artists and traders with no set hierarchy.

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I agree. I kinda dislike when people throw around terms like pyramid scheme and MLM. And specifically calling crypto a ponzi. Yes there has been ponzi schemes done with crypto. But speculative bubble itself is not a ponzi scheme.

Pyramid and MLM are related concepts, and usually MLM is pyramid. That doesn't mean all pyramids are MLMs though. Same applies for other types of scams or structures.

Yes, but that may be nitpicking. The salient part is if it is a get rich quick scheme based on convincing people to join.

I know I'm a hopelessly naive hippy, but isn't there some option where we make our case by saying things that are true, rather than saying things that are untrue but alarming in the right direction? I feel like I personally would find online discourse much more helpful if we could do that.

Yes. Words matter, and accuracy is important. I'm still dirty on "literally" being rebranded to mean "figuratively".

Okay here we go. Call it a crypto scheme. Now someone else create the wikipedia article I did my part...

Who convinces people to buy Herbalife? People who have spent a bunch of money on Herbalife.

Who convinces people that NFTs aren't just a fad, they're really innovative and you should consider adding them to your portfolio? Not people who don't own any.

That still doesn't make an MLM, MLM's have a specific meaning.

Ok, let's call it a pump and dump scheme then. The end result is the same: high profit for those in control (early adopters) and latecomers get the bill.

NFTs are most likely pump and dump. Established cryptocurrencies aren't following that pattern though. They get bigger and bigger until they are no longer sustainable. That's much closer to a pyramid scheme than pump and dump.

It's a pump and dump.

Which is different than an MLM.

Honest question though: how long does it have to go on until it stops being a pump and dump in your mind?

When it's regulated and you can sue.

Then there's a potential to stop the pump's.

Good news, you can sue. Regulation is applied in some circumstances and there's a lot of movement for further clarification at the moment.

https://www.reuters.com/technology/us-sec-sues-bitconnect-fo...

https://www.courthousenews.com/class-claims-securities-backe...

https://markets.businessinsider.com/news/currencies/coinseed...

https://www.paulweiss.com/practices/litigation/white-collar-...

https://www.cbsnews.com/news/youtube-twitter-bitcoin-scam-pr...

Somehow I don't think you'll read those and decide it's not a pump and dump anymore, are you saying that it's not actually a condition for beliving it's something other than a pump and dump, but rather a mechanism that might reduce the desire to participate in a pump & dump?

Sue who?

Did you click through to any of those links? People that are running scams. If you have standing sue them.

If you look at eg. Bitfinex and Binance. It's hard to find a llegal entity in your country, if you don't live in the US.

> The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities — that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future — will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.

But at least the solid tech companies had revenue in 2001. There's a long history of useless assets becoming a part of a bubble that pops. And this even worse than Beanie Babies. At least with those, if someone still enjoys them in 2021, they can put them on a shelf. Are you going to frame printed QR code of a NFT and tell your friends to scan it with their phones to verify what virtual asset you own?

Cryptocurrency has been through -80% draw downs multiple times in it's history. The question is, is the entire history a story of a pump and dump or are you saying we are currently in a smaller bubble & bitcoin should be ~5k instead of ~40k?

Why has it been able to withstand a draw down of 50% 4 times in 13 years?

I was referring more to NFTs than cryptocurrencies. They went from nothing to huge too quickly. NTFs are closer to Beanie Babies, Bitcoin to baseball cards. The big gotcha with NTFs, and why they're worse than Beanies, is they're incredibly hard to price because they're non-fungible, and unlike art (also non-fungible), it's not clear which tokens are desirable or why.

When an NFT project proposes a value share and airdrops amongst token owners, and also has a royalty fee paid on every transfer [1], I think the “up line” and MLM aspect come more into play. There is value for you to inflate the price of the NFT as it benefits you and the other owners directly as sale prices get higher.

[1] https://support.opensea.io/hc/en-us/articles/1500009575482-H...

I think you could argue that the 'upline' acrues value even if they aren't paid directly. Greater interest in an NFT drives the value up.

As with everything NFT crypto, the value is all probabilistic anyways /s

> I think you could argue that the 'upline' acrues value even if they aren't paid directly. Greater interest in an NFT drives the value up.

right, but uplines getting paid in a necessary but not sufficient condition for MLM. In a MLM it's usually derived through their downlines. The mechanism described is a general benefit to all participants in the system which isn't very MLM-like. platforms (eg. youtube) tend to have the same "general interest drives the value of the ecosystem up" (ie. creators convincing other creators to join your youtube clone increases your site's catalog, which boosts the quality of recommended content you can show to your user to get them to stay on longer, making it easier for creators to get views), but you wouldn't call that a MLM.

I think it has many of the characteristics of an MLM

* value is accrued by getting new people involved who buy something

* that they are buying in part because they believe they can make more value by selling it to someone new they recruit

* non-salaried workforce

* built on relationships and word of mouth

In the end, its an analogy not a proof of work...

Those points also apply to a wholesaler of physical goods

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