POWH (Proof of Weak Hands) says that they are a legalized pyramid scheme. Here is their website (archive version available here).

A pyramid scheme?

Basically anyone can buy or sell a POWHCoin for a set price. When someone sells, the price goes down 0.25%, and when someone buys, the price goes up 0.25%.

But there is a twist to this. Every time you buy, there is a fee of 10%. The Ether gained from that fee is distributed to all current token holders as a dividend.

So when you buy, you start out with a 10% loss. But you can slowly regain that loss and begin to profit as dividends pay out.

This is designed to act like a ponzi scheme does, the price exploding as people buy and get massive dividends from other people supplying fees when they buy. But then at one point people decide to cash out as they begin to have profit, and the price drops massively. Here is a photo of what would be a reasonable price chart over time. Note that POWH might stay in the Valley of "Ponzi Scheme" if too many people are frustrated with the fall and are done with it.

Image made by myself. License CC BY-SA (can remix, share, profit, but must state source and use same license)

Current price chart (found here)

All in all, POWH seems like an interesting experiment, and I can't wait to see how it turns out. I don't really want to buy it right now, but I highly recommend that you look into it.

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