RE: Ponzi Schemes Now Legal
If you live in a place where crypto is considered money, it changes nothing. It is not a Ponzi scheme either way. In a Ponzi scheme, investors believe that their gains are coming from somewhere else. Stock investments, sales, etc. Everything is hidden and they have no idea that their gains are coming from new investors. This it's completely different due to the fact that it is 100% transparent. Nobody is being schemed or scammed. Everybody knows exactly where everything is coming from. There is nothing hidden.
As for the first question. People would send money so they can make it themselves. In America we are forced to do this anyways. Most government programs are set up this way. The one that I have mentioned above is actually a model taken from a program known as Social Security. The one percent dropping off the top can be compared to people dying of old age on Social Security, although in Social Security that percentage would be a lot higher. When they raise the age at which you are able to draw Social Security, what they're actually doing is Raising that percentage.
New investors come of age, get there first jobs, pay into this program and see nothing in return. The money from new investors is used to pay the old investors. Once those investors get to a certain age they get paid from more new investors and so on. If they should die before they reach that age however, their money is gone. There is nothing illegal about this nor is it hidden.
I for one, would definitely buy into a system like this if it was 100% payout. Social Security unfortunately is not yet we are forced to pay into it. In a system where the top people drop off and are replaced by those beneath them, nobody loses. In fact, most of the people who have dropped off would probably buy back into it because they will have made money. This new money will then be paid to the others forming a Perpetual Circle that will grow in size.
Thank you for taking the time to write this. I will try to also explain my views here.
Social security is a scam. How you present it, was not the way it was supposed to work. A proper pension plan saves the money you put in, with compound interest, and uses it to pay you back. You have only explained why social security is a ponzi or perhaps pyramid scheme since we 'know it'.
So, I am changing to pyramid scheme, if indeed ponzi means you don't know, in a pyramid scheme, you know. The money making aspect of Drug Wars is a Pyramid Scheme, and no amount of knowing will change the fact that it will not be profitable to the vast majority of players, probably starting from here on forward. Please note that I want to see them turn the narrative to game play not money making. I believe I have their best interest in mind. I am not saying these things because I am bitter or hate anyone.
They can use other income streams, like from posts, to add to the pool, this will improve the situation but the math currently is not looking good, mostly because of how successful it was at first. I am the first one to say to people that it is a game and should be enjoyed as such. This is because the money making aspect is a pyramid. If it was an investment vehicle, that would be different. It is not. It is currently a game with a pyramid attached.
Talking about your circle scheme. Let's do some math. Again, I am not bitter, its just math. Let's say we all put in 100 dollars together. Combined, we can divide up 100 dollars however we want, but we are never getting more that 100 out of the circle. So if anyone makes 1 dollar, someone has lost one dollar. No amount of new recruits is going to change the fact that money in cannot be greater than money out.
So if we are not making money, why would we put money in? In fact, as long as the opportunity cost of money is not negative, rationally we should avoid this circle. That is the case with steem. Let's say the next best thing to do is power up into steem power (this is probably not true, because there are many more profitable things to do with steem, check this article). Just by having the steem powered up I earn interest. Why then would I feed it through the circle for zero return? Your circle scheme is mathematically a money losing operation.
I agree that money in does equal money out. If we all put in $100 combined then that would surely be a $100 paid put to us. If we were the only people in it and no one else joined then this is the way it would stay .
If other recruits join during that time and put in another hundred then that would be 200 out split amongst us. If the circle starts to shrink during this time the top 1% would be forced out (us), leaving the rest to find new recruits.
While the circle is growing however, everyone is making money. It is only when that starts shrinking that money will start being lost. The bot would be attached to the blockchain as a permanent fixture so it would surely go through phases of growing and shrinking.
This would leave it up to the people within the system to ensure its growth and maintain their profits. If a group of people did not work to make it grow by even 1 recruit per week or any set number, then they would flatline or maybe even loose a small investment.
The bot could possibly sit dormant for months or even years after a flatline while users are making nothing or breaking even. One recruit could come in and recruit many others which would then bring up a spike due to their hard work. No, of course everyone won't win in the end. But not everyone will lose either. When you are amongst hard workers it could be a winning situation