Comment by capableweb
4 years ago
Oh, by that definition, even AAPL is a pyramid schema.
How about we leave the definition for pyramid scheme where it's already at?
> Pyramid scheme: making money based on recruiting an ever-increasing number of "investors."
> Oh well. We'll see, it might bounce back as these things do.
No, it won't. It won't regain the trust of the community and the project is dead in the water now, no way it'll recover from this.
> Pyramid scheme: making money based on recruiting an ever-increasing number of "investors."
This is correct. While looking into this for a friend I came across: "for a full year, you'll earn 0.5% APY on what each person you refer deposits" [1]. Still not a pyramid scheme, since 0.5% is a small fraction of the total yield paid out, but pyramidesque.
[1] https://stablegains.zendesk.com/hc/en-us/articles/4409440197...
It's not a pyramid, it's an inverted funnel.
AAPL has physical and IP assets which could be sold to make investors whole. While I have big issues with them, they're not in the same ballpark as this 'stable' coin company or pyramid schemes.
>AAPL has physical and IP assets which could be sold to make investors whole
While they might have some "physical and IP assets", there isn't nearly enough to "make investors whole" (ie. pay them back). If you invested $100 in apple earlier this year and AAPL somehow needed to be liquidated, you're only getting a fraction of $100 back.
The investor valuation vs actual company value is a different ordeal.
In the end, AAPL is building a product, that is wildly popular. Makes a massive profit (and writes it all off, which is another discussion), and spreads its wealth to investors. The products they make produces value in and of themselves. Without the stock, the iPhone, iPad, Macs, cloud services, etc would still be valuable and used.
Crypto does not have anything to back itself. It doesn't produce value in and of itself. If suddenly people stop valuing crypto, there would be zero services it produces, unlike an iPhone. If suddenly the AAPL stock drops to 0, they can expose the code for enabling iphones to work and the tech can continue to be used one way or another for an existing an practical utility.
That's the difference people are missing. Even a company like Figma, who produces purely digital products, figma, without any investment, is a useful digital tool which serves a purpose to people who use it, without any need for others to invest into it. Theoretically it can be converted to a self-hosted service without any updates, an d still be a useful tool. The income model doesn't impact the utility of the digital tool. Not so with crypto.
This is what drives me nuts about crypto enthuseists... they forget the crypto has no value. And even saying "neither does money" but money does serve a practical purpose. It allows for one person selling chickens to convert those chickens to long-term value. And while money is only as valuable as people make it, money is backed by a country's production and reputation, so there is inherent anchoring of money to the world.
So here's the thing, the difference between a pyramid scheme and a business is that in the pyramid scheme, all the wealth gets generated by selling shares to other 'investors', while in a business, all the wealth is generated by selling to customers.
Which is why one's illegal, while the other is publicly traded on the stock market.