Since the aforementioned reasons mean Litecoin has no future potential, it effectively functions as a pyramid scheme, rewarding those who get in sooner at the expense of those who adopt it just before it finally fails (and are left with nothing). This is not the case for Bitcoin, since it has significant potential to become a long-term currency and continually be beneficial to adopters no matter when they begin using it.Seems like an inaccurate statement, but despite seeing multiple requests in the discussions section to remove this criticism, it's still there. Litecoin neither qualifies as a Pyramid Scheme nor as a Ponzi Scheme:
As its name indicates, the pyramid scheme is structured like a pyramid. It starts with one person - the initial recruiter - who is on top, at the apex of the pyramid. This person recruits a second person, who is required to "invest" $100 which is paid to the initial recruiter. In order to make his or her money back, the new recruit must recruit more people under him or her, each of whom will also have to invest $100. If the recruit gets 10 more people to invest, this person will make $900 with just a $100 investment.Litecoin doesn't promote itself as an investment opportunity, nor does it require people to recruit other people in order to secure "residual income." There is no recruiter and there is no kick-up to the top. Ultimately, even if Litecoin is a bad idea, it still does not qualify as a Pyramid Scheme.
Bitcoin describes itself as an experimental digital currency. Reuben Grinberg has noted that Bitcoin's supporters have argued that Bitcoin is neither a security or an investment because it fails to meet the criteria for either category. Although it is a virtual currency, some people see it as an investment or accuse it of being a form of investment fraud known as a Ponzi scheme. A report by the European Central Bank, using the U.S. Securities and Exchange Commission's definition of a Ponzi scheme, found that the use of bitcoins shares some characteristics with Ponzi schemes, but also has characteristics of its own which contradict several common aspects of Ponzi schemes.So let's be intellectually honest and not label Litecoin a Pyramid Scheme or a Ponzi Scheme simply because we find it inferior to Bitcoin. Please stand up for intellectual honesty and expect a higher standard of intellectual discourse from the Bitcoin community.
On the podcast this week, Reuben Grinberg, a recent Yale Law School graduate now in private practice in New York City, discusses his paper, published in the Hastings Science & Technology Law Journal entitled, Bitcoin: An Innovative Alternative Digital Currency.Grinberg first gives a brief overview of Bitcoin, the decentralized, digital currency. According to Grinberg, Bitcoin can maintain Reuben Grinberg on the legality of Bitcoin JANUARY 31, 2012 QuoteGrinberg first gives a brief overview of Bitcoin, the decentralized, digital WHEN he was a Yale Law School student, Reuben Grinberg wrote one of the first academic papers about Bitcoin, a novel virtual currency that uses sophisticated cryptography to validate and secure Hindsight being what it is, there’s a consensus that Bitcoin was in bubble mode, says Reuben Grinberg, an associate in Davis Polk’s Financial Institutions Group, who has studied Bitcoins since By John L. Douglas and Reuben Grinberg1 Table of Contents nonbank firms creating innovative bitcoin and blockchain technology, marketplace lenders, roboadvisors and innovative security, authentication, and payments technologies. news and other sources of information. Justin Baer, Goldman Backed Symphony Communication In Talks to Raise
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