Blockchain vs. MLM: Uncovering the Differences

News about the sharp rise and fall of Bitcoin continues to appear, causing many people who do not understand the whole story of Bitcoin to think that it is a scam and a pyramid scheme. This statement also affects blockchain technology and makes many people doubt it. Is blockchain a pyramid scheme? In fact, it is not a pyramid scheme. Blockchain is a distributed database technology and an underlying technology that can be used to build various applications, including digital currency (such as Bitcoin), smart contracts, supply chain management, etc. MLM is A business model, the nature and purpose of the two are different. The editor will explain it in detail below.

Is blockchain a pyramid scheme?

Blockchain itself is a computer technology and has no direct relationship with MLM. Blockchain is a new application model, including distributed data storage, point-to-point transmission, consensus mechanism and encryption algorithm and other technologies. Different from MLM, the definition, purpose, legality and sustainability of blockchain are obviously different. First of all, the definition of blockchain is a decentralized digital ledger that records the transaction data of all participants and ensures the security and consistency of the data through a consensus mechanism. MLM is an illegal pyramid organization whose purpose is to develop downlines. Secondly, the purpose of blockchain is to provide a safe, transparent, and traceable transaction method to solve the trust problems existing in traditional centralized systems. The purpose of MLM is to obtain

through developing offline and verify transactions. As the underlying technology, it can be used to build digital currency, smart contracts, supply chain management and other applications.

MLM is an illegal business model that makes profits by recruiting downline participants rather than by selling actual products or services. This fraud cannot be sustained and only a few at the top are able to profit. Therefore, participants should remain vigilant to avoid falling into the trap of pyramid schemes.

2. Purpose

The purpose of blockchain is to provide secure, transparent, decentralized transactions and data management, eliminate middlemen, and increase credibility and transparency.

The purpose of MLM is to obtain investment from downline members through a pyramid-like recruitment structure, rather than to obtain profits through legitimate sales of goods or services.

3. Legality

Blockchain technology itself is legal, and it is widely used in many industries, including finance, supply chain, medical, etc.

Myramid schemes are generally illegal because they violate regulations in multiple countries, including those governing fraud and pyramid selling.

4. Sustainability

Blockchain is a continuously evolving technology that is adopted by more and more industries and is widely used around the world.

MLM is an unsustainable model in which only a few people benefit from new members at the base of the pyramid, ultimately resulting in losses for the majority of participants.

What is the relationship between blockchain and MLM?

Blockchain and MLM are essentially two different concepts, and there is no direct relationship between them. However, some criminals may try to combine the concept of blockchain or digital currency with pyramid schemes to conduct fraudulent activities. In this case, the relationship lies mainly in the fact that these criminals are trying to conduct pyramid schemes or pyramid schemes by abusing the name of blockchain.

Some MLM activities may claim to be projects based on blockchain technology to gain public trust in emerging technologies, making it easier to attract investors. These projects may claim to take advantage of the transparency, decentralization, and security of blockchain, but in fact they may just use the cloak of blockchain to cover up the traditional MLM model.

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