If you’ve spent any time on the cryptocurrency side of social media recently, you’ve likely seen at least one person shilling the benefits of a cloud mining business, or “one simple trick to multiply your Bitcoin overnight.”
It can be tempting to follow through on these “opportunities”, but there’s a problem — many of them are MLM companies, some of which could be hiding pyramid schemes. If you can’t separate the wheat from the chaff, you could end up losing a lot of money.
That’s why I’ve compiled a guide to understanding cryptocurrency MLM: what they are and how to find them.
What is cryptocurrency?
A cryptocurrency is simply a form of digital currency: you can use it to buy or sell goods and services, or even as an investment vehicle. Unlike the national currencies we’re used to, cryptocurrency isn’t backed or regulated by a central bank or government — the coin’s holders have final authority.
How is this possible? Every transaction or payment made using a cryptocurrency is recorded on a decentralized ledger. Those transactions are secured using highly advanced cryptography. Overall, the underlying infrastructure of cryptocurrency is called blockchain technology.
What is multi-level marketing?
Multi-level marketing (MLM) is an approach to sales that encourages the company’s salespeople to recruit new members. A salesperson who enrolls a new member will receive a cut of their recruits’ sales. Salespeople will also earn money from the sales of the company’s actual product or service.
While MLM isn’t a scam in itself, many direct selling businesses have turned out to be pyramid schemes in disguise. In this kind of organization or company, profits are funnelled to the top members of the business, leaving very little for anyone else.
MLMs, pyramids schemes, and Ponzi schemes have been around for decades. Still, the digital era has empowered them to expand: social media, online selling, and — the subject of this guide — cryptocurrency. The novelty of crypto can be confusing for many, making it a prime target for scammers.
Cryptocurrency MLM Scams and Other Schemes of the Past
Cloud Mining Scams — BitClub Network
The minds behind BitClub Network got cash payments from investors with the promise of purchasing Bitcoin mining equipment that would return profits for everyone. They also rewarded existing members for recruiting new ones.
Cryptocurrency “miners” use powerful computers to validate transactions that happen on the blockchain. Executing the algorithms that make blockchain technology so secure is an energy-intensive process that few can afford — but those who can are rewarded with the currency they’re mining. These are prime targets for cloud mining cryptocurrency MLM scams.
Understandably, many people wanted to get their own Bitcoin, a fact BitClub Network exploited: the money was never used to buy mining equipment, and the guilty parties were charged.
Crypto Ponzi Schemes — OneCoin
OneCoin probably fits the purest definition of a cryptocurrency MLM. It was also a Ponzi scheme, where money from previous investors is used to pay new ones in a continuous cycle. To buy the fictional coin, investors deposited money into an internal exchange platform that was shut down in January 2017 before people could withdraw their money.
OneCoin also sold plagiarized training and education materials and rewarded members for recruiting new participants. Their rewards were tokens they could use to mine more OneCoin. The kicker? OneCoin didn’t have an existing blockchain network, so it was impossible to mine anything.
Crypto Investment Funds — BitConnect
BitConnect made headlines at its 2016 ICO for its wildly energetic presentation. It made headlines again in 2018 for suddenly shutting down amidst countless legal cease and desist letters from government regulators.
BitConnects promised to turn your Bitcoin investment into millions with 1% daily returns but had little evidence to back it up. In truth, it was another Ponzi scheme and cryptocurrency MLM that relied on members to shill the platform to new investors.
Many people lost life savings in BitConnect, as its token (BCC) shed over 90% of its value after the shutdown announcement.
What to Look For in Legitimate Crypto Resources
Bitcoin, Ethereumm, and other coins still hold tremendous promise for the future of finance — despite all the MLMs, Ponzi schemes, and various other scams surrounding cryptocurrencies. Here are some things to keep in mind when validating legitimate crypto resources:
- Education is better than a fund. The crypto markets are volatile, so entrusting your investment to someone else might not always be a great idea. It’s better to find resources that teach you about the markets rather than promise to make you money, no questions asked.
- Reputable sources. Who’s the person running the organization? Is it someone with a solid professional reputation? Have real people reviewed their business?
- If it sounds too good to be true, it probably is. Cryptocurrency isn’t the silver bullet to making money online: it’s a complex asset class that requires education, investment, and knowledge to leverage properly.
The best thing you can do for yourself and your money is to follow these best practices.
Avoid MLM Plans and Find Reliable Ways to Leverage Crypto
Fortunately, The Plan with Dan Hollings ticks off every box on the checklist.
- It’s an education program, not a fund, where you’ll learn how to leverage cryptocurrency grid trading bots to earn a passive income.
- Dan Hollings is a marketing guru who has invested millions into trading digital currency for over three years — he was also the mind behind promoting ‘The Secret’, the book that went viral before we knew what virality even was.
- Best of all? The Plan doesn’t promise you millions overnight. It promises you the formulas and knowledge behind leveraging micro-profits to generate money steadily every day.
Curious to learn more? Learn more about The Plan HERE
Frequently Asked Questions
Is Bitcoin mining an MLM?
Bitcoin mining is not an MLM. Mining refers to the computation done on the blockchain to verify transactions. Since this is an energy-intensive and time-consuming process, the owners of those computers — the “miners” — are rewarded with new Bitcoins. However, many cloud mining operations have been discovered to be MLM Ponzi schemes.
Is the crypto space a pyramid scheme?
The crypto space is not a pyramid scheme. Cryptocurrency is an extensive family of technologies (contained within the larger field of blockchain) that support many new kinds of businesses. Like any new business space, there will invariably be fraudulent activity.
Is MLM a legitimate business?
Multi-level marketing, or MLM, is a legitimate business. Also known as direct selling, MLM remains legitimate so long as salespeople aren’t dependent on recruiting others to make a living. If the recruitment is the sole objective, the MLM company may be a scam.