NFT is an investment product that has become very popular in the 2020s. However, due to the hot topic, there are many scammers in the NFT world. For that reason, some people have pointed out that it is a pyramid scheme. I will explain the truth about it.
What are NFTs?
NFT is an abbreviation for “Non-Fungible Token”. It has the meaning of a non-fungible token, anyone can sell it, and it can be bought and sold without any complicated knowledge about blockchain. When NFT is resold, the reward to the author will be included. In recent years, interest in NFTs has increased, especially among young people, because it leads to long-term profits for creators.
What is a pyramid scheme?
A pyramid scheme is a system in which members invite other people and pay rewards to the top people. Since you are inviting people themselves, no reward will be generated even if you solicit a person who has been solicited once. Since the number of members will not continue to increase indefinitely, it is a system that will inevitably fail in the end, so many countries have banned it.
Difference from MLM
Ponzi schemes and multi-level marketing are often thought of as one and the same. MLM is legal. MLMs are legal because they sell products to other people, not people. MLM allows you to sell products to the same person over and over again, so you can increase your income as much as you want. It has a different profit model from pyramid schemes.
Why NFTs Are Called Ponzi Schemes
NFT is said to be a pyramid scheme. Here’s why.
NFT has loyalty rewards. This is misleading because it resembles a pyramid scheme. Buyers themselves judge the value of NFTs and buy them. However, in the case of pyramid schemes, the mechanism is different because only the membership fee is distributed. Every time NFT is purchased, royalty income is generated for the producer. In the case of Ponzi schemes, you become a person, so once you make an introduction, you will not receive any income.
NFT games are said to be very similar to pyramid schemes. The NFT game is very similar to a pyramid scheme because it is necessary to purchase items to start and the reward increases as the number of new users increases. In other words, as the number of users increases, it is easier for users who entered early to earn money.
people who criticize
There are people who only criticize whether it is a rejection reaction to NFT. There are cases where those people are forcibly making a fuss about it being the same as a pyramid scheme. People who deny it often have no reason or are just making noise for the time being.
Many NFTs are worthless to buy. After the Ponzi scheme is introduced, there are cases where there is nothing, so there are cases where the mechanism is criticized for being similar. In the case of NFT, if you invest in something valuable, the value will increase, so it is different from a pyramid scheme.
Why NFTs Are Not Ponzi Schemes
Now I will explain the basis that NFT is not a pyramid scheme.
Ponzi schemes do not involve products, but NFTs do. If you don’t use the product, it will be a crime, but NFT is not a problem because there is a product. Products in NFT are art, music, videos, etc. Digital data exists in NFT.
Large companies enter
In the case of pyramid schemes, companies do not participate. because it is a crime. In the case of NFT, large companies are entering the market more and more. Good examples are Facebook and Adidas. Twitter and Starbucks have also entered the market, so the market will grow even more.
have a future
The market for NFT is expanding unlike pyramid schemes. The NFT market suddenly expanded explosively around 2020. The global NFT transaction value has tripled in one year, from $24.5 million in 2019 to $82.5 million in 2020. And by 2021, it will be $17.6 billion.
Bybit’s NFT Marketplace
Bybit has an NFT Marketplace. If you open an account, you can actually enter and trade, so let’s try it.