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.
Reuben Grinberg, Bitcoin: An Innovative Alternative Digital Currency, 4 HASTINGS SCI. & TECH. L.J. 159, 160 (2011). 46 See generally GLOBAL LEGAL RESEARCH CENTER, REGULATION OF BITCOIN IN SELECTED JURISDICTIONS, S. DOC. NO. 2014-010233 (2014), available at. 46 See generally GLOBAL LEGAL RESEARCH CENTER, REGULATION OF BITCOIN IN SELECTED JURISDICTIONS, S. DOC 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 ... Bitcoin » Bitcoin news, press hits, notable sources, gossips, scandals » Reuben Grinberg on the legality of Bitcoin; Advertise with us (we do not endorse any site advertised) « previous next » Print; Pages:  Go Down. Author Topic: Reuben Grinberg on the legality of Bitcoin (Read 2660 times) 0 Members and 1 Guest are viewing this topic. bitcoinforum.com. Administrator; Legendary Member ... By Reuben Grinberg March 13, 2014 by Reuben Grinberg. Although Davis Polk does not yet accept Bitcoin, we have been closely following the rapid-fire booms, busts and arrests in the Bitcoin and the larger cryptocurrency space. Cryptocurrencies – including Bitcoin, Ripple, Litecoin, Dogecoin and about a hundred others – are essentially money in the form of artificial commodities of limited ... Read Grinberg’s latest Bitcoin post on Davis Polk’s Capital and Prudential Standards Blog: “The Failure of Mt. Gox and Other Recent Bitcoin Catastrophes: Why Banks Should Care.” The Text of Grinberg’s talk: Of bitcoin. Walk us through. Qwest a long time ago, a group or people who were libertarian did not like control by the government.
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