EthPyramid: Pyramid Scheme on the Blockchain
The use of the smart contract is set to benefit most of our future transactions. The proof of work will go a long way in securing not only our deals but also the identity of the parties.
However, some others ventures have found a less-than-noble use for the smart contract technology. EthPyramid is an apparent pyramid scheme that works on the blockchain and will rely on original contracts to provide proof for its operations. The platform will facilitate its ecosystem using the EthPyramid token (EPY) as a mode of currency to facilitate transactions.
How It Works
Apparently, a user has to send ETH to the smart contract to facilitate the transaction. Once the user does that, each investment will earn them a 10% dividend from there henceforth. Much of the information of how the platform intends to do this is still hazy. Nonetheless, they do say that they rely on a mathematical robot to make a profitable investment for the investors.
That is a bit comical considering they don't mention the type of algorithm or formula the robot will use. Otherwise, each token purchase will subsequently increase the price of the next token. That is similar to how the typical pyramid scheme works. In return, the EthPyramid will rely on increasing the number of users for the price of the token to reach sufficient amounts.
Why EthPyramid EPY Is a Scam
For starters, a pyramid scheme is still fraud no matter the platform. An advantage EthPyramid rides on me stems from the fact that it's on the blockchain. The use of smart contracts is no guarantee that your money won't be lost.
Remember the blockchain is decentralized, and any project can quickly turn into a scam and disappear with the investor's money. That is much similar to EthPyramid. Most of the platform's aspects are still unknown or plain anonymous.
Additionally, the platform also works on a much similar scheme as a fraud waiting to happen. The platform intends to rely on the users inviting or referring more users for the token price and sale to go up. Such a scenario works in mostly fraudulent investment schemes, where they get many investors on board then they disappear with their money.
EthPyramid EPY ICO Conclusion
Unfortunately, the EthPyramid is finding investors who are willing to risk their finances. That means the blockchain technology is moving to less convenient methods of benefitting people.
With Ethereum's potential of smart contracts on the rise, it is somewhat sad to see the technology in use for such fraudulent means. All-in-all, I would not recommend such a scheme as an investment opportunity.
Whether it is transparent or not, there are no good endings with pyramid schemes. A majority end up with the investors losing a significant amount of money with the firm owner nowhere in sight. A right word of advice will entail for any crypto investor to avoid such programs whether they are on the blockchain or not. I would not expect anything good to come out of it in the long run.