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Edit: I searched about Pyramid scheme but a site said that it is a marketing scheme recruiting more people to make profit. Apparantly this site was wrong. But, that's the reason that I asked this. So, apologies. Cant delete the question now.

Say someone invests 10 dollars in this scheme. If they recruit 2 customers to this scheme, they get 15 dollars. So,they get 5$, a profit of 50% the investment. Now, I get 30-15= 15 dollars from this, which is a 150% their investment. And this profit increases exponentially with each step.

Now, as there isn't an infinite amount of customers, somebody inevitably fails to recruit and they loses their invested amount. But, If they correctly plan, they can make a 50% profit.

Is there already a scheme like this? If no, why?

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    $\begingroup$ (-1) This question shows no research effort. $\endgroup$
    – Giskard
    Aug 30, 2022 at 15:03
  • $\begingroup$ But, I searched about Pyramid scheme but a site said that it is a marketing scheme recruiting more people to make profit. Apparantly this site was wrong. But, that's the reason that I asked this. So, apologies. Cant delete the question now. $\endgroup$
    – Sophile
    Sep 4, 2022 at 6:42

2 Answers 2

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You already know the problem:

Now, as there isn't an infinite amount of customers, somebody inevitably fails to recruit and they loses their invested amount.

That's the problem.

But, If they correctly plan, they can make a 50% profit.

It's not possible to correctly plan. Before you pay your $10, how do you know whether you can find 2 people? You don't know, but smart people can see the odds are against them, and refuse to participate.

You can easily calculate that the average person loses money. More people lose money, than make money. So why would any smart person sign up? If they're at the top, that's why. The people at the top make a lot of money. But there aren't very many of them, and you're probably not one of them.

This is basically a way for ten smart people at the top to get money from a million stupid people at the bottom.

What happens in reality is that the stupidest people (the ones who don't realize why this investment doesn't work) are the last ones who sign up, and then spam everyone everywhere trying to recruit them. Nobody likes this, and since the entire thing is just a scam anyway, they made it illegal.

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Yes, there are such schemes. They are called pyramid schemes, and the problem is that they are illegal in most countries.

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  • $\begingroup$ The real problem is that it is inevitable that a large number of people lose 10 dollars $\endgroup$
    – Henry
    Aug 30, 2022 at 23:34
  • $\begingroup$ @Henry suckers losing \$10 would be okay. The real problem is the spam they create. $\endgroup$ Nov 15, 2022 at 12:23

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