Bitcoin has become a very popular form of money, attracting interest from all over the world. Not all of that attention is positive, however, as various companies have taken it upon themselves to use Bitcoin as a promotional tool for Ponzi schemes and MLMs. Needless to say, most of these projects are scams, hurting the public image of Bitcoin in the long run. Bitclub is one of the longest-running Ponzi schemes openly advertising Bitcoin, in an attempt to lure in novice investors.
Also read: Ethereum Spam on Reddit To Blame on /r/Bitcoin Censorship
The Bitclub MLM Ponzi Scheme
For anyone who has ever heard of Bitclub, they might remember how this company is supposedly selling cloud mining contracts to investors. The main goal of cloud mining is to let people generate bitcoins without having to buy and operate the mining hardware themselves. Instead, Bitclub will host the machines and take care of maintenance. The contract itself represents a portion of their total hashpower, and users can start generating bitcoins immediately.
On paper, this sounds like a very lucrative investment, as people can pay cloud mining contracts with convenient payment methods and see their earnings in Bitcoin trickle in within minutes. Keeping in mind how more mining power will help secure the Bitcoin network, this seems like a proper approach by companies such as Bitclub.
But that is where the fairy tale story will come to an abrupt end as the people representing Bitclub have started spreading some things about Bitcoin cloud mining that are factually incorrect. People with some level of knowledge of how mining works will immediately pick out the flaws in their logic. After all, someone trying to sell cloud mining contracts to potential investors should know what they are talking about in the first place, right?
To give our readers an example of how uneducated some Bitclub sales representatives are: not all of them know what the blockchain is. It is rather difficult to get into the world of Bitcoin and digital currency without looking up the term blockchain. Without that knowledge, the whole concept of cloud mining won’t make sense to the sales rep, let alone the people they are trying to convince.
It is not the first time Bitclub is getting a lot of negative attention, though. People can clearly see this company is nothing more than an MLM Ponzi scheme waiting to collapse at any moment now. While there seems to be some mining activity going on behind the scenes at Bitclub, they are only sharing 50% of the revenue with investors, while the rest of the funds is used for marketing purposes to attract more people.
A project where initial investors need to refer other users to earn a commission in the hopes of recovering their original investment is the pure definition of a Ponzi scheme.Granted, they will be earning small amounts of Bitcoin from the mining game as well, but based solely on that, breaking even will take an infinite amount of years. After all, they have to rely heavily on an increasing Bitcoin price to get any noteworthy dividends.
Aggressively Targeting Bitcoin Meetup Groups
For MLM Ponzi schemes such as Bitclub, there is no better place than Bitcoin Meetup groups to find new investors. These groups and events are targeting novice users who want to venture into the world of Bitcoin and other digital currencies. As these Meetup groups are often short on speakers, various Bitclub sales representatives will gladly tell people all about their project and how they can become an investor.
As long as Bitclub is paying out its members, it is very difficult to label this company as a scam. Even though anyone can see the real deal behind the scenes, they keep paying out to their investors. Bitcoin is getting a lot more attention these days, and these negative programs will have to be culled from the chaff at some point.
Novice Bitcoin users have to be extremely careful when it comes to investing money these days. While there are a ton of respectable companies in existence who will deliver on their promises, there are others that will try to take your money by selling lucrative bags of air. Always do your research before giving money to a company or individual.