Finally someone has explained clearly the differences between MLM coins, Bitcoin, digital currencies, etc.!

Since the first cryptocurrency Bitcoin successfully entered the public eye and gradually attracted a large number of players, more and more criminals have set their sights on the cash cow of "virtual currency". As a result, various virtual currencies such as Baichuan Coin, Morgan Coin, Beta Coin, V Treasure Coin, OneCoin, BBT Gold Coin, etc. have emerged in an endless stream. These newly born Internet virtual currencies no longer have the revolutionary nature of Bitcoin, but more reflect the characteristics of the Ponzi scheme of passing the parcel, becoming a huge malignant tumor in Internet financial innovation.

Characteristics of Cryptocurrency Scams

First, most virtual currencies claim to adopt the same model as Bitcoin for coin creation. However, the difference is that Bitcoin is open source, and the total amount is limited (about 21 million), and each bitcoin generated is transparent and not subject to any manipulation; while many other virtual currencies are not open source, and the speed and amount of virtual currency generation are controlled by the platform. As long as the platform developers are willing, virtual currencies can be issued indefinitely.

This results in the fact that this type of virtual currency actually has no theoretical scarcity and its quantity cannot be kept constant. Without scarcity, it has no basic investment or collection value, and will eventually become a purely worthless game of passing the parcel.

Secondly, the income of this type of virtual currency is generally divided into static income and dynamic income. Static income refers to the production income of the coin-making machine. In order to attract more uninformed investors to participate in this game, this type of virtual currency often adopts the method of pyramid selling to promote it crazily, that is, to obtain income by recruiting people, which is called dynamic income.

In actual operation, the platform generally does not encourage members to take static income as the goal, but encourages members to obtain dynamic income, that is, to hope to make profits through the continuous development of members, which is a typical pyramid scheme. Because the nature has become a pyramid scheme, this type of virtual currency often has a short operation cycle. Generally, within 6 months, when the peak period of returning money is reached, the network will be shut down and run away, and then a new name will be changed to make a comeback.

MLM Coin is different from Bitcoin

In many other ways, this type of pyramid scheme-style virtual currency is completely different from traditional virtual currencies such as Bitcoin.

First, the issuance method is different. Bitcoin and other virtual currencies are not issued by specific monetary institutions. They are generated through a large number of calculations based on specific algorithms. They are decentralized issuance methods. Each different terminal node is responsible for maintaining the same ledger, and this maintenance process is mainly the algorithm packaging and encryption of transaction information. MLM-style virtual currencies are often rewarded by recruiting people to send money.

Second, the transaction methods are different. Bitcoin and other virtual currencies are scattered transactions formed spontaneously by the market. After they are formed, third parties gradually establish exchanges to complete the transactions. However, MLM virtual currencies are often issued by themselves and their own platforms are built for transactions.

The third is the different implementation methods. Bitcoin and other virtual currencies are open source programs, and the parameters and methods of their total amount restrictions are all displayed in the open source code. However, the so-called open source of pyramid-style virtual currencies is completely plagiarized from other people's open source codes, and no open source codes are used to build programs, so their essence is the same as Q coins and can be controlled by the website.

Virtual currency is different from digital currency

It is also important to note that the People's Bank of China recently made it clear that it will issue digital currency in the future, and this news has also been misinterpreted by many virtual currencies.

In fact, the digital currency that the central bank is talking about is not the same concept as the various virtual currencies that are currently popular on the Internet.

First, the issuers are different. Most currencies have one issuer, such as the RMB, which is issued by the central bank. However, virtual currencies such as Bitcoin do not have a centralized issuer.

Secondly, the methods of obtaining Bitcoin are different. Bitcoin is “mined” by people who master the algorithm, but the digital currency issued by the government must be publicly issued to the people of the country.

Third, the pricing principles are different. Bitcoin prices are completely market-based, with large fluctuations. A national currency must do its best to maintain its own stability.

Fourth, the scope of use is different. At present, most countries in the world, including China, do not recognize the currency attributes of Bitcoin. Although some institutions, enterprises and commercial places accept Bitcoin, the scope of application is still very narrow. As a digital currency issued by the state, it must be able to meet the largest range of payment needs, not only domestic payment needs, but also global payment needs.