Wednesday, December 10, 2008,
12:47 AM
Ok, so.. 2nd part about how pyramid scams work.
Say I plan to start a pyramid scam. So. I start with $0 capital.
Then, I just convince A and B to invest say, $10 each. I promise them 70% ROI. So currently, the wealth distribution is such:
Me: 0; A: 10; B: 10
After they "invest":
Me: 20; A: 0; B: 0
Alright, so... when A puts in 10 and B puts in 10, all I have to do is take the 10 from A, and 7 from B, and give them to A. I then keep $3 for myself...
Me: 3; A: 17; B: 0
At this point, A may only be half convinced. Ok, I've got extra $7, he thinks. So I talk him into "reinvesting" his earnings to earn more. At the same time, I also get him to convince his friends to invest as well. A gets A1 and A2, and both put in 10 each.
Me: 33; A: 7 (keeps his earnings); B: 0; A1: 0; A2: 0
Then, I shall just take 17 from what I have and give B.
Me: 16; A: 7; B: 17; A1: 0; A2: 0
Notice how in the previous round, I have more money than anyone else. So all I have to do is repeat the process over and over again, until it becomes a huge huge sum, or until there are no one else to talk into "investing", in which case, I take all the money and run to Hawaii, and everyone else gets conned and in the end, earn nothing.
Simple, you think? Too simple, until so many get tricked over and over again. Why?
Because! They always decorate such scams with nice packaging!! They rent buildings, put a nice decoration around it, give itself a super cool company name with a super cool catch phrase, and just pretend as if they are running some serious business for profit.. All to keep up a facade! Yeah.. cruel. It's sad that people go to great lengths to cheat others off their hard-earned money.. even sadder that many people fall for it time and again.
~Falcon, OUT!!
