I know the term but I’ve never actually been able to understand what it is and what happens in one
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It’s a type of a non sustainable business model.
Whereas a classic business model relies on creating value for its customers in return for profit, a pyramid scheme doesn’t create any value at all. It pretends to create value by giving its customers money it takes from other customers (whom it promised to pay as well from other customers and so on).
Most people understand that it will never be able to work in the long run but are hopeful to “quit while they are ahead” dumping the losses on fellow customers (investors). What actually statistically ends up happening though is the vast majority of people involved lose all of their money.
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