Many of you have already heard about smart contracts. Some of you may have probably heard that smart contracts like Forsage are scams.
Are all smart contracts scams?
No, of course not. Smart contracts are only programs that are stored in a blockchain and run automatically, without human control. A good example of legitimate smart contracts are contracts on Detoken.net. If you want to read more about smart contracts, I recommend the article by Ashma.
However, there are certain types of smart contracts that are scams. They are so called MLM programs or matrix schemes, like Forsage, Bitcoin Millions and others.
What are MLM programs?
MLM means multi-level marketing. It's a form of marketing. This kind of marketing works in such a way that a participant of the program gets a part of the profit of the people he has advertised in the system.
Are all MLM programs scams?
No. If the MLM program is operated by a company and the company sells goods with the help of MLM marketing, it is not scam. You must imagine that person A invites three people B1,B2 and B3 into the system. Each person from level B again invites 3 new people (person B1 invites C11, C12 and C13, person B2 invites C21, C22 and C23, person B3 invites C31, C32 and C33). The result is a pyramid.
All people sell goods and make profit. A part of the profit of the people from level C goes to the people from level B and a part of the profit of the people from level B (incl. a part of the profit of the people from level C) goes to person A. If person A also sells the goods of the company, he has additional profit. The entire profit (including the partial profits of all persons in levels B and C) remains with person A, who no longer shares it with anyone.
In reality there are not only the 3 levels, but much, much more, that is why person A (but also the people from levels B and C and maybe from other levels can become very rich if the people from the lower levels sell many goods of the company. The MLM system creates a pyramid system, but it is not a scam, because in this system everyone earns. The higher someone is in the pyramid, the more they earn.
What is the difference between this system and smart contract scam like Forsage?
The pyramid systems such as Forsage or Bitcoin Millions work identically to normal MLM systems, with the important difference that the participants do not sell goods. The profit is only generated by the deposit of the new participants. This means that the people who are new to the system pay for those who are at the higher levels.
In these systems all those who are at the bottom of the pyramid lose. And as you can see, most of them are. This system is perfidious because everyone who enters the system is either cheated (because he pays with his contribution for the people on higher levels and loses money because he does not find enough people to pay for him) or he cheats because other people pay for him. The worst thing is that there are always people who are a bit higher in the pyramid (Level B) and really get a little bit more money than they paid for participation. These people write in the forums and also here in read.cash how good and legitimate these systems are.
Some say, why am I a fraud if I invite someone into the system?
You are a fraud because you are inviting people into a system where many people will deposit money and lose. Because the people you invite won't find anyone to pay for them anymore. If you imagine a pyramid, you see that every pyramid must have a base, it cannot grow infinitely. And that the base is much, much bigger than the top. And the bigger the pyramid is, the more losers there are.
You are inviting people into a system that is built so that very many lose some money (usually not very much), but very few, at the top of the pyramid, win a lot of money.
So how do I know if a smart contract is a scam?
If a smart contract:
demands a fee from you (usually they call it an investment);
is an MLM system (or matrix);
and does not sell goods or services;
it is most certainly a fraudulent pyramid scheme, a scam.
It does not matter that the system is not controlled by anyone. The program is designed to work automatically and those who have started the system get most of the money from new users.
These systems have different names, Forsage, Bitcoin Millions and others. It is also tried to attract new users to the systems on read.cash.
Do not participate in these systems and warn everyone not to participate in such systems.
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I read this article after two years because in our country the forsage.io project has become quite popular and viral. I request you to discuss this project again with a new article. 🙏🏻