Not sure if this breaks any rules, but thought it would be the best place to bring it up since I feel like other subreddits have a tendency to label anything with the word NFT in it a pyramid scheme, even though they aren’t.

The system:
There are initially 1000 NFTs auctioned off. Every NFT gives the holder 0.05% royalty for every sale after the initial NFTs have been minted. The original creator doesn’t get any royalties by default.

My argument:
It would be a pyramid scheme because it’s defined as “a form of investment in which each paying participant recruits further participants, with returns being given to early participants using money contributed by later ones.” In this system, there could be a group of initial buyers that shill the NFT and “recruit” people to buy it, while still holding their “shares”. This would mean that they are making returns off later buyers, and therefore be considered a pyramid scheme.

Their argument:
It wouldn’t because, unlike a pyramid scheme, the NFTs are a “real” product since they can be used as a profile pic with verifiable ownership. Also, the NFT provides a real stake in the project through royalties, similar to (but not exactly) how the stock market has dividends. Lastly, you can sell your “share” in the system, and there is a limited amount of those “shares”, so it wouldn’t have unsustainable recruitment as a pyramid scheme does.

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