This is part 1 of a 2 part series about Bitcoin and MLM.
Before I get started, I know this post is likely to ruffle a few feathers. Hopefully if you are involved in MLM though, you can please let your guard down so I can give you some perspective outside of the “bubble”. Often times when you are involved in a group and everyone thinks the same and acts the same, you don’t get any unique perspective.
Also, when you PAY for something you are instantly going to defend your purchase. It is a dim feeling when you realize that you have been ripped off and in no way would I call anyone dim or look at anyone that way if they were part of an MLM. It is all part of the journey to success and sometimes we need to find out what doesn’t work before we can find out what works.
In this post, I am going to make some valid points that I think you are going be able to appreciate on both sides of the fence. Those that love or think they love MLM… as well as those that are bitter towards the idea of MLM because of past experiences. Either way, these are undeniable points that I am about to make.
I caught the Bitcoin bug two years ago, back in mid-2015. I was speaking with a friend and he mentioned this Bitcoin thing, talking about how it was a new way to make money online and equally send “funds” overseas without any intermediaries (banks). I was hearing this at a time when I was aware of another friend schooling in India experiencing trouble getting money out due to banking restrictions. In a fast and fluid economy, time is precious. And if banks’ outdated systems were adding undue burdens on international business, innovation in that sphere was inevitable. While I did not fully understand it, the concept made sense.
I was hooked. I read as much as I could and even bought a few coins to test it out by joining one of these Bitcoin businesses online (Nigeria get rich quick thing) on the hunch that there was an opportunity for legal services when it came to crypto-currencies. Politically, the concept of Bitcoin was appealing. The current banking system with a centralized Federal Reserve has always made me nervous. Practically, I had no idea if I had any real need for Bitcoin.
As time gone by, I’ve become less interested. While Bitcoin might have a strong future, it solves no immediate problems for me today. I experience zero difficulties transferring funds to merchants, friends or anybody else. Long term, I think the Bitcoin technology might inspire banks to streamline their processes, adopting some of the blockchain technology to eliminate some of the costs associated with money remittance. Will Bitcoin trump the banks? NO.
MLM Makes You a Hustler.
You are that pimp standing on the corner of the street. You are that energy juice salesperson that solicits your “scheme” to people. You are selling insurance programs that nobody has ever heard of, yet you do so because there is opportunity getting others to do as you are.
Every MLM is based on the hustle. You are told, “get out there and make some cold calls”, “call your friends and family”, “talk about it every day”, “use social media to mention something about it every day”, “check up on your downline”, “boast about how great the product is”.MLM hustlers
This is called hustling and unfortunately it puts your reputation on the line. There is nothing more annoying than listening to someone pitch their MLM to you, often times a product they don’t even really use or they are forced to use it because of the continuity aspect of the program.
To make it in MLM, you have to hustle. You have to hustle others.
Unfortunately there is a systemic problem with MLM and that derives in the business model itself. It relies on you getting other people into the program and almost always if your goal is getting actual customers, it is convincing people to spend way too much on products. That leads me to…
Without Overcharging, There Would be NO Compensation.
There would be no feasible way to earn within an MLM if they didn’t overcharge for their products/services. Your best interest automatically has to be you “selling” people on overpriced junk most of the time, and sometimes unsafe, untested and unproven programs.
AND more often than not, it has nothing to do with the actual product. You are selling people into a scheme so they can do the same to others. Most MLM’s have a fee to join. Most MLM’s require you to purchase the product. Most MLM’s have products that are vastly overpriced to support the compensation structure of the very program.
Without overcharging for their products and without having fees or relying on recurring product orders (by the people within the program), an MLM would die out very quickly. Unlike legitimate sales models, they rarely rely on selling quality products at a good price to customers. They rely on selling people on the scheme fees so they can do so to others….and the endless chain continues until people wake up to what is really going on.
Making MoneyOff Your Friends, That Ain’t Cool.
The most common and sometimes the only way people make money in MLM programs is from recruiting others into the scheme.
I personally know, I have been involved in MLM’s and this was unfortunately the only way I could promote it. I sold my Aunts and Uncles, my Cousins, tried to sell my friends, and of course my parents bought into my products because I thought I was an entrepreneur. I think that they committed to a program they didn’t necessarily believe in just because they felt bad for me.
You get real tired real quick of shameless promoting products/services and the scheme itself to others you know. You get tired of getting “denied” by people. And the unfortunate but natural consequence of promoting MLM and “amazing” opportunity after opportunity is that it gives them a perception of you that you probably don’t like. A schemer and a swindler.
You Are NOT Building a REAL Business With MLM.
You don’t own the business. You don’t own the website. You don’t own anything other than “product” that you usually are required to buy from the company (for way more than it is actually worth).
One of the biggest fallacies with an MLM program is that you are actually building a business. Unlike Affiliate Marketing, where you are creating a website, a brand and a following (which is a business), in MLM you are undergoing a constant “hustle” cycle that requires you to always suck in that next person to your downline, shamelessly promoting the products and services to your family and friends, or even worse, have to buy the product yourself in order to remain part of the MLM…which can get very expensive.
You are assigned names like “sponsor”, “distributor”, “presidential level” (and many others) which serve as nothing more than a facade as to what you actually are when you are involved in MLM. A block in the pyramid.
Think about it. A pyramid will always stand high and the top block will always be supported if there is always MORE blocks underneath the upper level. That is why the CEO of the companies tend to make 10’s of millions and the average person within the program will never be able to support the actual fees of getting involved in it.
And if you are like most, when you end up hanging up your MLM boots, you are left with drawers and boxes of “extra” product that you never used. This more than validates that you were part of the program not for the quality of the product, rather the potential opportunity if you got other people involved in the product. A backwards way of trying to do business and fundamentally, with MLM you are not creating a business.
MLM is NOT Affiliate Marketing, Period.
This is an apple vs. oranges comparison. MLM is nothing like Affiliate Marketing. Affiliate Marketing gives you the freedom to promote whatever products/services that you want, within any niche, in fact, it can quite often be the segway for you creating and selling you own products/services.
MLM locks you to ONE program. You by no means have the best interest of your audience in mind because you are always required to sell the same, overpriced, and often times unproven product to people.
Affiliate marketing is the act of promoting products to customers. It it is not the act of promoting an opportunity to others with “products” hidden inside of the scheme somewhere.
It is very easy to determine whether or not you are an affiliate or an MLM’er. If you are promoting products to others, then you are an affiliate. If you are recruiting people into your program in your downline, you are involved in MLM.
Currently, Bitcoin related companies are trying to fit their square pegs into round holes by trying to comply with existing banking regulations. It’s not going so well with several of the early pioneers facing jail time. Cryptocurrency was born out of a need for privacy. Banking regulations exist to eliminate privacy, making it easier for the government to root out fraud.
Does Bitcoin work with MLM?
It’s a tough question. I’m often reminded of Seth Godin’s analogy of a Meatball Sundae. Just because I like ice cream and I like meatballs doesn’t mean that I should put the two together. The same applies to cryptocurrency MLMs. While the two can coincide in theory, it’s hard surgery to do right.
The purpose of this article is to serve as a warning
I feel as though there’s a cryptocurrency ponzi scheme bubble brewing in the network marketing industry. It reminds me of the environment during Monrovia. I’m afraid this cancer has already grown into a mass larger than what we saw with Monrovia. Ponzi scheme promoters, domestic and foreign (primarily in China), are taking advantage of Bitcoin’s complexity and its veneer of legitimacy to convince investors that “now’s the time to invest in Bitcoin.” Consumers, completely uneducated about the technology behind cryptocurrency and unable to decipher good from bad, are making serious mistakes. Plus, there’s the added excitement of investing in a coin cheaply with the hopes of it rising in value 1000%.
After seeing the Monrovia rewards hysteria, there’s one lesson I’ve learned: People under the influence of easy money make stupid mistakes. Be warned: There’s a chance the cryptocurrency program is a cleverly disguised ponzi scheme. In most scenarios, the coins are not OPEN; thus, there’s no way to confirm the coin’s legitimacy. When the coin is developed in a CLOSED environment, the value of the coin is driven purely by new enrollments into the scheme i.e. ponzi.
The ponzi promoters that push these programs look like you and I. The difference is that they spend most of their time building their “businesses” in the dark corners of the world. They’re hanging out in places like Thailand, Hong Kong and China. They know they’re doing wrong, which is why they’re building away from their homes, amassing as much money as possible before the market wises up to the industry. In Nigeria – Monrovia rewards, there was about a year run where the ponzi promoters made their money before the market figured out the game. The victims are uneducated and faceless, which makes their work that much easier.
The SEC and CBN have warned and provided some tips on how to sort out the ponzi schemes from the legitimate cryptocurrencies. In part 2 of this series, I’ll pass along the SEC’s tips as well as provide some tips of my own.
I’m hopeful this article educates people and starts a discussion.
In Part 2, we dive more into the specific law and I provide some tips for consumers.