Nothing creates euphoric sentiment and increased attention on an investment sector quite like prices making all-time highs. After shaking loose some weak hands in mid-September bitcoin has recovered impressively, and this week the leading virtual currency surged to fresh all-time highs above $5,000:

Bitcoin/USD (Daily)

Total bitcoin market cap has now reached nearly US$100 billion and total cryptocurrency market cap is ~US$175 billion. The attention that bitcoin has received in recent weeks has led to a whole slew of new attention on the space including a large number of multi-level marketing (MLM) firms who profess to have bitcoin trading and mining operations. 

However, there are few details offered regarding many of these MLM companies' trading/mining operations. Instead, they are intently focused on raising money from retail investors under the promise of offering 'guaranteed' returns of 1% per day.

A 'bitcoin' MLM scheme that I was pitched on earlier this week can be summarized by the following comments from an article on bitcoin MLM network marketing:

"They simply amass wealth and use it to pay out on members that joined before you – perhaps even the person who recruited you – to provide the promised rate of return.

These companies want you to then recruit others in turn so they'll have the money they need to pay you when your “investment” matures.

The whole scheme collapses once the amount of money it needs to pay out to investors becomes more than the amount takes in through recruitment."

This sort of scheme is as old as Charles Ponzi, however, by relabeling it with bitcoin trading/mining somehow people lose their sense and miss what's really going on here. 

Avoid anything that can't offer a reasonable amount of transparency and don't fall for the old "it's a proprietary algorithm, we can't disclose our trades." - if their trading was so profitable they wouldn't need to raise $200 from Joe in Duluth, Minnesota. 

Moreover, if you want to get invested in cryptocurrencies you can simply open an account on and make a purchase of bitcoin, ethereum, lightcoin etc. using your debit card - there is no need to take on excessive counter-party risk through an opaque middle-man.

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