Many Papua New Guineans are becoming blindfolded and now living in fantasy world with dreams of becoming millionaires overnight. So their pursuits of becoming millionaire have cost them their entire wages, salaries, savings or even their retirement savings with little or none returns. Some even have lost their lives. So where are these people investing? In Papua New Guinea, we turn to look for quick money rather than sweating the guts out to make your dreams come through. We are now investing in foreign Pyramid Schemes which are quickly become unsustainable. I try to warn fellow Papua New Guineans on some of these pyramid Schemes.
Some of these pyramid schemes that taking the country by storm are Proma, H Hip , hoprocket and Aim Global etc. These are pyramid schemes that do not work in this country. I beg you to understand how these pyramid schemes work.
The main characteristic of a pyramid scheme is that participants only make money by recruiting more members.
There are many different kinds of pyramid schemes, but the two most basic ones are product-based and so-called naked pyramid schemes.
Naked Pyramid Scheme
In a naked pyramid scheme, no product is sold. Here's how it works:
1. One person recruits 10 other people to participate in a "no-fail investment opportunity."
2. The 10 recruits each pay the recruiter
K100.
3. The recruiter now tells them to go out and recruit 10 more people to do the same.
4. If each recruit is successful, they'll all end up with K900 in profit from a K100 investment.
Sounds simple enough, but here's the problem: Let's say the initial 10 recruits each find 10 more people. Those 100 new recruits will have to find 10 recruits each to make K900. That means they have to find 1,000 people willing to sign up for the program. And if they somehow find 1,000 people, that next level of the pyramid will need to sign up 10,000 to make a profit. Eventually, there won't be enough recruits at the bottom of the pyramid to support the level above it. That's when the pyramid topples and everyone at the bottom loses their investment.
Product-based Pyramid Scheme (Ex. Global Aim)
A product-based pyramid scheme is the same concept disguised as a legitimate direct sales opportunity. Here's how it works:
1. A distributor recruits 10 salespeople who each pay K500 for a starter kit of products to sell.
2. The distributor gets 10 percent of each starter kit that's sold.
3. The distributor also gets 10 percent of each product that any of his recruits sells, including more starter kits.
4. The recruits are told that the fastest way to make money isn't by selling products, but by recruiting more people to buy starter kits.
5. The people at the top of the pyramid get commissions from everyone in their downline, the many levels of recruits below them on the pyramid.
The problem with most product-based pyramid schemes is that the products themselves don't sell very well, or have very slim profit margins. So the only way to make money is to find more recruits. Eventually (and surprisingly quickly), the market becomes saturated. There are too many people trying to sell the same unattractive product and there's no one left to be recruited.
It's mathematically impossible for everyone to make money in a pyramid scheme. For example, if each recruit needs to find 10 more people to recoup the cost of his or her initial investment, the eighth level of the pyramid would have to recruit a billion people to make back their money. And the next level would need 10 billion, nearly twice the population of the Earth .
In fact, pyramid schemes don't work unless somebody loses. Those at the bottom of the pyramid are essentially defrauded by those on top. It's a mathematical fact that no matter how many people join a pyramid scheme, 88 percent of the members will be on the bottom level and will lose their money [source: Pyramid Scheme Alert]. Pyramid schemes are illegal because people don't lose their money due to normal market forces, but because the system requires them to lose so that a few at the top will win.
Studies show that in a naked pyramid scheme, 90.4 percent of people lose their money, while in product-based pyramid schemes, that number jumps to a shocking 99.88 percent [source: Taylor].
For now the concept is proven to be paying people and most are attractedto it especially the Aim Global. What happens at the back is that The owners already know the break even period where the pyramid will be exhausted so they will start to invest in somethng else in the meantime and thise faitful folowers who are not aware of it will fall prey to a devastating loss of hope when all stumbles down.
If Aim Global is putting a smile at the beginning, it will hurt you in the long run. Aim Global is a Product-based Pyramid Scheme
Some of these pyramid schemes that taking the country by storm are Proma, H Hip , hoprocket and Aim Global etc. These are pyramid schemes that do not work in this country. I beg you to understand how these pyramid schemes work.
The main characteristic of a pyramid scheme is that participants only make money by recruiting more members.
There are many different kinds of pyramid schemes, but the two most basic ones are product-based and so-called naked pyramid schemes.
Naked Pyramid Scheme
In a naked pyramid scheme, no product is sold. Here's how it works:
1. One person recruits 10 other people to participate in a "no-fail investment opportunity."
2. The 10 recruits each pay the recruiter
K100.
3. The recruiter now tells them to go out and recruit 10 more people to do the same.
4. If each recruit is successful, they'll all end up with K900 in profit from a K100 investment.
Sounds simple enough, but here's the problem: Let's say the initial 10 recruits each find 10 more people. Those 100 new recruits will have to find 10 recruits each to make K900. That means they have to find 1,000 people willing to sign up for the program. And if they somehow find 1,000 people, that next level of the pyramid will need to sign up 10,000 to make a profit. Eventually, there won't be enough recruits at the bottom of the pyramid to support the level above it. That's when the pyramid topples and everyone at the bottom loses their investment.
Product-based Pyramid Scheme (Ex. Global Aim)
A product-based pyramid scheme is the same concept disguised as a legitimate direct sales opportunity. Here's how it works:
1. A distributor recruits 10 salespeople who each pay K500 for a starter kit of products to sell.
2. The distributor gets 10 percent of each starter kit that's sold.
3. The distributor also gets 10 percent of each product that any of his recruits sells, including more starter kits.
4. The recruits are told that the fastest way to make money isn't by selling products, but by recruiting more people to buy starter kits.
5. The people at the top of the pyramid get commissions from everyone in their downline, the many levels of recruits below them on the pyramid.
The problem with most product-based pyramid schemes is that the products themselves don't sell very well, or have very slim profit margins. So the only way to make money is to find more recruits. Eventually (and surprisingly quickly), the market becomes saturated. There are too many people trying to sell the same unattractive product and there's no one left to be recruited.
It's mathematically impossible for everyone to make money in a pyramid scheme. For example, if each recruit needs to find 10 more people to recoup the cost of his or her initial investment, the eighth level of the pyramid would have to recruit a billion people to make back their money. And the next level would need 10 billion, nearly twice the population of the Earth .
In fact, pyramid schemes don't work unless somebody loses. Those at the bottom of the pyramid are essentially defrauded by those on top. It's a mathematical fact that no matter how many people join a pyramid scheme, 88 percent of the members will be on the bottom level and will lose their money [source: Pyramid Scheme Alert]. Pyramid schemes are illegal because people don't lose their money due to normal market forces, but because the system requires them to lose so that a few at the top will win.
Studies show that in a naked pyramid scheme, 90.4 percent of people lose their money, while in product-based pyramid schemes, that number jumps to a shocking 99.88 percent [source: Taylor].
For now the concept is proven to be paying people and most are attractedto it especially the Aim Global. What happens at the back is that The owners already know the break even period where the pyramid will be exhausted so they will start to invest in somethng else in the meantime and thise faitful folowers who are not aware of it will fall prey to a devastating loss of hope when all stumbles down.
If Aim Global is putting a smile at the beginning, it will hurt you in the long run. Aim Global is a Product-based Pyramid Scheme
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