Cryptocurrency pyramid: The higher you go, the higher the rewards
Cryptocurrency works in layers, like a classic pyramid. The higher you are in the tier, the more lucrative the rewards. You, or the retail investor, are at the bottom of the pyramid. Here’s how it works.
First layer: You, the retail investor
Naive and trusting, retail investors are often abused and exploited. They are lured into the game by the promise of a 100x return. Few achieve this, and those who do, quickly lose everything in the crypto game due to their newfound greed. This is the crypto base layer. It feeds and sustains all the higher layers. When a VC makes a 1000x return on one of their investments, that money came from the retail investor.
Second layer: KOL and media
They may be sponsored by any party higher up the pyramid to promote narratives that are not in your interest. That new token may very well be a copy-paste project from the last cycle with a new name. Don’t be fooled, always do your own research. Most memes are like this. Media companies may also work with a KOL or group of KOLs to create spontaneous engagement around a token or topic as a whole, this is nothing new. Crypto protocols and VCs have marketing budgets and they will take advantage of this
The third layer: encryption protocol and development team
The most honest developer was Satoshi. Everything after him was distorted. That is why there are over 13,000 altcoins in 2024. 99% of them are shameless money grabs with no technology or innovation, and most are hype to make money from retail investors.
The fourth layer: venture capitalists
These are the tycoons in the crypto space, they have money, power and control everything. They can push up or down the market, exchanges and even kill tokens. They also promote the development of crypto casinos by investing in new projects proposed by various crypto developers. They are the ones who promote the start of the bull market and the ones who sell when the market hits new highs.
Layer 5: BlackRock and the Federal Reserve
BlackRock recently joined the crypto space in a public way with their Bitcoin ETF. Privately, they have been in the space for years through venture capital, and have been privately (and mostly secretly) accumulating Bitcoin with their Bitcoin Private Trust. It was inevitable that they would go public. They own traditional finance, and cryptocurrencies are their latest expansion. The Fed’s role is pretty simple, they print dollars whenever and wherever they need to, they decide when the market will boom or crash, we are the victims of their decisions, and have no power to influence or stop those decisions, they act as the king of the pyramid as they please.
