MLM Crypto Trading: Should You Be Cautious or Seize Real Opportunities?
For many years, MLM (Multi-Level Marketing) companies have been flourishing in various industries, including trading. This controversial field sparks both concerns and interests among many individuals. In this article, we will explore what MLM trading is and whether these are companies to follow or avoid.
What is MLM?
Before delving into MLM trading, it's useful to understand the concept of MLM itself. MLM companies are based on a unique marketing structure known as Multi-Level Marketing, or MLM for short.
This means that the company operates on a multi-level system. Existing customers are part of a hierarchical structure resembling a pyramid. The customer who recruited them is one level above, and new entrants can also start recruiting new people who will be placed below them in the hierarchy.
In an MLM company, customers are often ranked by their level, which often corresponds to the number of people they have recruited and the income generated.
The advantage for such companies is that they don't need to advertise to attract new customers. Members are compensated for recruiting new people, and it's the customer network that brings in newcomers.
MLM companies are naturally centered around a product or service. These companies exist in various sectors, including wellness, nutrition, digital products, make money schemes, and even trading.
MLM is a contentious activity that has generated a lot of debate and controversy. Many people fall victim to scams involving false promises. In these systems, the promoted activity is often secondary, with the real focus being on recruiting new members.
What's the Difference Between MLM and Ponzi Schemes?
MLM is often confused with pyramid schemes, also known as Ponzi schemes. Pyramid schemes are illegal. So, what's the real difference?
In reality, the operating system is quite similar.
The key difference is that in pyramid schemes, new entrants must pay an entry fee to join the company. There isn't always a product involved, and the focus can be entirely on recruitment.
In MLM, it's necessary to sell a product, and new customers should not have to pay an entry fee.
What Is MLM Trading?
There are many different MLM companies operating in various fields, with one of their favored areas being finance, investments, business, and trading. These areas often appeal to people's dreams of financial success.
Generally, MLM companies in these fields sell training programs for becoming wealthy or learning about business. In the trading sector, they sometimes offer access to trading robots promising astonishing results.
These products are promoted by recruiters to entice new people into the company. The recruiter's interest lies in earning a commission through their recruits.
The company's products are used as selling points. Trading is particularly attractive to dream sellers because it's a domain that few people understand, making it easy to convince individuals of extraordinary results.
Training programs and trading robots are the most common products. Less frequently, but more concerning, some companies encourage customers to invest their capital directly. These companies rarely advertise such services.
The risk of loss for the customer is much higher since they are no longer in possession of their capital. The company claims to invest clients' funds and distribute profits to them.
In most cases, clients do receive a portion of the profits for a certain period. This allows the company to demonstrate its legitimacy and provide selling points to recruiters.
What Is the Cost Structure of an MLM Trading Company?
MLM companies can operate with different cost structures. One of the most common is a monthly subscription fee. To become a member and recruit others, new customers often need to pay a monthly fee, typically ranging from $100 to $200.
In trading, it's common for the company to encourage its members to sign up with a trading broker, enabling them to earn an affiliate commission for the clients they bring in.
When money is transferred between the client and the company, the company often charges high withdrawal fees.
Members who excel at recruitment often earn the most within the company. In MLM businesses, recruiting is often more profitable than selling the initial training or trading robots.
By recruiting new members, the current member expands their team of referrals. The more they have, the higher the commission they earn on their activities. Depending on the MLM company, there are various ranks that members can achieve by reaching specific milestones in terms of the number of recruits or generated income.
Whether it's member commissions, profits from trading robots, or a percentage of the capital invested with the company, the company always fulfills these commitments for a certain period. To gain success, attract new members, and convince existing clients that it's a good deal, the company must initially prove its results and credibility.
The issue is that a significant portion of the income is distributed across multiple levels of members within the company. Generally, MLMs cannot be profitable in the long run because they promise exaggerated results, especially in cases involving investments or trading robots.
After a certain period, when the influx of new members decreases or when there are too many members, it's not uncommon for the company to start facing difficulties, freezing withdrawals, struggling to refund clients, and eventually disappearing.
Should You Invest in MLM Crypto Trading?
MLM trading opportunities are often enticing to many people who hope for a profitable investment that will lead to financial freedom or supplement their income.
However, reality often differs from expectations. New members pay their subscription fees with the hope of quickly making them profitable. They often struggle to recruit enough people to make it profitable, and they can end up alienating their friends and family due to this activity.
While some individuals manage to make money with certain companies, whether through the product or recruitment, the majority find it challenging to make this activity profitable.
In general, it's wise to be cautious of MLM companies with exaggerated promises. Claims of becoming wealthy through trading courses, robots that promise +30% returns per month, or investments in unknown funds offering +300% returns in a year are common in many active MLM companies.
Futures Infinity, OmegaPro, Autotrade Gold, Validus, and others are examples of MLM trading companies that exist or have existed. Companies like OmegaPro have completely vanished after several questionable events. This company, which operated for several years, brought significant profits to its creators and some top recruiters.
After claiming to have experienced hacking issues on the platform, which supposedly explained the withdrawal difficulties, OmegaPro disappeared from the radar, taking tens of thousands (or millions?) of euros from clients with them.
All MLMs often require payments in cryptocurrency to facilitate their disappearance when the time comes.
Our opinion on MLM trading is that it's better to be cautious and stay away from it. While proponents of these systems may try to convince you that you can make money through them, there are far more people who lose their money than those who profit.
Always conduct thorough research on companies before trusting them. In most cases involving MLMs, the companies are opaque, and their leaders have questionable backgrounds, among other issues. Easy and magical money doesn't exist, despite what these companies may lead you to believe.