https://img.leopedia.io/DQmRiLpiUtGWiMs4hEvvVe3MSxXBcJHvTge7DuwzYHcfivx/1000190348.png 

Earlier today, Michael Saylor dropped a new announcement by MicroStrategy, with the crypto community immediately going nuts over it. In that tweet, he went on to show a pyramidal chart explaining their "Long Term Target BTC Capital Structure," and, honestly, the shape alone got everyone asking if this whole thing is starting to look like a pyramid scheme.

The important highlight in the tweet was this new thing, $STRC, or, as it is called, "Stretch," a kind of Perpetual Preferred Stock meant for select investors. In fact, what Saylor is saying here is that MicroStrategy wants to create a capital structure around Bitcoin that is stacked like a pyramid. At the top, there is $STRF, then $STRC, then $STRK, and so on-all on top of MicroStrategy's gigantic Bitcoin holdings.

Just​‍​‌‍​‍‌​‍​‌‍​‍‌ by looking at the image, one can quickly understand the reason why people are doubtful on the internet. The pyramid structure gives the impression that each new layer is relying on the one below to ​‍​‌‍​‍‌​‍​‌‍​‍‌survive. People saw that and instantly said, it looks like a Ponzi structure dressed in corporate language. Others said Saylor is just creating financial instruments based on Bitcoin, the same way that banks would build products on top of assets all the time.

So is it a pyramid scheme? Here's my personal take.

I don't think MicroStrategy is actually running a classic pyramid scheme because they aren't asking random people to recruit others or promising guaranteed profits. But I do think Saylor is pushing things to an extreme level. The chart gives off a vibe that MicroStrategy wants to build an entire tower of financial products on top of the value of Bitcoin. It looks like stacking leverage on leverage.

And that is where the risk comes in.

If Bitcoin goes up forever, like Saylor believes, then maybe all these layers will make sense. But if Bitcoin ever crashed badly, this whole structure could become extremely unstable. When you put too many layers of finance on one asset, you are creating top-down pressure. And the people who might feel that pressure first are normal investors.

My take is that MicroStrategy is not scamming people, but they are moving in a very aggressive direction; it feels like financial engineering. Crypto investors have seen too many blow-ups to feel comfortable with anything that looks like a pyramid, even when it is just a chart. I think MicroStrategy is trying to evolve into a kind of Bitcoin-powered bank, and the new $STRC announcement is another step in that plan. 

But honestly, the design of that chart was a bad PR move because it left the door wide open for people to compare it to a pyramid. And once the internet makes that joke, the joke spreads fast. I really do think it's not a scam, but it's also not something the average investor should jump into without understanding the risks. MicroStrategy's playing a high-stakes game, and the higher they climb, the harder the fall could be if something goes wrong.

Posted Using [INLEO](https://inleo.io/@thelastdash/is-microstrategy-becoming-a-pyramid-scheme-2qn)