Money

A pyramid scheme an illegal investment scam. The basis of this scam is that investors receive a commission for each new person they bring into the system. Returns are based on the number of sellers recruited. As the scheme a progress, the investment is pitched to an increasing number of potential investors until the market becomes saturated.

It is called a pyramid scheme because early investors (mainly the organizers of the scam) receive the most money, while each layer below gets less until the last people recruited get taken for all their money. If you visualize it as a pyramid, the early investors are at the top while each subsequent layer of investors spreads outward. A pyramid scheme typically has no other source of revenue other than new investors.

Because this scam relies on an ever increasing number of victims, it tends to die out quickly, making money for a few people at the top and leaving the masses at the bottom penniless.