This seems cute, but it's actually a Ponzi scheme, a type of pyramid scheme, and as such it is illegal.
While the starters of such accounts can hardly be compared to Madoff or Shkreli, they essentially do the same thing: relying on the next batch of investors to pay off the first ones.
Thing is, cake badges cost 80 points, and at some point the bubble is going to burst. To pay for 1 investor, you need 4. To pay 4 investors, you need 16. To pay off those 16, you need 64. To pay off those 64, you need 256 investors.
Get it? Exponential growth! Like the grain on the chessboard story, except it grows twice as fast!
Let's do the math - I love math:
Let's say the imaginary account GiveThemBrioche sells cake badges for 20 points instead of 80, so at a 75% discount.
Let's say there's a steady flow of 20 cakes per day bought this way.
Let's say this goes on for 4 weeks.
Day 1: 20 investors, 400 points, 5 cakes - waiting list of 15 = 60 new investors needed to clear backlog
Day 2: 35 investors, 400 points, 5 cakes - waiting list of 30 = 120 new investors needed to clear backlog
Day 3: 50 investors, 5 cakes - waiting list of 45 = 180 new investors needed to clear backlog
Day 4: 65 investors, 5 cakes - waiting list of 60 = 240 new investors needed
Day 5: 80 investors, 5 cakes - waiting list of 75 = 300 new investors needed
Day 6: 95 investors, 5 cakes - waiting list of 90 = 360 new investors needed
Day 7: 110 investors, 5 cakes - waiting list of 105 = 420 new investors needed.
Week 2: 245 investors, 2800 points, 35 cakes, 210 people on the list = 840 new investors required.
Week 3: 350 investors, 35 cakes, 315 on the waiting list, 1260 new investors needed.
Week 4: 455 investors, 35 cakes, 420 on waiting list, 1680 new investors needed.
What does this mean for the waiting list:
The last ones on day 1 get their cakes on day 4 - waiting list 3 days.
The last five who subscribed on day 2, are paid on day 8 and the waiting list is 6 days.
The last on day 3, are paid on day 12 - waiting list 9 days.
Day 7's last ones are paid on day 28 - waiting list 3 weeks
Week 2: last ones get their cake on day 56 - waiting list of 42 days or 7 weeks
Week 4: last ones get their cake on day 126 - waiting 94 days, 14 weeks or 3 and a half months.
At this point, the people are getting fishy and stop subscribing.
Let's say the account owner of GiveThemBrioche is bonafide and realizes his mistake. He decides to pay back every single investor. For every cake that's been given out, there's now a debt of 60 points - this makes his debt 300 points per day, a grand total of 8400 points, with a total monetary value of $105.
Let's say the account owner of GiveThemBrioche is malafide, takes all the points in the kitty and runs. Of course they're points, which cannot be changed back into money, if he runs after the month is over, he'll have enough to buy him a month's worth of premium membership from what the investors gave him in the last week.
Ponzi schemes are illegal under US law and as such are banned by dA. As soon as you spot one, report them to dA and let them do their work.
- Listening to: Dir En Grey
- Reading: Beginning Programmer Guide
- Playing: Lemmings
- Eating: Chocolate
- Drinking: Tea
Such a cute concept they originally had but I wonder if they didn't even realize how illegal it really is...
i didn't even know this was a thing that was going on.
And good luck to all the people who need their points back!
Also because they, or whoever liked them enough to buy a cake for them, fell for a Ponzi scheme and the more people we can prevent from doing that, the better.
Here's what happened before this journal was posted:
My fellow account admin and I realized our mistake with the mathematics over the long term.
I posted an apology explaining everything:
The future of this account and our deepest apologyWhen KiranDrawss opened this account we had no idea that it would cause problems that people call "ponzi schemes" and "pyramid schemes." We thought, "It works for GiveThemCake, it'll work for us too." Unfortunately, the once great GiveThemCake has vanished from dA without a word.
Neither Kiran nor I are good with math in the slightest. We had no idea that this discount system would compile more debt than core memberships given. We humbly admit to our failure and our mistake.
The future of this account:
All points this account currently has will be used to refund everyone we can starting from the first person on the waiting list since they donated the earliest. After those points run out both KiranDrawss and I (wintercool612) will be raising points to refund everyone else. We will not stop until our goal is complete.
We're offering llama badges and commissions for points.
We've already refunded a lot of deviants.
As I have stated in status update posts, I recently got a job. I haven't gotten paid yet, but I do promise to help cover the refunds for the two accounts.
We will never be running this kind of system ever again. If I do start another point account, it would only be because I am certain that it will work long term.
I personally have never seen any other point accounts issue refunds. I was directed to this journal by Voiii in their attempt to refund people scammed by GiveThemCake.
To me the difference between a scammer and an honest business person is whether or not they chose to fix their mistake.
Let me know if you'd like screenshots of the point history from YouAreStarred
but it is good that youarestarred and dressmyllama will be trying to refund everyone rather than taking the points and running like what we all assume GiveThemCake did
And to prevent people from using it - GiveThemCake claimed to have given out over 500 cakes, meaning 1500 cakes were bought but not received. That means GTC had a point debt of 40,000 points (in US $ 500).
To pay off the 40,000 GTC would've needed 2000 more cakes on the list.
Those 2000 cakes would in return need 160,000 points (since you used their points to build off debt) to get baked.
For which you would need 8000 new cakes. Which would require 640,000 points.
For which you would need 32,000 new investors. Which would then require 2,560,000 points (= $32,000)
Aaaaanyway... you get the point... the waiting time for a cake would run into months, possibly years, and that is going to keep people from investing. The less people are investing, the longer the waiting time becomes, the less people will invest and so on. Then the bubble deflates and a lot of people lose their points.
DeviantArt should have pulled the plug a lot earlier, but they're the only ones who make money out of this.
Thank you so much for the info
Note a cake badge costs a dollar.
GTC had bought at least 500 cakes, according to the signature. The most recent cache Google came up with, is from 28 July, about two weeks before the baking stopped, and by then there were 419 cakes delivered.
So at that point in time,
419 cake badges were bought at 20 points, yet they received something of 80 point value.
All their cakes together cost 33520 points. Yet they only paid 8380, so the gap of 25140 came from the next investors in line. There must've been a total of 1257 cakes purchased through GTC (on top of the original 419) in order to afford this.
We're trying to refund around 650 cakes through PRR.
Let's see, how can I fit this data together...