ELI5: Explain Like I'm 5

pyramid scheme

A pyramid scheme is a type of scam. It works by having people pay to join the scheme and promising them money from other people joining. This means each new person pays money to the person at the top of the pyramid and the money then works its way down. People who join early on in the pyramid get money from the people who join later on. However, eventually, there are not enough people joining for everyone to get money, so people at the bottom of the pyramid can lose the money they paid in.