Madoffs scheme was a Ponzi. Pyramid schemes are more like multi-level marketing, you pay money to join then you recruit others and make a % of their membership fee, usually they try to hide it by having some worthless product to sell along with it but the majority of it focuses on the membership and recruitment / referral fee structure. Ponzi schemes pay old investors with money new investors put into the scheme and they pretend to be investing in other things but really are not investing in shit. Ponzi schemes are insanely popular with e-currencies of all sort, just look up HYIP, high yield investment program. It really is like gambling with those things, the first few people who put money in get huge returns, but eventually the person running it takes off with everyones money. Some people are actually fooled by those things, many just treat it like gambling, if you get in early enough you do stand to double or triple your "investment", but if you get in at the wrong time you stand to lose everything.