Over the weekend a new traffic generating widget called BlogRush was released to the masses. Within hours of its launch, BlogRush had swarmed the vast network of blogs run by internet marketers who, for the most part, make their money online by bragging about all of the money they make online.

Essentially, you sign up your blog and add the BlogRush widget to your site. The widget then begins displaying links from other users who are also running the widget. For each view the widget gets on your blog, you earn one credit that buys you the right to get one of your links displayed on someone else’s blog. Pretty simple. It’s not entirely an awful idea but there are three really big problems with BlogRush that are cause for concern.

#1. BlogRush is a Pyramid Scheme

BlogRush has a tiered referral system (explained nicely in their FAQ) in which the person at the top of the pyramid earns credits for all of the traffic the users who signed up underneath them earn. This is awesome if you’re the owner of a really popular blog who can make one post and snag hundreds and hundreds of referrals. Unfortunately, everyone not near the top is essentially having their credits used against them as a means for the “traffic rich” to get richer.

#2. BlogRush Doesn’t Scale

There are just too many credits going around. Maybe I’m too stupid to work out the math correctly but it would appear to me that using their system of referral credits, at some point, the number of available credits is going to vastly outmatch the number of available impressions the widgets can generate. The only people that can burn through the most credits are going to be the ones who are, in turn, getting the most free credits with their own huge referral bases. If you’re late to the game, or run a small site, you’ll be out of luck using BlogRush as your links get swamped by the big boys.

#3. BlogRush Appears to be Easy to Game

By using impressions, and not clicks, as their metric for credits BlogRush is open to about a million ways to be manipulated and abused. They’re already experiencing these kind of problems and have even resorted to manually reviewing blogs who apply. On top of the various ways you can cheat, BlogRush can be manipulated at its very core by simply supplying it with an RSS feed of your own choosing. John Chow blew the lid off of this one yesterday while smoothly mentioning you can make a new account (under his referral, of course) with a custom made RSS feed of your most popular posts with specialized headlines.

But maybe there’s hope.

Those are my three big issues with the current state of BlogRush. Does that mean I hate it? Not exactly. Actually, I think if you run a blog that doesn’t revolve around the generic “Computers & Internet” category you might see some decent results using the widget. There might even be hope yet for the computer blogs out there if they decide to break that category down into more specific sub-categories.

I’m going to keep my eye on BlogRush just to see how they handle the issues of cheating alone. I’m afraid that the referral system, which was a great way to spread the widget virally, will ultimately be the reason for its failure. At the very least, the BlogRush people should be commended on putting on a total clinic in marketing and hyping the launch of a new product. The way this thing has exploded is pretty incredible.