Bitcoin: What is a Ponzi Scheme? 

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Around the world, ever since people first started investing in bitcoin, there have been constant attempts by skeptics to label it a Ponzi scheme. However, the idea is that BTC does not actually do anything, and how its value increases are entirely up to the people.

If it is used by them to buy more things, then only does its price increase otherwise else not. But today we will know whether it will be able to make it a Ponzi scheme. Perhaps you can invest via a genuine exchange like bitcoin revolution, or any other compatible platform.

What is a Ponzi Scheme?

So, first, the question in your mind would be what are Ponzi Schemes? So, if we talk about it then it is a kind of investment scam. Through this scheme funds from those investors who have recently ventured into it are used to give a higher reward to the existing investors. It was known as Charlie Ponzi, he deceived many investors during the 1920s. Unlike a real investment, money is not invested through a fraudster.

OneCoin is considered to be one of the most famous Ponzi schemes. It created an alleged cryptocurrency with no blockchain behind it. Investors around the world were defrauded by OneCoin to the tune of more than $4 billion. And when OneCoin was discovered, the main figure behind it, Ruja Ignatova, had completely disappeared, whichever was not caught. 

How is it implemented on bitcoin? 

There are many ways to apply Ponzi schemes to Bitcoin, which we have listed below.

  1. A High Return with Risk

Bitcoin has generated many high returns in the past, but most crypto investors around the world feel that it involves little to no risk of any kind. If you are also one of those who invested in bitcoin five years ago, then you are more than 750% in today’s time. Despite a recent accident. Also, there was no guarantee at that time. However, even today, it is considered relatively new and at the same time exists as an unregulated asset class.

  1. Highly Consistent Returns

If the Ponzi scheme is introduced in bitcoin, then investors from anywhere will start receiving payments regularly. Furthermore, the value of bitcoin at present is anything but it will be perfectly consistent as well as its price swings anytime. There are many platforms available that pay stable APY on bitcoin.

However, it may be pertinent to question whether the platforms that offer returns on cryptocurrency deposits are in the form of Ponzi schemes. But if this allegation is made on bitcoin, then it can be like calling the dollar a scheme because it can also be used as a form of payment by some scammers.

  1. Unlicensed and unregistered investment sellers

These Ponzi schemes also include investments that are not registered with state regulators or the SEC, the SEC says.  It is considered relatively unregulated, and there are only a few cryptocurrencies available that register as investments with the SEC. In addition, most cryptocurrencies are those that are brought under control by the Commodity Futures Trading Commission (CFTC), as they are generally referred to as commodities rather than investments. But there are also most of the top crypto exchanges available that try to keep up with the regulators. If they are U.S. Speaking, their crypto platform must have something like a money transmitter license. While this does not exactly equate to being an SEC-authorised investment firm, it’s not entirely unregulated either.

Bottom line

People who invest in bitcoin believe that it can also prove to be a transformative one. Although many consider it like digital gold, others believe that it can also appear as the currency of the Internet.

If seen, it is in the form of one asset that has a lot of speculation and at the same time, the industry is available in its infancy. This is a situation where tighter regulation or quantum computing may have been able to influence the digital asset market on its own before it was fully developed.

SOURCEBitstamp.net

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