Ponzi schemes and Cryptocurrency
By: Shrey Shukla
Tags: Network Marketing, Cryptocurrency, Bitcoin, Referral Marketing, Bitcoin Mining

CRYPTOCURRENCY. When the name pops up, trust me, more than 70% of educated people, still twitch their nose. If we give a benefit of doubt to these people, human psychology is the answer. Less people are curious to almost everything. The rest of them are not likely to like anything they do not understand or they don’t know about. They have their own perceptions because they are “traditional”, “conservative”, “anti-progress” and a list of other adjectives you can count. I would however prefer, “classic”.

These classic people don’t believe in changing that often, they are like a roller coaster which could not leave the track to go on open road, irrespective of the fact that they move on their own track, too fast to be even tracked. These ‘classics’ are firm believers in “not to change” the way they have been moving upon, doesn’t matter whatever comes and goes around, in the lives of people around.

There are these classics, and then these enthusiasts. These enthusiasts have a special quality, they are rebels. They enjoy moving on the path, people usually abandon. These virgin socio-economical paths could lead them to Grand success, or even to the worst failures. They however rarely get rid of this “adventurous” way of living the life.

Enthusiasts and investment Plans

These enthusiasts have been seeking opportunities for quick and effective ways of economical growth, irrespective of the fact that these ways are socially accepted and appreciated or not. They get in to quick money making, following the investment plans with almost impossible returns on investment. Then they get in to Ponzi schemes too, where a number of people get promised for lucrative returns and it makes a pyramid of investment, where as many levels it does travel for, more risk factor gets involved in to it.

A Ponzi scheme is, where some people invest in to some ‘non income generating’ program and then they ask others to invest in the same. The initial people get referral income and they get more and more people introduced to the program, to earn more referral income. Respectively, each one in the program pays some money to get in to the program and gets referral income. It eventually increases exponentially and as soon as the number of new joiners becomes insufficient to satisfy the referral income of all the levels above, the whole system collapses.

Bitcoin and how does it support a Ponzi scheme

So these Ponzi schemes have this pyramid pattern to follow, and they don’t have a business model either, apart from taking money from several people and then re-circulating the money to the previously added people. This business model eventually crashes and people who were at the bottom of the food chain are dissatisfied and have earned nothing. Then they try to connect the links and go after the people or minds that were after all of this. After some intense research and with the help of authorities, they finally get caught and sentenced.

(photo source : 123RF)

In case of bitcoin, on the name of bitcoin mining and pool mining, people use to get the referral links, multi level distribution of referral bonus and everything like earlier. They use to get daily returns in form of bitcoin too, now it is important to mention here, that these returns are way more than the normal mining pools could reward. There was no justified explanation of how could they give those high returns on pool mining.

Then comes the next phase of the business, where eventually the returns became too high to be distributed in the big downline and it all crashes. People, who had put their money in form of bitcoin in last week, or month, could not get the investment back because the system doesn’t support any withdrawal requests anymore.

(photo source : shutterstock)

The next phase, where the perpetrators were to be caught and punished never happens in case of BTC related Ponzi schemes. It was just a bitcoin wallet address everyone was feeling so related with. Nothing else is there to track to catch hold of the culprits. The company runs for some days or weeks, pays some hundred thousand to people who joined initially and takes millions from people who joined in the last days. The number of joiners in the last few days is the most as it has to be a pyramid. The biggest pile of people loses its money and the organizers remain anonymous because they could not be tracked back.

What is better? To be an enthusiast or a “classic”, when it comes to finances

If someone asks me, I would suggest remaining a “balanced” version with the characteristics of both.

1) Risk taking is nice, but it has to be a calculated one.

2) It is ok if one loses some money in some investment, one should not have a “goodbye” approach to investment plans.

3) Unrealistic returns even, for better, could be good. Could be some progressive project and planned well may be, it’s better to have a look at things and then decide to go for it or not, instead of regretting later, for not getting profit, or for losing large amounts

4) Do your researches well, know the business model and consider the information you get about the organization very crucial.