Although most people are well aware of why Ponzi schemes are so dangerous, there are quite a few programs out there in the Bitcoin world that aim to reach the same goal. However, users will need to be even more vigilant in the world of digital currencies, as Ponzi schemes can promise a high return, and very few people will ever see their money back, let alone a profit.
Also read: Core Vs. Classic Discussion Grows Stale
The Ponzi Schemes That Make Bitcoin Look Bad
Based on various reports by mainstream media throughout the years, Bitcoin itself could be classified as a Ponzi scheme as well. To many people, this popular digital currency is an ecosystem where only the early adopters get rewarded, and everyone who has come after that will never see a return on investment. These statements stem forth from a lack of research and understanding of how Bitcoin and the free market works, though.
Moreover, it is a clear example of the lack of understanding by a lot of people on how Ponzi schemes work. The primary objective of a Ponzi scheme is to lure in as many unsuspecting investors as possible, by making a lot of [unrealistic] promises. Plus, members of a Ponzi scheme are rewarded for bringing in additional users, which actually keeps the pyramid scheme going.
It is very true some Ponzi schemes in the world are making use of Bitcoin to bring in additional investors. After all, the world’s leading digital currency is attracting a lot of attention all over the world, and there is a lot of potentials for huge profits to be made. However, Bitcoin has evolved from its volatile days into a long-term investment, although a significant price spike – either upwards or downwards – can occur at any given time.
Throughout the years, there have been various Ponzi schemes active in the Bitcoin world, most of which revolving around the mining industry. Butterfly Labs, one of the more infamous manufacturers of Bitcoin mining hardware, turned out to be a pure scam as far as the delivery of mining equipment was concerned. The company later tried to offer cloud mining as well to repay customers who did not get their hardware, but that attempted Ponzi scheme fell on deaf ears.
A lot of people refer to MMM Global as Ponzi scheme as well, and they are right for the most part. The main purpose of this company is to grant investors easy access to Bitcoin, as long as they keep bringing in new users to the system. Moreover, it is impossible to cash out until someone else in the MMM Global network buys out your stake. Once people stop coming in, the Ponzi Scheme by this company will be up, costing a lot of people a lot of money.
If you liked this article follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin and altcoin price analysis and the latest cryptocurrency news.
