The fact that cryptocurrency is booming right now, has led to numerous fraudulent projects with the sole purpose of making quick money. To put it simply, at this point, almost every single Blockchain projects are Ponzi schemes until proven otherwise.

What is a Ponzi Scheme?

A Ponzi scheme is a type of pyramid scheme. In a Ponzi scheme, an investment promoter offers high returns to new investors. New investors are attracted by high returns from the people who came before them. This means that the first few people to get in Line do not put any money at risk. All of the money coming in is just used to pay returns to people who got in line before them.

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As long as new investors are willing to pay high returns, the scheme continues to bring in more money and perpetuates itself. Ponzi scheme promoters typically encourage investing in real estate, stocks, bonds, or other assets. However, these assets are rarely the source of the high returns that Ponzi scheme promoters promise. Instead, the returns come from the new investors. After enough people are lured in and money is taken from subsequent investors, the scheme collapses because there is no actual profit.

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Ponzi schemes are fraudulent investment program

They rely on new investors to pay the original investors, who put up initial capital. Once new investors start pouring in, the original investors stop paying out as much money because they’re no longer getting as much money from them. They then ask new investors to pay them by selling off other parts of their investments—which is known as a secondary market.

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This continues until eventually there’s nothing left for the organizers of the scheme and they go bankrupt.
This can be an effective way for some people to make money if done carefully and with foresight. But in today’s digital age where fake news is so easy to spread, taking that extra step of verifying information can be difficult or even impossible for some individuals.

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Ponzi promised investors high returns

Investors are promised high returns from their investments within a few months or even weeks. In fact, they do not ask for any money up front. Instead, they are certain that they would get their return from new investors who would pay higher returns than the original ones. Therefore, the scheme is often sustainable because new money was constantly coming in to keep it going.

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Ponzi Schemes collapse eventually

The main problem with Ponzi schemes is that they collapse when there are no more new investors. The scheme’s operators then have to take money out of other parts of their business instead of paying “compensation” to their original investors. Even though it seems like a win-win situation and shows everyone how efficiently the business works, no one is happy and everyone ends up losing money except the original perpetrators who took advantage of others’ greed until the end. This is why these schemes are generally frowned upon as practices that should be avoided at all costs.

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Do you know what blockchain is?

The blockchain is one of the most talked-about financial technology innovations of our time. With its distributed ledger and cryptocurrency, it has the potential to revolutionize a range of industries from banking and insurance to remittance and government.

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The blockchain is essentially a digitized, decentralized ledger that functions as an accounting system for digital assets. It records financial transactions in a secure manner, prevents fraud, and makes the process transparent for everyone.
While there are many benefits of using the blockchain, it is also home to some less desirable characteristics.

What is a Blockchain Project?

A blockchain project is the implementation of a blockchain, i.e., a digital ledger technology, to facilitate any type of decentralized application (DAPP) such as a digital currency, digital asset, or asset issuance. A blockchain project aims to improve current business processes by implementing blockchain technology as its central nervous system.

A blockchain project may look very different depending on the industry. Internet-of-Things (IoT) projects are looking to use blockchain as a way to connect devices and enable decentralized monetization. Physical supply chain management projects are exploring blockchain as a way to verify and track goods from source to retail shelf.

The blockchain is one of the most talked-about financial technology innovations of our time. With its distributed ledger and cryptocurrency, it has the potential to revolutionize a range of industries from banking and insurance to remittance and government.

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What then is the difference Between Ponzi Schemes and Blockchain Projects?

The fact that cryptocurrency is booming right now, has led to numerous fraudulent projects with the sole purpose of making quick money. To put it simply, at this point, almost every single cryptocurrency project is a Ponzi scheme.

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Ponzi schemes and blockchain projects are two of the most popular new financial concepts. However, these terms aren’t well understood by most people. They have a lot in common, but there are also some significant differences between them.

The following are key differences between Ponzi schemes and blockchain projects: –

• Ponzi schemes are centralized. Blockchain projects are decentralized.

• Ponzi schemes offer high returns to new investors. Blockchain projects do not promise high returns to new investors.

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• Ponzi schemes are a classic financial scam. Blockchain projects are real and use blockchain technology.

• Ponzi schemes are illegal. Blockchain projects are mostly legal.

• Ponzi schemes offer a very high risk of losing all the money invested. The high risk of losing all the money invested is one of the main factors that make blockchain projects attractive.

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• Ponzi schemes are expensive to participate in. Blockchain projects are free to join.

• Ponzi schemes use fraud tactics to lure new investors. Blockchain projects use technology to attract new investors.

How can you recognize a Cryptocurrency Ponzi Scheme?

As with any investment, it’s important to do your research before investing in a new cryptocurrency-based project. A cryptocurrency Ponzi scheme is likely to be similar to a traditional Ponzi scheme. A cryptocurrency Ponzi scheme is a project that is built on a fraudulent concept to make money. The difference between a cryptocurrency Ponzi scheme and a regular Ponzi scheme is that it is built on the concept of a cryptocurrency. These are often called token-based Ponzi schemes.

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How do you determine if you are about to invest in a Real, Legitimate Project?

If you want to invest in a real, legitimate project, then you need to determine if that project is solving a problem. This is the key difference between Ponzi schemes and blockchain projects. There are legitimate blockchain projects that aim to make people’s lives easier. These are blockchain projects that aim to solve real problems such as food safety, financial inclusion, or healthcare. On the other hand, there are illegitimate blockchain projects that are built on the concept of a cryptocurrency and are, therefore, likely to be fraudulent. These are commonly called token-based Ponzi schemes as mentioned above.

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Conclusion

In today’s digital age where fake news is so easy to spread, taking that extra step of verifying information can be difficult or even impossible for some individuals. This doesn’t mean you should stop doing your research before jumping into any investment of your choice.

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The main problem with Ponzi schemes is that they collapse when there are no more new investors. So, you can start by identifying where the source of your remuneration is coming from. If it’s not tangible or problem-solving means, you should be skeptical.

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The blockchain is essentially a digitized, decentralized ledger that functions as an accounting system for digital assets. It securely records financial transactions, prevents fraud, and makes the process transparent for everyone. The fact that transactions are transparent means authentic information can be derived when you do your due diligence around those projects of your interest.

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