Ponzi’s often have a set of
characteristics that help identify them. Some people will insist a
ponzi is not a ponzi as they have been paid by the scheme, but this
does not necessarily help their cause, as it is part of the pattern
of a ponzi. At the second level of a pyramid/ponzi scheme it is
critical people are actually paid, otherwise the scheme will stop
right there. If the fraud just persists one level after the creator,
the profit won’t be all that great.
As you can see with this crudely made
graphic, the ponzi requires exponential growth to continue. It can
continue a little while, but will eventually reach a critical mass, a
point where it is no longer possible to attract enough people to pay
the upper levels of the pyramid. This is where the owners skip town
to run the scheme again somewhere else. Everyone else generally ends
up with nothing.
There is a very good reason I am a
blogger, not an artist.
Another critical part of the ponzi is
that the method of making money is overly complex, or simply not
explained (look at my past posts for more on this).
99
bitcoin recently reported on a possible ponzi scheme.
Note how USI seems congruent with a typical ponzi scheme:
There is little information about the
founding team. This would definitely be the case if they plan on
skipping town after everything shuts down, or if they did that in the
past. Further, it seems there is evidence that the founders they do
know about seem to have been involved in fraud. This doesn’t look
good for USI.
So people might even think this
reflects poorly on Bitcoin or on Crypto as a whole. Well, you
wouldn’t blame USD every time a Ponzi was conducted in dollars,
would you? Probably not. Hence blaming Crypto for this really isn’t
that helpful.
Read more about my past reporting on
Ponzi’s
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