Title: Ponzi Schemes Post by: Husires on January 13, 2022, 11:33:51 AM Disclaimer: The information's contained in this explanation is the result of my understanding of Ponzi Schemes and may contain some errors. Search and confirm about it. Table of contents 1. Introduction (#post_point1) 2. What is a Ponzi scheme? (#post_point2) 3. How Does a Ponzi Scheme Work? (#post_point3) 4. How to Recognize crypto Ponzi Schemes? (#post_point4) 5. How to protect yourself? (#post_point5) Introduction Most individuals who invest in cryptocurrencies want make some profits so the return on investment (ROI) is supposed to be one of the things to study before thinking about investing. With the increase in projects and methods of investing in cryptocurrencies, the risks increased, and therefore risks must be redefined, the difference between them and Ponzi schemes. What is a Ponzi scheme? The name goes back to Charles Ponzi who became famous for his fraudulent system of earning money, as he managed to defraud hundreds of victims. Ponzi schemes work by paying profits to former investors with funds from newer investors and therefore the belief comes that profits come from product sales and thus continue to invest and the promise of generating high-value returns with little or even no risk. In the end, other investors discover that they are the source of the funds and therefore they will not receive returns and they may lose their money. How Does a Ponzi Scheme Work? The main point is that scammers never invest money that they redistribute investor money to believe that they are making profits, and therefore you need a steady flow of money to survive, otherwise they will run away with the money. What makes this type of fraud appropriate in cryptocurrencies is the fact that scammers are more difficult to track and there is not enough regulatory framework to protect investors and thus may escape all investments without paying any returns. How to Recognize crypto Ponzi Schemes? It is not an easy task, but there are some indicators and red Flags which make more likely the project is to be Ponzi Scheme than as an investment:
How to protect yourself?
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