To the Moon: Shitcoins are Ponzi Schemes

[Davidvictorson]

According to Investopedia, "The term shitcoin refers to a cryptocurrency with little to no value or a digital currency that has no immediate, discernible purpose."  They are characterized by short-term price increases followed by nosedives caused by investors who want to capitalize on short-term gains. On the other hand, "A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk."- Investor.gov. In my opinion, shitcoins are ponzi schemes, they have no goals, no direction nothing other than to rip-off folks who buy invest in  it  and hope that they're gonna make it big overnight not knowing that the odds are against them. I might be wrong but this is just what I think. Do share with me your thoughts. Thank you.

https://www.investopedia.com/terms/s/shitcoin.asp
https://www.investor.gov/protect-your-investments/fraud/types-fraud/ponzi-scheme

[Upgrade00]

Ponzi schemes are scams which invites investments on the promise that they'll get ROI within a certain time and to a certain degree, they usually do not have any financial model or way of generating funds besides funds generated from previous investors, it differs from shit coins to a certain degree as those are designed to look attractive, like any regular scam, but do not promise investors xxx$$ returns within xxx time frame.

They both lack a functioning business model, and focus majorly on marketing and presenting an attractive outlook

Ponzis are more similar to pyramids which requires investors to recruit other investors and get payed directly off them with no functioning business model, bring 4 new investors and get payedIn summary, there is no need to really differentiate between them, they are all scams with similar models and should be avoided.

[mk4]

In my opinion, shitcoins are ponzi schemes, they have no goals, no direction nothing other than to rip-off folks who buy invest in  it  and hope that they're gonna make it big overnight not knowing that the odds are against them. I might be wrong but this is just what I think. Do share with me your thoughts. Thank you.

I get why altcoins are hated, but this is not it. No doubt a lot are really really flawed, but I'm pretty sure some projects actually have good goals with good intentions, regardless if they end up failing. Just like how there are scam companies/businesses, and companies/businesses that actually have goals but will end up failing anyway due to having a flawed product.

[Taskford]

Not unless you are absolutely certain of what you are doing. I mean, you can make astronomical gains if you have a general idea of what to look out for, what are the red flags and all the shits, the community, dev updates, and so on.

And, from what I've seen, even good projects have been dubbed "shitcoins" because no one believes in them in the first place. I still believe that if you know what to look for, you can spot GEMS in a sea of shitcoins.

[Woodie]

The problem with ponzi schemes is that the early birds do get to benefit from  their investment unlike the long term hodlers who loose out from their investments because all the value has been taken out... Hence not everyone will see these ponzi schemes to be ponzi schemes.
But in all honesty right from the start if the project doesnt look legit dont invest in it.

[hatshepsut93]

I get why altcoins are hated, but this is not it. No doubt a lot are really really flawed, but I'm pretty sure some projects actually have good goals with good intentions, regardless if they end up failing. Just like how there are scam companies/businesses, and companies/businesses that actually have goals but will end up failing anyway due to having a flawed product.

Of course there are honest projects that try to build something, but this doesn't mean that they are worth investing in, from the fundamental perspective, because time has showed that blockchain and cryptocurrency has almost no applications in real world.

In my opinion, shitcoins are ponzi schemes, they have no goals, no direction nothing other than to rip-off folks who buy invest in  it  and hope that they're gonna make it big overnight not knowing that the odds are against them. I might be wrong but this is just what I think. Do share with me your thoughts. Thank you.

You are wrong, because a Ponzi scheme is a very specific type of investment scam, and shitcoins don't fall into this type, because shitcoins don't promise anyone fixed returns of investment and they don't make promised payments to early investors with the funds from late investment.

[Ararbermas]

Well that's what it is.. It usually happen in some new projects wherein very promising "to the moon" but after all they all ended up into shitcoins. Lol never ever again because that's the common strategy of some influencer wherein " To the moon" and fake information and news, main reason investors always fell in such ways even nowadays. . Lol

[The Sceptical Chymist]

I get why altcoins are hated, but this is not it.

It's not it at all, at least for people who know what cryptocurrencies are all about.  I'd also suggest that investopedia shouldn't be relied on as an authoritative source of information--especially if that's what they (or whoever contributed to it) wrote about altcoins, because they clearly don't understand what they're talking about.

Consider that there's really no fundamental difference between bitcoin and your typical altcoin in terms of their nature.  Sure, there are a lot of little differences, but basically bitcoin is a crypto just like Litecoin is or Dash or you name it.  If you lump all altcoins into the category of "Ponzi scheme" you might as well put bitcoin into that as well--and that would be just as wrong.

Way back in the day I used to think bitcoin was a scam, or at the very least a bad idea that would never catch on (and goddamn was I so painfully wrong on that point), but I never considered it a Ponzi.  A Ponzi is a subset of scams that employs a very specific tactic, with some variations on the theme, which was described in the OP here.  Obviously whoever wrote that altcoin description for investopedia doesn't get it.

Edit: hatshepsut93, I swear I didn't read your post before writing mine.  I basically wrote the same thing you did about Ponzis being a specific type of scam.  Nice to see that others see things logically.

[livingfree]

Not all of the shitcoins are ponzi schemes, although many of them really don't have an actual good product and they only aim to increase the value of their project.

But I won't count all of them are ponzis.

There are good projects that I've seen and called shitcoins during their early phase and I've even called a lot of them as shitcoins too then, this bull run came and proved their worth and became one of the top.

[jtipt]

Firstly, if this isn't clear not all altcoins are shitcoins. In my opinion, shitcoins are any crypto that serves no real purpose, take meme-coins for example. And even these shitcoins are not exactly Ponzi schemes by defination, as others have mentioned since they don't promise any returns, but some shitcoins do work like Ponzi schemes.
Take these recent Shib, Squid Game, even Doge examples, early investors who were sensible enough to get out at the peak (just like Ponzi investors) made some insane profits but others who bought near the top are left with holding their bags or cuttings massive losses.

[titular]

While yes, the majority of altcoins are indeed scams, many projects do come with positive intentions. Much of the time, it's just regular people attempting their own iteration of what they think cryptocurrency is. While we know that 99% of these chains will fail, this doesn't mean they don't have the right to try.

[kryptqnick]

I think they're similar (if we ignore the difficulties of sorting altcoins into shitcoins and legit projects), but there's still a difference. For example, there's a certain hierarchy in the company when it comes to Ponzi schemes, whereas all investors are formally equal when it comes to shitcoins (my 500 coins will be worth the same that someone else's 500 coins, and the question is only if I sell them at the right moment).
As for shitcoins not promising returns, I think it probably depends on a project but I doubt that no ICOs promised their investors good returns.

[Jackl87]

According to Investopedia, "The term shitcoin refers to a cryptocurrency with little to no value or a digital currency that has no immediate, discernible purpose."  They are characterized by short-term price increases followed by nosedives caused by investors who want to capitalize on short-term gains. On the other hand, "A Ponzi scheme is an investment fraud that pays existing investors with funds collected from new investors. Ponzi scheme organizers often promise to invest your money and generate high returns with little or no risk."- Investor.gov. In my opinion, shitcoins are ponzi schemes, they have no goals, no direction nothing other than to rip-off folks who buy invest in  it  and hope that they're gonna make it big overnight not knowing that the odds are against them. I might be wrong but this is just what I think. Do share with me your thoughts. Thank you.

https://www.investopedia.com/terms/s/shitcoin.asp
https://www.investor.gov/protect-your-investments/fraud/types-fraud/ponzi-scheme

Well i would say per definition shit-coins and ponzi schemes are different things. A shit-coin, so basically every meme-coin that is out there, is an absolutely useless token that is created by a "team" with almost zero effort in order to make money, but i would say that most people know that shit-coins are exactly that and only throw in a little money maybe in the hopes for a fast pump to sell them again quickly. No one, at least i hope that, would invest a significant amount of money into a shit-coin (meme-coin). A Ponzi scheme on the other hand is a project that may look very serious and professional on the first glance but that's only a trick in order to trick people into investing their life-savings into it.

[uneng]

I think ponzi schemes are very similiar to some shitcoins, because the intention behind the launchment of these coins is the same intention of a ponzi scheme operator.

The method employed isn't exactly the same, but besides the goal being the same there are many common aspects: misleading marketing, attractive referral programs (bounties, airdrops or initial staking for shitcoins), lack or false content of informations about the team behind the project...

And just like in any ponzi, shitcoins' developers can use the investment made by early investors to pump the coin and make it look promising for more investors around.

It became very clear with the scam shitcoin Squid, which went from almost 3000$ to nothing in 5 minutes. Furthermore, investors were not allowed to sell their coins when they wished. That was a manipulative intentional move of the developers.

So shitcoins look like refined ponzi schemes for the new generations which obviously wouldn't fall for the old model.

[chenille]

You are right, it might be useful to introduce a new category "ponzicoin" because new coins are often only launched to be a ponzi.

So many DOGE copies have been released providing no added value.
People should always avoid such coins because avoiding such coins will prevent price gains which makes ponzicoins unattractive and disliked.

Education is key and we should not support ponzicoins.

[tvplus006]

...In my opinion, shitcoins are ponzi schemes, they have no goals, no direction nothing other than to rip-off folks who buy invest in  it  and hope that they're gonna make it big overnight not knowing that the odds are against them. I might be wrong but this is just what I think. Do share with me your thoughts.

The main difference between the ponzi scheme and shitcoins is that the organizers of the ponzi scheme pay a guaranteed profit to early participants, using the money of those who joined later. There is no guaranteed profit in shitcoins and you can lose your money at any time.

[iv4n]

Welcome to crypto! I don't think there's another way of saying that... it's something we all encounter, sooner or later! There is no way to miss all those shit and Ponzi schemes coins, they are around, and we see them make spikes on charts, and going down to zero after! And most of us know it's just a game of "fast fingers", if you having fun it's like gambling, and if you have "fast fingers" maybe you can make some profit here and there, but at the same time there is a high risk that you will lose everything!

So... just don't invest in low cap coins for fun, do it only after deep research! If, in any case, you decided to have fun with low-cap coins at least be aware of all the risks you are facing with! People do it, we all know that, but most of them are short in the end!

[Maidak]

Ponzi scheme and shitcoin do not follow the same rules but both are scams. At some point, they will scam you. Before investing in a coin, one should know the details of the project's background and never be persuaded or influenced by anyone.

The main difference between the ponzi scheme and shitcoins is that the organizers of the ponzi scheme pay a guaranteed profit to early participants, using the money of those who joined later. There is no guaranteed profit in shitcoins and you can lose your money at any time.

In the same way that early investors get some profit in the Ponzi scheme, early investors also get some profit in shitcoin. No doubt dogecoin is a shitcoin with no fundamental background, you can't say no one benefited from dogecoin. It is true that many people have been deceived into buying dogecoin but the list of beneficiaries is not too short.

[Charles-Tim]

In my opinion, shitcoins are ponzi schemes, they have no goals, no direction nothing other than to rip-off folks who buy invest in  it  and hope that they're gonna make it big overnight not knowing that the odds are against them. I might be wrong but this is just what I think.

I do not know if this is true, but there are many scams of this type which I did not find it in connection to Ponzi scheme. The type you are commenting about are called 'pump and dump'. This is called pump and dump all because the developers will invest first, making other investors to invest later. But, later, the developers dump the project after making profit and sell the coin, making high amount of profit, but they sold huge amount which will result to bear market for the coin to become shitcoin. But, also know that some developers wanted the best, but the project failed. Aside from pump and dump, even new projects are risky.

[South Park]

In my opinion, shitcoins are ponzi schemes, they have no goals, no direction nothing other than to rip-off folks who buy invest in  it  and hope that they're gonna make it big overnight not knowing that the odds are against them. I might be wrong but this is just what I think. Do share with me your thoughts. Thank you.

https://www.investopedia.com/terms/s/shitcoin.asp
https://www.investor.gov/protect-your-investments/fraud/types-fraud/ponzi-scheme

A great deal of altcoins are scams, others are bad projects and a few are in fact Ponzi schemes, however there is a reason why words have different meanings, and I think it is a mistake to think of shitcoins exclusively as Ponzi schemes, after all that is only one way in which you could lose your money when there are so many ways in which could happen, so you need to learn to distinguish each one of them so you can better protect yourself and your capital if the time comes in which you decide to invest in new coins.