With the appreciating value of so many cryptocurrencies, the number of ponzi schemes also increases. Last week, @oluwoleolaide talked about how he lost about 200 Steem to a Ponzi scheme. You can read his post <a href=“https://steemit.com/steem/@oluwoleolaide/200-steem-down-the-drain-pay-attention-to-me-and-don-t-fall-victim-to-blockchain-ponzi”> here</a>.
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<img src="https://static.pulse.ng/img/incoming/origs6038555/3146364508-w644-h960/Ponzi-Schemes-Feature.jpg"> <a href=“https://static.pulse.ng/img/incoming/origs6038555/3146364508-w644-h960/Ponzi-Schemes-Feature.jpg”> Source</a>
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<b>What is a Ponzi scheme?</b>
The <i>Merriam-Webster's</i> dictionary defines it as

<blockquote>An investment swindle in which some early investors are paid off with money put up by later ones in order to encourage more and bigger risks.</blockquote>

<b>How It All Started</b>

It started in the 1920s, when Charles Ponzi conned thousands of New England residents into investing in a postage stamp speculation scheme. That time Annualised Percentage Rate (or APR) for bank accounts was 5%, but Ponzi promised investors that he could provide a 50% return in just 45 days. Initially, Ponzi bought a small amount of reply coupons to aid his scheme, but later switched to using incoming funds from new investors to pay alleged returns to earlier investors.

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<img src="https://upload.wikimedia.org/wikipedia/commons/6/66/Charles_Ponzi.jpg"> <i> Charles Ponzi | Wikipedia </i></a>
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<b>Signs to look out for</b>

High returns with little risk is usually promised. Like Charles Ponzi's example, a rate that was ten times higher than the normal annual interest rate was offered. I usually tell people this, "If an investment sounds too good to be true, it probably is." Most Ponzi Schemes have high interest rates to lure many participants.

Ask questions like, What is my money going to be used for? Most Ponzi schemes do not have assets and they cannot specifically answer that question. The money invested, usually moves from new investors to old investors.

Another red flag is that they are not registered with any security, exchange commission or state regulators. So when the Ponzi Scheme collapses, all funds are lost.

Ponzi schemes also relies on new members or on old members to increase the amount they're investing. So when someone tells you about an investment, check how it is coordinated.

Ponzi schemes rely on advertising through websites and old investors. It is difficult for them to go to media houses, TV stations, radio and feature in newspapers pages, the way legitimate investments like mutual funds do.
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<img src="https://img.gancxadebebi.ge/ka/gancxadebebi/qseluri-marketingis-specialisti-GEO29892-619978.jpg"> How Ponzi Works | <a href=“https://img.gancxadebebi.ge/ka/gancxadebebi/qseluri-marketingis-specialisti-GEO29892-619978.jpg”>Image Source</a>
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Before investing in any scheme, check if it is reputable and if it has any of these red flags. Always be cautious. I will appreciate any additional tip or comment. Thanks for reading!


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https://steemitimages.com/DQmRmzKhmSegf2bvy6VkAsDtMLdnm1pRKNN6uKjJBGq1hd6/upvote%20resteem%20follow.gif
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Notable credits:
<a href=“https://en.m.wikipedia.org/wiki/Charles_Ponzi”> Wikipedia</a>
<a href=“https://www.sec.gov/fast-answers/answersponzihtm.html> U.S. Securities and Exchange Commision</a>