How to Spot An Obvious Ponzi Scheme
With the recent death of the bitconnect ponzi scheme I wanted to help you guys spot obvious schemes that will eventually run out with your money. This might seem stupid, but people are going to invest in them and lose their money so I figured I would make this a warning because already in the aftermath I already see people moving back to a few other lending schemes. The problem with ponzis is there is always someone on the inside who has more knowledge and access than you so your chances of getting your money out before they run is very small.
The new platform that I saw Trevon pushing was lendconnect, which is also a complete ponzi and will run off with your money eventually. How can I make such a claim? I can do the simple math that people either dont want to do or for some reason choose not to do. First of all there are tiers of investing so if you invest more you should be able to get your money out quicker, but im guessing that even if you put the max (50k) and can pull your money out in 60 days, you still wont ever get it.
Lets do the simple math to show you what I mean. Because 99% of the people using the site will compound their earnings, we will use the compound interest forumula. They are currently paying on average around 5% a day so if you put in just $1 how much money would you make in say a month? 2 months? A year?
These are the amounts you would have after
30 days: $4.32
90 days: $80.73
180 days: $6517
1 Year $54,211,841
2 Years: $2.9 quadrillion
3 Years: $159 sextillion
Obviously this could never actually be sustained. Doing the math usually tells you all you need to know.
They boast they are using the funds to make money on trading and are making 2-3 percent a day. This is complete bullshit. Any real trader knows that you cant push trades and you wont be profiting every day, if you could we would have many more traders with billions of dollars. The problem with this is despite what people tell you making that much a day compounded in trading is hard, very hard. The liquidity in the crypto market as a whole wouldnt even be able to hold a sell orders of such magnitudes and you would end up losing money.
The next thing you have to be aware of is multi level marketing tiers (pyramids) and getting money benefits for getting people into the system. Why do you think so many people push people to invest? They basically get the greater fool to hold the bags while they run off with the money. If you arent the creator of the project you probably arent the one getting away with the money. People need to stop gambling their money like this. They all want to belive they can be the one who gets out but they almost never are and even if they are, its at someone elses expense.
Overall I expect many of these ponzis to be popping up after the failure of bitconnect to try and capitalize on people who will make the same mistake twice. Dont be the person who falls for the same scam again and again. You worked too hard for your money and its too valuable to give to some scammers. Do your due diligence before entering a project and look out for the signs that its a scam.
-Calaber24p
A friend of mine actually lost money in bitconnect, even though i told him it was a scam.
Glad bitconnect is over and ppl are more aware of ponzi schemes now
I find it hard to believe that people still fall for pyramid ponzis despite the long history of highly-publicized failures.
Hahah these projects are so funny. And people still buy them?! people still make them grow just like bitconnect. I just got a commercial for a new ico that is excatly the same as bitconnect. And people still buy it?! I think they will never learn their lesson. Great post to educate everyone and to not give scammers any money. Every dollar that is givin to these kind of scam projects will be lost and otherwise they could be spend on serious crypto projects. This means bigger market caps and means more profit for you and me. Keep on going mate keep on going!
Sadly yes :/ people still keep thinking they will be able to get out before it collapses.
hoping for that 159 sextillion and get out. Who doesn't want that right? hahhaha
excellent post @calaber24p, having a formula like this to use is genius and honestly I had no idea how to see whether something is legit or not. Often I can feel something is off, but having a calulation to run the claims through makes all the difference. resteemed this and hope lots of people see it
I only did read something about bitconnect, never been part of this. And what i have seen so far is exactly what i read here, some people defending bitconnect hard. Which means for me that there will be people, willing to do the same mistake twice.
They were to invested into it and they are now moaning their loss.
What if Steemit is also something like a ponzi scheme? I mean, it is really creepy, that everybody prays, that you have to believe in a longterm investing in STEEM.
Believe it or not, that's what a lot of Bitcointalk scoffers called it when it burst out of the gates. I saw several scoffs of that sort in the Altcoin Discussion board before I decided to sign up.
If you're worried, take this to heart: once Ponzi schemes hit rough spots, they implode and stay imploded. They die and stay dead.
On the other hand, legit platforms go through the valley of collapse and emerge toughened. If a crypto has endured a plummet, gotten through it and climbs back, that's a good sign that it's not a Ponzi-type crypto.
Look at this all-time chart of STEEM,
and you'll see it's already gone through its pummeling. It's climbing back, in satoshi terms, with a user base that's much larger than its base in the heady days of Spring '16.
A lot of the anger from people is that money gets locked up when powered up, which honestly is probably a decent point, but at the same time crazy volatility with the underlying token might not be the greatest.
I for one, enjoy the volatility - mainly because it's been on the uptrend ever since I got here, investing $100, my account is now worth $200 (once I get all my payouts). Locking up steem power is quite important in reducing volatility and maintaining price. Plus, it's an investment and does encourage people to participate rather than just cash out all the time.
Not only that, the rise of the steem dollar now means posts are worth x4 more than displayed on steemit.
Alright, I understand the point with the volatility.
That's precisely the feature that Bitcointalk scoffers zeroed in on when calling it a 'Ponzi scheme'.
But given how Steem's turned around, the lock-in has been a net benefit. It makes you think hard before selling. Moreover - this was the design feature - it means that using your STEEM to influence the rewards stream (by upvoting) requires you to make a commitment to the platform by locking-in.
Wow! Thanks for this comparison! That's really a point. In fact, Steem is climbing back with such a strength. I hope, we will not see the deep valley again and just stay between $ 2 - 10. That would already be ok.
The main characteristic of a ponzi is the promise of consistent returns that are impossible mathematically, using the money of previous investors to pay the new ones. There is no such promise with STEEM. The coin is traded at a certain price because people are willing to pay that price.
I think that crypto as a whole definitely has some principals of a ponzi, but the difference is there is an actual usecase for the steemit blockchain while many of these straight up ponzis are literally "give us money, well give you more"
Good content. It's really sad that crypto as a whole gets bad press like this because of these shady companies/top elite that want to cheat innocent hardworking people. It's already hard enough trying to spread the word without all that negativity.
Your post is one of many, I have a huge respect for you for this. You are truly the one who is really helping All steemiens here.
I completely understand your point how to different ponzi of non-ponzi investment. Would you be able to post why BTC and other cryptos are not Ponzi as well?
I tried to say obvious ponzi purposely because there are traits that crypto exhibits that might look like a ponzi. I think what separates it is there are actual use cases and people who arent just asking for money and saying they will multiply it.
Totaly got it! It’s all about the math. Many people don’t look beyond where it makes no sense. Your example is perfect ponzi.
That’s the kind of post I was rooting for in Steemit. I wish T the best, I think he is a good guy, but we all have to be very careful about where we put our money. At the end it’s thanks to our hard work we made our money. We shouldn’t invest a dime if we can’t afford to loose it. I’m certain there are still people buying BCC.
Thanks so much for this post, you have a courage!
The crypto space is already such a gamble, I dont want anyone to compound that 10 fold by investing in something that is certainly a scam.
One might think that it's take a smarter guy to create a ponzi scheme. I don't know, at least to not make it that obvious after a simple math calculation. But yeah, people are not educated enough to understand and know how to make this calculation. Thanks for pointing it out @calaber24p