If anyone promised you that your bitcoin investment would multiply by 50% within 24 hours, you need to think twice before you jump into such business opportunity. It could be bitcoin ponzi. So what’s bitcoin ponzi?
Bitcoin ponzi is a questionable and fraudulent cryptocurrency investment that uses ponzi scheme business model to pay its investors irrespective of change in the price of bitcoin in the market.
Any bitcoin platform that promises 100% return every 24 hours whether there is dip in bitcoin price or increase, it’s simply a bitcoin ponzi. What this means is that such platform pays old members from what the new investors pump into the platform.
The price of bitcoin since the beginning of 2018 has not been stable. Bitcoin investment itself is volatile, so anyone promising you a stable return everyday is simply a ponzi.
In January 25, bitcoin gained a value of 2.91% selling at $11,405.90USD (11:59AM), and took a slight dip before the end of the same day selling for $11,309.80USD.
By January 26 (the second day), a bitcoin was selling at $10,989.60USD (16:29), that is 2% decrease in value.
Based on the little analysis above (as regards the volatility of bitcoin), it means you should be wary of anyone who promise you a static daily return.
What is a ‘Ponzi Scheme’
There are different definitions of ponzi scheme, but all of them make the same point: It is a fraudulent and questionable investment scam that promise high rate of profit daily, weekly, monthly, or yearly.
“A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors.
The Ponzi scheme generates returns for older investors by acquiring new investors.
This is similar to a pyramid scheme in that both are based on using new investors’ funds to pay the earlier backers.
For both Ponzi schemes and pyramid schemes, eventually there isn’t enough money to go around, and the schemes unravel,” investopedia
In 2016 Nigeria’s Security Exchange Commission (SEC) and apex bank Central Bank of Nigeria (CBN) warned Nigerians against investing bitcoin, saying it’s risky based on the experience Nigerians had with the notorious money doubler platform MMM (now rested).
On January 30, 2018 again, a Nigerian Senator raised an alarm over influx of Nigerian into bitcoin investment. He was making the same point SEC and CBN made.
The point they’re making is: Bitcoin is a risky business.
Yes, it is. Bitcoin is a risky investment. It is volatile. Its value isn’t stable. The price isn’t predictable. What the price of bitcoin will be in the next two hours, no one can precisely say.
If anyone told you that you WILL multiply your investment within a day or hours, then the person is dragging you into bitcoin ponzi.
Is bitcoin a ponzi?
Bitcoin itself isn’t a ponzi. It is an investment anyone can jump into in as much he has the basic understanding of how bitcoin operates, the pros and cons, btc wallet, and other things that have to do with bitcoin.
However, operators can run a bitcoin ponzi scheme platforms by using ponzi business model: promising fraudulent high profit.
Example of bitcoin ponzi (in Nigeria)
In Nigeria for instance, we already have some bitcoin ponzi : podret, btccycling are bitcoin ponzi.
One reason that makes podret a bitcoin ponzi scheme
Since the boom in bitcoin, several bitcoin ponzi scheme have sprung up, one of them is podret.com, which says, “Podret is an online investment platform that helps you trade on developing digital currency asset class.”
Podret business model is questionable.
Podret bitcoin investment return
Podret says it trades your bitcoin investment on your behalf with $10USD as minimum amount. It promises as high as 2.8% daily return, 14.8% as weekly profit.
Going by the weekly calculation, it means an investor will be making 59.2% as monthly profit, 177.6% in three months, 355.2% in six months, and 710% in a year.
Podret says it’s able to pay profit based on the gains made from trading your bitcoin for you. This isn’t true.
What happens if price of bitcoin goes down to $5,000USD today? Podret will go off the internet one day with your money. It may be paying today, but it’ll definitely go away like MMM did last year.
Podret is a bitcoin ponzi scheme.
How to invest in bitcoin
You can buy bitcoin, ethereum, monero, or any other altcoin of your choice and keep. Sell when the market is favourable. Don’t invest your money in just any altcoin, thousands of them are coming up every day. Virtually all of them are tying their value and marketability around bitcoin.
Just like forextrading, bitcoin investment is volatile, it’s MORE risky when you involve yourself in bitcoin ponzi.