With the concept of cryptocurrency becoming hugely popular across the globe, scamming activities have augmented to a great level. People put their money into a crypto investment, hoping to earn huge profits and lose all their savings. If you are interested in bitcoin trading, visit The News Spy official Site to acquire an utter guide to crypto trading.
Only in the United States of America has it been reported that the scamming activities have increased to 30%, ever since cryptocurrency has become a standard form of investment. In 2019, around four billion dollars worth of cryptos were stolen through fraudulent activities. Most of the traders and investors get scammed through the Bitcoin Ponzi schemes.
Understanding the concept being the Ponzi scheme and how it works is essential to avoid all the chances of it affecting you. This will let you know why so many people have started becoming victims of it and end up losing their hard-earned money through it. It will also make you aware of how you can avoid being a victim of these scams and keep your profit-making possibilities intact.
Understanding The Ponzi Schemes
An investment fraud that tends to attract investors through fraud and make them put the money in their schemes is the Ponzi scheme. This is the most basic type of fraud that leads to the rip-off of new investors.
The first instance of the Ponzi scheme was carried out back in the 1920s. This was the brainchild of Charles Ponzi, who tricked a client by promising him a profit of 50% within 45 days. He asked his client to purchase IRC at discounted prices, also known as the international reply coupon. He did everything possible to make this plan of investment appear legitimate.
For that matter, he even used the later investment money to pay those who had invested earlier. Hence, there were testimonials to make this whole plan appear regular. He successfully carried out the scheme for more than a year, and eventually the truth was revealed. It was a massive scam of around twenty million dollars if sources are to be believed! This scam was so huge that the name got associated with him, leading to people calling
Ponzi Schemes In Cryptocurrency
The most basic form of scam in cryptocurrency is that of the Ponzi scheme. What happens in it is that the conman conceives an entire business plan, which is entirely based on assumptions rather than facts. He makes it so desirable and easy to understand that whoever listens to it decides to put his money in it.
However, what sets this plan apart from others is that it requires putting in money consistently. The scammers get new investors speedily and then use their money to pay off the previous ones. Hence, it keeps running and operational without fail. Therefore, as the investors keep getting money, they feel like everything is fine and going well.
Ponzi schemes and scammers have shifted their attention to cryptocurrency because the number of people using cryptos across the world has significantly enhanced. Therefore, the scammers consider it a pretty lucrative idea to enter this investment world. Being the most traded crypto now, it is more vulnerable to the nefarious aims of con artists.
Staying safe from the Ponzi scheme
It is natural that by now, you must have gotten quite scared of the Ponzi scheme and would want to avoid it to the maximum. So here are a few things you need to do to prevent this:
1. Avoid investment offers with NO risk
Every investment plan or scheme comes with a certain level of risk. Therefore, anyone offering you ZERO risk is not legitimate.
2. Avoid investment with consistent profits
The crypto market is highly volatile. You can’t think of having the same profit repeatedly when the market never remains the same. Any deal that promises consistent returns is not legitimate!
3. Avoid unregulated firms
If you follow the rule of law, you will stay safe. This means that an investment firm that the securities and exchange commission does not register is not something you should believe in. It will keep you safe from being ripped off.
