Cryptocurrencies are gaining popularity on a daily basis and with the rise in popularity there has been a surge in scams and ponzi schemes targeting cryptocurrencies.
Our aim here will be to give you an insight into some clear signs of ponzi schemes.
Common Signs Which Help in Recognizing Cryptocurrency Ponzi Schemes
- High Profit/Low Risk Plans: It is a known fact that if you want to make large profits then it will be necessary to take risks. This known fact is utilized by masterminds of ponzi schemes.
- Issues with Withdrawal of Money: Generally, there are irrational reasons due to which you will not be allowed to withdraw money you earned or invested.
- Hard to Understand Business Model: People running ponzi schemes usually have an explanation for their business model which is very hard for any ordinary person to understand.
- Clear Details about Payouts: On the opposite end of the business model, there is clear explanation about earning system they have and the payouts you will be getting. They will do their best to explain how much you will be able to earn, how you will earn the same and every other detail. But, it will be unclear from where all the profit will be coming from.
Another Crypto Ponzi scheme collapses: DavorCoin caught defrauding investors who lost nearly everything.. Yet another cryptocurrency startup promising massive financial returns to investors has kicked the bucket. Scottsdale, Arizona-based DavorCoins (D… https://t.co/QAFlRRXpBe
— Beet Hive Stream 🎨 (@yceek) February 21, 2018
- Risk Free Option: You should get alerted when you find that it is a scheme in which you will not have to bear any kind of risk.
- Get High Rewards: You are promised rewards in the form of twenty percent of amount a new investor would invest and in addition to it, you will be getting twenty percent from annual profits. As in every fraud case, if the rewards seem too good to be true then in most likelihood they are not true.
Let us now look at different forms of cryptocurrency ponzi schemes that you need to be wary of.
Different Forms of Cryptocurrency Ponzi Schemes
There are 3 common forms in which cryptocurrency ponzi schemes are implemented, these are:
- Cloud mining programs
- Cryptocurrency investment programs
- Ponzi schemes pose as altcoin and guarantee to provide assured capital appreciation
Cloud Mining Programs
These are quite popular with cryto ponzi scheme proponents since they are able to make people believe that they would be renting mining machines or purchasing hashing power for getting desired high returns.