If something promises a high return, does it qualify for a Ponzi scheme? According to a new survey by BanklessTimes, one-third of Americans believe cryptocurrencies, for example, are Ponzi schemes because of their high return.
While cryptocurrencies have some of the same similarities as Ponzi schemes, there are a couple key differences. According to the survey:
- Both promise high returns, but while a Ponzi scheme is not sustainable, cryptocurrencies are built to last.
- Cryptocurrencies are decentralized and not controlled by any person or organization. This makes them much more resistant to collapse than Ponzi schemes, which rely on new investors to keep them going.
And while cryptocurrencies are transparent, their code is open source. This allows anyone to audit their code and verify they are not being manipulated.
In the end, BanklessTimes CEO Jonathan Merry said that a Ponzi scheme is only sustainable as long as enough new investors are coming in to keep the scheme going. “When that stops, the whole thing collapses. Bitcoin is not a Ponzi scheme because it does not rely on new investors to keep it going. Instead, Bitcoin relies on its own technology and network effects to maintain its value.”
To read the BanklessTimes survey, CLICK HERE.