How many times do you hear someone mention Ponzi Schemes when talking about bitcoin? It can be maddening, right? Well, this video will arm you with all the information you need to defend yourself. Bitcoin is not only, not a Ponzi scheme, but it seems likely that no investment could be less of a Ponzi scheme.
But, while Bitcoin is not a Ponzi scheme, we do underline some realistic fears you need to consider as you move deeper into the Bitcoin world. And because Bitcoin is a great currency, there’s an important distinction: just like dollars, euros and yen, you can run a ponzi scheme with bitcoin (remember that’s not saying bitcoin is a ponzi scheme). Hope all of this helps when you get in those heated moments. Enjoy as James D’Angelo hostos.
This is the 1th episode in our Debunking Bitcoin Myths Blackboard Series — where we debunk at all the gossip, slander & just plain mistakes that are levied against bitcoin.
The Bitcoin 101 Blackboard series is a moderate/beginner’s course in bitcoin. We hope you enjoy. Please like and subscribe or drop some comments, suggestions or critiques.
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The following are Wikipedia’s paragraphs on Ponzi Schemes highlighted in our video
A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation. Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the high returns requires an ever-increasing flow of money from new investors to sustain the scheme.
The scheme is named after Charles Ponzi,who became notorious for using the technique in 1920. Ponzi did not invent the scheme (for example, Charles Dickens’ 1844 novel Martin Chuzzlewit and 1857 novel Little Dorrit each described such a scheme), but his operation took in so much money that it was the first to become known throughout the United States. Ponzi’s original scheme was based on the arbitrage of international reply coupons for postage stamps; however, he soon diverted investors’ money to make payments to earlier investors and himself.
Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi, (March 3, 1882 — January 18, 1949), commonly known as Charles Ponzi, was an Italian businessman and con artist in the U.S. and Canada. His aliases include Charles Ponci, Carlo and Charles P. Bianchi. Born in Italy, he became known in the early 1920s as a swindler in North America for his money making scheme. Charles Ponzi promised clients a 50% profit within 45 days, or 100% profit within 90 days, by buying discounted postal reply coupons in other countries and redeeming them at face value in the United States as a form of arbitrage. In reality, Ponzi was paying early investors using the investments of later investors. This type of scheme is now known as a “Ponzi scheme”. His scheme ran for over a year before it collapsed, costing his “investors” $20 million.
Ponzi was probably inspired by the scheme of William F. Miller, a Brooklyn bookkeeper who in 1899 used the same scheme to take in $1 million. Video requested by Machobabba Zetlino.