Bitcoin Trigger Ponzi Scheme Fears As Prices Continue To Rise
As more and more people dive into the Bitcoin craze, prices continue to soar exponentially. But while many investors tried to make money using the cryptocurrency itself, many have tried to cash in on its popularity in the most devious way possible: Ponzi schemes.
Ever since it made headlines, many companies began sprouting up enticing people to investment schemes involving the digital currency. But while some companies do try to make their investors happy others are no more than illicit money-pooling activities aimed at reeling in unsuspecting victims. As the old adage said, there's a sucker born every minute.
These companies have all the hallmarks of a Ponzi scheme: get rich quick promotions, huge financial rewards, some trappings of legitimacy, and yes, emphasis on recruitment. The people behind them promise of huge returns from investment in Bitcoins and other cryptocurrencies, which they claim are minted through blockchain, a distributed ledger technology that was created to mint these currencies comprises of extremely complex algorithms with several thousand nodes for each chain.
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Analysts and seasoned investors have expressed that these investments have nothing to do with blockchain-developed virtual currency and are nothing more than a new way for scammers to part people with their hard earned money in what has been dubbed as "e-Ponzi" schemes. According to financial regulators, the lack of regulations governing cryptocurrencies has made it easier for such "e-Ponzi" schemes to expand their operations.
Government agencies, along with financial sector watchdogs, are already planning a crackdown on such investment schemes. There are already a few proposals such as applying current financial regulations to cryptocurrencies as well as those aimed at checking the spread of Ponzi-schemes and other illicit money-pooling activities.
The dangers of such investment schemes already add the growing uncertainty in the cryptocurrency market. The inherent volatility of Bitcoin and similar currencies has already raised concerns among financial analysts and economists who fear that a massive crash is on the horizon. So for those who are planning to enter this veritable financial minefield, tread carefully.
