What is A Ponzi Scheme? Is Ponzi Scheme A Scam Or Genuine Business?
Without a doubt, Ponzi Scheme is a fraudulent business. Yes, we agree that Ponzi Scheme pay few members, but that doesn’t make their business model legal or sustainable. They will stop paying sooner or later, due to which majority of members will lose their money. Why? Well, let’s find out the answer in detail through our post here.
You may be thinking, who is the man in the picture above, and why is this picture within this post, right? Well, his name is Charles Ponzi, and he is the one who has started the Ponzi scheme. From his name, you can now guess why Ponzi Scheme is called as Ponzi. Yes, Ponzi Scheme name has been derived from his name. OK, now let’s find out what is Ponzi Scheme.
What is a Ponzi Scheme?
Ponzi Scheme is neither a legal nor a sustainable scheme. It is operated by routing the money between the users who participate in this program. They never have any real source of income to pay claimed profit to their members.
The majority of members will lose their money in Ponzi scheme and only a few ones who join the system at first will make some few bucks due to which you will find out some few people who promote and support some Ponzi schemes.
All the Ponzi schemes trick people by showing the real payment proofs because they pay few members at starting by routing the money between the members so that they can lure more people into their scheme by showing those payment proofs. However, it is practically not possible to pay all members in that way because when they pay one member, they need to use the money invested by other two members so that they can pay the principle and profit amount to that one member. But, whenever they pay members in that way, they will create a debt equal to the amount of profit that they use to pay the members.
So, even Ponzi Schemes want to pay all members they can’t because day by day the debt will be kept on increasing, and they will not have enough fund to pay all members. That’s why Ponzi schemes are illegal schemes.
Legal authorities have already warned the public to stay out of the Ponzi scheme due to its unsustainable nature.
How to Identify a Ponzi Scheme and save yourself from it?
If any businesses, either online or offline, claim to pay you high profit within a short period of time, then you must be aware that is a Ponzi Scheme. You can think yourself, why anyone will pay you interest/profit rate more than a bank? If he/she thinks his/her business is very profitable, then he/she can take a loan via bank where he/she needs to pay very less profit and keep more profit for him/herself.
For example, Ponzi Schemes claim to pay you 30% monthly profit on your investment amount. So, why are they asking for your investment by paying you such high amount of profit rate when they can take a loan from a bank where they only need to pay maximum 1% monthly (12% yearly)?
So, from their business claim, you can identify they are a Ponzi Scheme. In simple word, if something is too good to be true, then it is.
These days we have also found that lots of online Ponzi Scheme sites are trying to trick people by showing the company’s registration document registered from the United Kingdom, or Hong Kong. But, don’t fall for that trick. Lots of online Ponzi scheme sites in the past have already turned into scams which were registered from the United Kingdom, or Hong Kong.
Actually, it is very easy to register a company in the United Kingdom, or Hong Kong by providing the virtual address which anyone can rent from the virtual address provider services as well as by providing the third person identities. Even you can register a company in the United Kingdom, or Hong Kong without a big hassle. On top of that, such kind of registration is not the license to run an investment company like Ponzi Schemes, but just a registration for the tax purpose.
Examples of Ponzi Scheme:
To find the examples of Ponzi Scheme, you can click this tag >Ponzi Scheme<. Once you click it, you can find the list of Ponzi Scheme businesses and their detailed reviews.
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