SEC-S17W3- "Let's talk about Ponzi scheme"

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Have you ever heard about ponzi schemes?

Yes, I have heard of Ponzi schemes before. I understand that these are fraudulent investment schemes that promise high returns with little risk. The way these schemes work relies on using new investors' money to pay for previous investors' returns, rather than actual profits generated from a legitimate business or investment. This method is named after Charles Ponzi, who popularized the scam in the 1920s by promising quick profits on investments in international postal coupons.

I know that the main attraction of these schemes is their promises of quick and high returns, which is generally unachievable under normal investment conditions. I am aware that Ponzi schemes require a constant flow of new funds to maintain the illusion of success, which makes them inherently unstable and destined for collapse once the flow of new investors dries up. From my point of view, they are not only immoral but also illegal, as they end up causing significant losses to the majority of participants, especially those who join the system last.

Have you been offered to invest in any of these schemes?

Personally, I have been asked to invest in such schemes, like the one offered by Qnet. These offers can often seem very attractive at first, promising big returns on your investment in a short time. However, after further analysis and research into the practices of Qnet and other similar programs, it became apparent that these opportunities could be risky and operate similar to a Ponzi scheme, where payments to former members depend on of the financial contribution of new members. This made me very cautious and prompted me to decline these offers to avoid any potential financial risk.

Source

Do you know how to detect Ponzi schemes?

I can detect Ponzi schemes by paying attention to several specific red flags that are often present in these types of scams. First, promises of abnormally high returns with little or no risk are particularly suspect. In a realistic investment environment, higher return is generally associated with higher risk.

Then, an excessively constant return can also be an indicator that the investment is not legitimate. Financial markets are inherently volatile, and investments that produce consistent returns regardless of market fluctuations are unlikely without some form of manipulation or fraud.

Another critical point is the registration of investments. Legitimate investment opportunities are usually registered with financial regulators like the SEC in the United States or the AMF in France. Investments that avoid these registrations can often operate outside official regulations, making it easier for fraudulent practices to take place.

Transparency is also crucial. If investment strategies are described as secretive or too complex to explain, this should prompt caution. A responsible investor must understand what they are investing in and how returns are generated.

Finally, if I am asked to constantly reinvest my winnings to achieve higher profits, or if I have difficulty withdrawing my funds, this may also be indicative of a Ponzi scheme. Ponzi schemes often depend on the ability to attract new investment to continue operating, and they may use tactics like forced reinvestment to keep money in the system as long as possible.

Do you think Steemit is a ponzi scheme?

Regarding Steemit, I don't think it's a Ponzi scheme. Steemit is a blockchain-based blogging and social media platform that allows users to earn cryptocurrency rewards for posting original content and curating quality content, i.e. positively reviewing other content. This reward system is different from a Ponzi scheme because it does not rely on money from new users to pay old ones.

Rewards on Steemit are generated by the blockchain creating new tokens according to a predetermined algorithm that rewards both content creation and curation. This distribution is transparent and based on community engagement and content quality, rather than recruiting new investors.

However, it is essential to understand that, as with any cryptocurrency-based platform, there are associated risks, including the volatility of token values and reliance on the popularity and activity of the platform. Using Steemit wisely involves knowing these risks and understanding how the platform and its token economy work. It is also important to recognize that although Steemit is not a Ponzi scheme, new users should always exercise caution and not view rewards as guaranteed or immediate income.

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Thank you very much for reading, it's time to invite my friends @hamzayousafzai, @suboohi, @ngoenyi to participate in this contest.

Best Regards,
@kouba01