Interesting Read Are Cryptocurrencies Like Ponzi Schemes?
Some experts agree that there are cryptocurrencies that work like Ponzi schemes. “When it comes to crypto products, there are many products with projects that are trying to work like Ponzi schemes. It's spread across the world but is much more popular in countries such as Malaysia and Indonesia. Crypto is used as a way of payment because it's easier and, by using crypto, they can open the entire Ponzi scheme to the whole world instead of being restricted to a specific country or region,” says Sathvik Vishwanath, co-founder and CEO, Unocoin, a crypto exchange.
Cryptocurrencies are, in fact, worse than Ponzi schemes, says Gaurav Mehta, founder of Catax, an online crypto tax and auditing platform. “It is a more complicated asset than a Ponzi scheme, and it is worse since it not only encourages evangelism but also undermines nation states by interfering in the currency system. When the tulip mania passed, people were at least left with tulips to smell; when Bitcoin passes, they (investors) would be left with nothing," he said.
Other don’t agree. A Ponzi scheme promises high returns with minimal risk, whereas crypto trading is quite volatile due to market conditions, regulator challenges, and other factors, which gives investors an opportunity to earn high returns but while they face high risk.
"Clubbing crypto assets with Ponzi schemes is grossly unfair. Multi-level marketing schemes and chit fund schemes that promise steep returns would qualify as Ponzi schemes," says Sharat Chandra, vice-president, research and strategy, EarthID, a global decentralized self-sovereign identity management platform.
As cryptocurrencies fight for legitimacy, bad players make the task more difficult, especially as the commentary around cryptocurrencies has moved beyond payments (legal tender) use cases to aspects such as asset tokenisation, metaverse, gaming and web3.0.