Wednesday, November 29, 2023

Is Cryptocurrency the Information Age's Ponzi Scheme?

(Image created by A.I. DALL-E/Bing)

There's been people trying to get money off of other people for as long as money exist. In the industrial age, "Ponzi Scheme" came about to do just that and today it seems to have taken a new form namely: Cryptocurrency.

Is Cryptocurrency the information age's version of a Ponzi Scheme?

It's important note that not all door to door salesman are part of a Ponzi Scheme. It's very likely that not all cryptocurrencies are frauds however it does look like it's easy for it to be a fraud as people don't understand them enough. 
With FTX, one of the biggest cryptocurrencies exchange platform, going bankrupt after being found to be a fraud ... it's difficult to trust any of them. If one of the biggest one turned out to be a fraud then how likely are we to find other ones to be frauds?

The idea behind cryptocurrency is relatively simple: scarcity creates value. The value of these coins comes from them being limited. The key here, however, is that people must buy into it - if there's no trust there's no value. For Cryptocurrency NOT to be a fraud, it must exist for the right reason and not for the purpose of defrauding someone.

Is Cryptocurrency the information age's version of a Ponzi Scheme?

Ponzi Scheme was created in the industrial age for the purpose of defrauding people. Cryptocurrency was created in the information age but the purpose depends on the creator. Some turn out to be FTX while others are Bitcoins... some salesmen represent Ponzi Schemes while others don't.

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