Is Bitcoin A Ponzi Scheme?

BITCOIN investment is set to ramp up in March according to new research as some expect its price to reach $60,000 over the coming days. While this could bring opportunity, investors have been reminded and warned of the potential for fraud with cryptocurrencies.

What really drives its price, according to investment manager Fidelity, is simply human interest in Bitcoin. The upward price effect is amplified when interest rates go lower. The opportunity cost of owning gold, which pays no income, decreases as yields fall on rival “safe” investments such as bonds and cash saving accounts. Understanding why people buy gold is critical to understanding why people buy Bitcoin.

A senior promoter gave her a nice car to impress customers, and instructed her to visit farmers when their crops were being harvested and they had money in their pocket. But it seems it’s not just the promise of riches that keeps people believing. After Jen McAdam invested into OneCoin she was constantly told she was part of the OneCoin “family”. She was entered into a Whatsapp group, with its own “leader” who disseminated information from the headquarters in Sofia. And McAdam’s leader prepared her carefully for conversations with OneCoin sceptics. “You’re told not to believe anything from the ‘outside world’,” she recalls.

Investors who would never fall for similar scams in the non-digital world are falling prey, not only to hackers accessing wallets and acquiring passwords, but to outright blockchain fraud. Cryptocurrency investment has seen a resurgence during the many Covid-19 lockdowns, and with Elon Musk piling into Bitcoin, interest is unlikely to diminish any time soon. But, with the upswing, there has also been a corresponding spike in the volume of cryptocurrency related fraud.

Bitcoin Set To Hit $60k As Joe Biden’s Stimulus Package Is Passed

Therefore, trust is involved and Bitcoin undermines its own credibility without blockchain verification at minimum. Cryptocurrency has very solid and practical value and purpose. It definitely got overvalued, but that’s what humans always do for everything.

this is something we don’t see in legitimate markets, and especially not in a market which supposedly has a demand surplus that constantly pushes prices up. Something about cryptocurrencies attracts, not just starry-eyed naïfs, but the sort of starry-eyed naïf who thinks that Ponzis, chain letters and other blatantly fraudulent financial schemes are actually a good idea. Bitcoin is also a popular platform for Ponzis and Ponzi-like schemes. The story of Pirateat40 is detailed in chapter four of the book, but “high-yield investment programmes” were stupidly popular in the early days. And it’s attracted experienced Ponzi operators such as Sergei Mavrodi of the MMM scheme of the 1990s, who started new schemes based around bitcoins. This means that more money has to come into the system — new people have to join the scheme. This is obvious to everyone “investing” — they have to recruit.

Diane Abbott Expresses Concern Over Bitcoin gigantic Ponzi Scheme

Around the same time, the US authorities charged Dr Ruja in absentia for wire fraud, security fraud and money laundering. Igor Alberts, the MLM seller, also talks about the involvement of “very influential people”. When I ask him who might be behind the threats, he won’t elaborate.

• Investment Quorum is authorised and regulated by the Financial Conduct Authority.
• But the authorities all over the world have been slow to react, partly because the whole area of cryptocurrencies is relatively new.
• The currency first hit the mainstream not for being a savvy investment, but rather because it was the tool of choice for online drugs websites hidden in the dark web, a collection of anonymous internet webpages.
• You go into it very soberly understanding that you can lose all of your principle and that this is purely speculative,” he told Yahoo Finance.
• On 6 March 2019 Konstantin Ignatov was at Los Angeles International airport, waiting to fly back to Bulgaria after some OneCoin meetings in the US.
• All over the world, people were already investing their savings into OneCoin, hoping to be part of this new revolution.

In the UK, a firm must be authorised and regulated by the FCA to do most financial services activities. The scammer might tell you the investment opportunity is just for you and ask you not to tell anyone.

Ponzi

Advice from an expert fraud solicitor at the earliest opportunity is crucial to your defence. At Selachii, our tenacious, commercially-minded solicitors provide expert advice and assistance in all manner of investment fraud matters.

Dr Ruja identified several of society’s weak spots and exploited them. She knew there would be enough people either desperate enough, or greedy enough, or confused enough to take a bet on OneCoin. She understood that truth and lies are getting harder to tell apart when there is so much contradictory information online. She spotted that society’s defence against OneCoin – the law-makers, the police, and also us in the media would struggle to understand what was happening. It represents the dark side of rapid technological change – the way that every new technology creates amazing new opportunities and possibilities for people who understand it, but also the chance to exploit the people who don’t.

Igor Alberts, the MLM kingpin, said he’d heard she has Russian and Ukrainian passports and travels back and forth between Russia and Dubai. It’s also been suggested that there are powerful people who might protect her in her native Bulgaria – and that she could hide in plain sight because of plastic surgery that makes her unrecognisable. Others told us she was dead – which does remain a possibility. Georgia suggests we tell Daniel’s mother that we are journalists, and that we are investigating OneCoin because a lot of people aren’t getting their money. She doesn’t speak English either, so I’m shocked to discover, as we sit and talk, that Daniel has never actually told his mother that the money is lost. “I’m somehow hiding myself. I don’t want those people I introduced into OneCoin to see me moving around. They can easily kill me. They thought I ate their money.” Prudence is a nurse in a Kampala slum, who thought she could make more money selling OneCoin and set about recruiting new investors.

Both approaches differ from physical goods such as gold or silver, commodity money. Typically, new cryptocurrenncies are issued with “white papers”, a document which covers the problem that the project is attempting to solve and details on how their product is designed and works. “Except there is no mining equipment, it’s just a Ponzi scheme.

In court it was revealed that Ignatov signed a plea deal on 4 October, in which he pleaded guilty to several fraud charges. Then a few days later we received a call from a trusted source we cannot identify. He told us we were right – Frankfurt is indeed where she spends much of her time. Armed with a microphone and several photographs of Dr Ruja, we headed off to Frankfurt and searched old addresses and gated neighbourhoods said to be the most expensive in Germany.

I Think An Investment Scammer Has Contacted Me

There is some very clever maths behind all this, but this means that Bitcoins can’t be faked, they can’t be hacked and can’t be double-spent. For a long time, people have tried to create a form of digital money independent of state-backed currencies. But they have always failed because no-one could trust them. They would always need someone in charge who could manipulate the supply, and forgery was too easy. All over the world, people were already investing their savings into OneCoin, hoping to be part of this new revolution. Documents leaked to the BBC show that British people spent almost €30m on OneCoin in the first six months of 2016, €2m of it in a single week – and the rate of investment could have increased after the Wembley extravaganza.

As she got more and more friends and family on board, investors kept on receiving messages to mentioning a ‘big announcements’ and ‘new owners’. The Londoner later persuaded her mum to funnel around £13,000 of her retirement fund into the scheme. Another alleged victim is a woman in her late 30s who once worked in investment banking. Lyfcoin is now trading at 8 cents on its website, instead of the $1.60 advertised to buyersShe invested $2,500 (£1,900), but when she went to cash out after five months, she was told she was locked in for 12 months. ‘Initially the only reason I bought this was they told us it was going to be linked with eBay, Amazon.

Some think of it as the future of money, others claim it is a giant Ponzi or pyramid scheme, duping the trusting and the gullible. But there must be something particularly capricious and whimsical about Bitcoin if its value can surge by 20% simply because one man lends his support to it on Twitter (although admittedly that one man just happened to be the world’s richest). January saw Bitcoin’s price climb far above any previous record it had achieved. Then it hit a new record high (US$48,000) after Tesla said it had bought about US$1.5 billion of the cryptocurrency. Before a new cryptocurrency is launched on an exchange, you will be able to buy cryptocurrency coins or tokens as part of an Initial Coin Offering . This is usually what’s known as a pump-and-dump – when a price becomes inflated at launch, and then rapidly crashes.

The reason so many people are excited by Bitcoin is that it solves that problem. It depends upon a special type of database called a blockchain, which is like a huge book – one that Bitcoin owners have independent but identical copies of. Every time a Bitcoin is sent from me to someone else, a record of that transaction goes into everyone’s book. Nobody – not banks, not governments, or the person who invents it – is in charge or can change it.

It’s been a rollercoaster couple of years for cryptocurrencies, but 2019 has been a fruitful one for Bitcoin holders. The value of one Bitcoin rose more than 85% since January 1, placing it among the some of the year’s top performing financial assets. In fact, a recent report from Bank of America names Bitcoin the single best investment of the last decade. Do you have a money dilemma which you’d like a financial expert’s opinion on? If you would like to ask one of our finance experts a question, please email your query

If someone bought a fraction of a bitcoin at $19,000 per BTC, that doesn’t make anyone else a “Bitcoin billionaire” whose bitcoins could be sold at $19,000 each — the total actual money recoverable from the system hasn’t gone up. This makes Bitcoin a zero-sum investment — the actual money coming out can never be more than the actual money coming in. (Or a bit less, as the miners cash out their reward from each block mined to pay for their electricity.) X amount of actual money goes into Bitcoin — the same amount of actual money, X, is immediately returned to a different person. You’re basically telling people “please don’t let the price drop, just sit and wait for new suckers to arrive”. Ultimately, some of technology’s brightest and best are jumping aboard the Blockchain and cryptocurrency bandwagon.

It is currency that crosses borders without interference from middlemen, such as banks or governments. These factors combined, from an investing stand point, mean those who own Bitcoin already only expect the price to continue rising. It is a digital currency with a limited and slowing supply of coins. These cannot be faked due to the blockchain that underpins it and all transactions are public but only identifiable by unique keys. The actual coins themselves are “mined” and released into the blockchain by computers cracking complex coding problems. However, approximately every four years these codes become twice as complex, meaning the same computing power can only “mine” half the number of Bitcoin. Bitcoin and other “cryptocurrencies” are being taken extremely seriously by large and respected investors, tech chief executives, governments, criminal gangs and most importantly, the younger generation.

Before long, she had invested €10,000 of her own money – and persuaded friends and family to invest €250,000 of theirs. She watched excitedly on the OneCoin website as the value of her coins steadily rose. Before too long they had passed £100,000 – a 10-fold return. But there was something very important these investors didn’t know. OneCoin, Dr Ruja told the Wembley audience, was the “Bitcoin Killer”. “In two years, nobody will speak about Bitcoin any more!” she shouted. “Labour overall thinks it’s important to have proper regulation of financial services,” she said.

The authorities believe that those who operated it were able to gain a minimum of €6 million, with outstanding invoices existing for several million more. But investigators have so far only been able to recover more than €1 million. The majority of the fraudulently-obtained money is believed to have been taken out of the European Union.