How To Spot Bitcoin Ponzi Schemes

For some time, a Ponzi scheme as a type of investment fraud has been very much around. This comes in the disguise of promises for investors, but which always turns out to be false. These fraudsters do lay claim that their investments will be profitable at little to no risk.

Similar to pyramid schemes, Ponzi schemes gear at attracting many new clients to their illicit investments. With this, they get their family members, friends, and colleagues involved in this false investment.

But the questions here are how are Ponzi schemes connected to cryptocurrencies? Also, how do you recognize a Bitcoin Ponzi scheme?

How Ponzi Schemes Work

Fraudsters start a Ponzi scheme through the generation of a stream of income by attracting new members. How this works is that they use the funds from new investors to pay out the old investors and keep the scheme up and running.

The bottom line of this discourse is that fraudsters don’t/never invest the money. They use the funds gathered to manipulate and convince their investors into the shallow thought that they are making a profit. But, in the real sense, they are gradually losing their money as the ground of the ‘sham’ investment shifts.

Ponzi schemes are piloted with a steady flow of funds to survive, but when the number of people cashing out is greater than the number of new investors entering into the scheme, they collapse.

Most recently, fraudsters are shifting gears towards operating Ponzi schemes on cryptocurrency investments.
But what makes this type of scam convenient to operate upon is the inability to trace the culprits and poor regulation bounding Bitcoin and its investment.

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How To Spot Bitcoin Ponzi Schemes

Bitcoin Ponzi schemes can be a bit tricky to be spotted, albeit some things connect every Ponzi scheme. You can easily spot and distance yourself from potential Bitcoin scams if you can understand some of the signs it present.

1. Very Reliable Returns On Investment

Returns on investment (ROI) are characterized by fluctuations, depending on the market situation. They go up and down without consistency. Therefore, always be wary of any investment posing consistent returns, irrespective of what is going on in the capital market.

2. Mindblowing Promises

Investments are defined by a set of risks to be considered. In the world of investment, the higher the risk, the higher the reward. Thus, when you are approached with an investment proposal that offers little to no risk, there is a need to be opened to the reality check that something is not right about the investment.

Often than not, Ponzi schemers try to persuade their potential victims with the claim of having a profitable deal. According to them, the investment carries virtually no risks at all.

3. Unregulated Investments

Fraudsters usually have a preference towards investments that have not been registered by the Security and Exchange Commission (SEC) or other regulatory bodies. Hiding under this sleeve of anonymity for as long as possible enables them to keep the scheme going. So, always stay clear of unregulated investments that might expose you and your funds to risk.

What Precautionary Measures Should Be Taken?

Today, Bitcoin theft and scamming are prevalent. After all, scammers have a lesser chance of being caught.
You should consider implementing these security measures to ensure that your cryptocurrency transactions are safe, private, and protected.

1. Physical Security Key: this is a piece of hardware you can use to allow access to your Bitcoin. It is one of the best ways to reduce the risk of being hacked and traced because scammers would need to have the physical security key to perform any action.

2. Install A VPN: a VPN encrypts all traffic, making it difficult for hackers to track your activity. There is a common misconception that all cryptocurrencies are anonymous, they are pseudonymous. Hence, there is a possibility to trace them back. Using a VPN with a killswitch and a strict no-log policy would do the magic.


You must always be alert, diligent, and careful with your investments and security. This precautionary measure is important for anyone who deals with cryptocurrencies like Bitcoin. As Bitcoin-related scams are becoming prevalent in our society today, ensure you stake woke to fraudulent activities that can put you and your funds in jeopardy.

Kolade Elusanmi

As a cryptocurrency and digital assets writer, I am knowledgeable about the latest developments in the world of digital currencies and their impact on the global economy. I also have a deep understanding of the various types of gift cards and their use in the modern retail landscape. With my expertise, I strive to provide informative and insightful articles that help my readers stay up-to-date on the latest trends and issues in these dynamic fields. I hope you enjoy my writing.

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