Bitcoin Ponzi Scheme – How to Detect One?
A Bitcoin Ponzi scheme broadly known as HYIP (High Yielding Investment Program) was once a center bitcoin investment and still continues to exist in the Crypto sphere. Boasting of returns ranging from 15% daily to 1000% or more in three days these schemes lure people by offering a high return on investment within a few days.
Imagine you have $100 today and after three days they turned them into $300 or more by doing absolutely NOTHING! A Ponzi scheme is an investment or pyramid scheme where the return on investment for the old investor is generated by the funds from new investors. These type of scheme rely solely on new investment and massive advertising campaigns. Once the new investment stops coming, the schemes plummet leading to loss of funds.
Well, on a sad note, the Bitcoin ecosystem is rampant with such schemes marketed almost on all Bitcoin ads network. As a matter of thought, I was also a victim of a Bitcoin Ponzi scheme during the early days of my Crypto life. Hence, you are likely to come across such networks sometime during your Crypto life.
How to detect a Bitcoin Ponzi scheme
Detecting a Ponzi scheme is not hard. Just know that if it sounds too good to be true it might be a Ponzi scheme. It is also advisable to research about the company before making an investment with them. If they are new and boasts of lucrative returns, then there is a likely chance for you getting scammed. Some specification that might indicate a Bitcoin Ponzi Scheme website includes.
A new domain
Bitcoin Ponzi scheme website can be detected by their domains’ age. Domain age refers to the period of time a website has been online or active. Usually, Ponzi website domain age ranges from one to four months. You can easily check a Domain age using this tool. If the domain age is under six month it is one of the signs of a Ponzi scheme.
Moreover, many scammers are now also taking advantage of expiring domains to counter this factor. There are thousands of expiring domains and choosing any of it to run the Ponzi scheme would likely lure many novice investors.
Offers high return
The main recipe of a Ponzi scheme is its abnormal return on investment. Ponzi schemes offer lucrative investment offers. This attracts people into investing in the newly made program without performing due diligence.
Millennials entering into Cryptocurrencies usually come across Ponzi website banners on various Bitcoin and Micro Earnings websites offering them insanely profitable programs. Some even go extreme and claim to double or triple their Bitcoins within few days.
Offers low investment plan and even a lower withdrawal threshold
This is by far the main reason for people burning their money in Bitcoin Ponzi scheme. You can start investing in Ponzi sites with as low as 0.001 Bitcoin and see your money grow with no effort.
Withdrawals are even lower usually 0.0001 in Bitcoins to appeal more investments. Once the user is able to withdraw part of their investment he starts to believe that this is a legit website paying to its users and will run forever. Further, many investors also start to promote the program using their referral link. This, in turn, creates a flow of money into the program.
Claims to be a registered company
The HYIP’s and other pyramid schemes use this tactic to make investor believe that they are a legit and recognized company, especially in the United Kingdom region. As a matter of fact, it only takes 20 GBP to register a company in the UK and you can do it online. Similarly, the website also provides a fake phone number and company address to further provide authenticity to the company. However, the majority of the time these details are all fake.
If you come across a website that offers high returns within a short period of time and claims to be a UK or Singapore registered company. Then the chances of this website tumbling within a few months are very high. In short, before investing in any online Bitcoin program make sure to perform thorough research into the platform to mitigate the chances of frauds.
You should not deposit any of your money in such programs except you want to lose them. Moreover, these types of investment program are also making their way into Telegram