Why Crypto/NFTs Aren’t a Ponzi Scheme — A thread

1. First, “crypto” is not one thing. It’s a massive ecosystem containing lots of different things. Most are legitimate projects. Some have been scams. Others have just failed, as most things do.

2. A Ponzi scheme is a type of investment fraud in which the money contributed by later investors is used to directly pay early investors and trick them into thinking the money is the natural return on their investment. No funds are ever actually invested.

3. The original “Ponzi” scheme was run in 1920 by a dude named Charles Ponzi. He promised people he could take their money, invest it into stamps/coupons, and deliver a 50% return in 90 days. He never actually did what he said... he just lied and attempted to sustain the lie.

4. There were plenty of holes in his scheme which eventually led to investigations and the downfall of the entire operation.

Important points to keep in mind:

• A ponzi scheme needs centralization, trust in a middleman, and secrecy in order to work.

5. With cryptocurrencies like Ethereum and Bitcoin, there is no centralization, no middleman, and there is essentially total transparency. Anyone can look at the ledger and the records ( http://etherscan.io ). That’s the only reason cryptocurrencies can work and have value.

6. The reason why some people think cryptocurrencies are a ponzi scheme is because they work better & are typically more valuable if more and more people start to use them and believe in them.

But that’s not fraud or inherently bad. Almost everything works like this.

7. The US dollar only works because people believe in it on a global scale.

Or consider the telephone. The more people that adopted telephone usage, the better it was for everyone because there were more people to call and more ways to get value out of it.

8. When you buy Ethereum or Bitcoin, you’re not giving your money to a middleman like Charles Ponzi who is promising to take your money and give you a guaranteed amount back in X number of days.

Bitcoin and Ethereum are highly volatile. We all know this cause it is transparent.

9. Many people foolishly invest in cryptocurrencies because they’ve latched on to media headlines and stories of people who seemingly “got rich quick”. And people have “gotten rich quick”! But many haven’t, and there is no Ponzi figure-head promising returns.

10. Cryptocurrencies, like any currency or form of value, are dependent upon collective belief. They are quickly spreading and evolving because they have a lot of practical benefits over older beliefs.

11. If you invest in a transparent and decentralized cryptocurrency like Ethereum or Bitcoin, then you aren’t investing in a Ponzi scheme.

Your $500 may or may not go up in value. There is no promise or intermediary like in a Ponzi scheme. Instead, there is a global community.

If you’re interested in actually learning more about crypto/NFTs & not just dismissing them out of ignorance, follow along. No promises of returns, and you’re always in control of your money, cause there is no Ponzi.

Read more about Charles Ponzi here: https://en.wikipedia.org/wiki/Charles_Ponzi?wprov=sfti1

Following up on this thread because I just discovered the nightmare that is crypto TikTok. Do not ever follow and buy into these RIDICULOUS grifters who are promising you wealth and cash grabs. If anyone is giving you crazy and charismatic investing advice, RUN. https://twitter.com/lawmaster/status/1384762392933015553