What is Ponzi scheme about? Ponzi Scheme Definition

You might have listened to the Ponzi scheme but do you know, it derives its name from a real person named Charles Ponzi. He is the first person in the history of the mankind that use the Ponzi scheme in the world. In 1919 he offering people to pay a return of 50% in 45 days and 100% after 90 days. Many people invested in his company Security Exchange Company because he made a very good profit in his earlier business. But he instead of investing the money just redistributed it to the members and told them that they have made a profit. The scheme lasted until only 1920 when an investigation took place into the Security Exchange Company.


How does Ponzi scheme work?

We all have witnessed about the fraud companies do. Especially those companies that require investment from the people use the trick of Ponzi Scheme to scam people and run away with their money. Everybody must have listened and read about the Ponzi scheme. If people follow the newspaper continuously then they will understand it much more easily how the Ponzi scheme works. For the information, Ponzi Scheme is the most used unethical scheme in which company pays to its starting members from the investment made by the new members. This is one of the most fraudulent ways to work. Many people confuse either Ponzi Scheme is a scam or not. They confuse in the legitimacy or authenticity of the company due to their brilliant presentation and high returns offer.

The evolved version of the Ponzi schemes at present time, take the advantage of recent technology and use all the resources available to them. Many people nowadays claim to work on some projects. They claim to be working on some big projects like an Oil refinery, Real Estate, Pharmaceutical, Bitcoin Mining, Foreign Exchange, Trade Market and so on. The usage of a wide variety of projects confuse people and they did not understand that the company is working under the Ponzi scheme which is an illegal scheme. In reality, all the claims made by the company are bogus and fake. They have never been involved in any kind of business that they are stating on their site. They just want to show their members that they are involved in very big business and that is why they are going to pay the High Return on Investment (ROI) to them. They are just trying to justify their claims by showing the project details.

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Here, we want you to do a little brainstorm with us. If we believe that company does have some genuine business plan and in reality, they are making a very good profit which they are going to distribute among their investors then why they need to get money from the people or public they can easily take a loan from the bank. We understand that banks do not provide loan for such adventures, this argument is right. But the company people or the owner can take the personal loan which will be only 1% per month for them. Since the high ROI of the company is much higher than the personal loan interest rates. It is because companies claim to give 2-4% interest daily for certain period time. Now, the company can make a profit by using the bank money and pay back the loan to the bank even before the sanction time limit.

The companies will not go to the bank for suck kind of loans simply because they cannot fool the bank people. They need authentic papers and verify each detail of the loan receiver. That is why companies working in the Ponzi Scheme prefer or only take investment from the public. It is because the majority of the people does not ask for company authenticity or credibility. They do not talk about the company is legit or not. They just get partially blinded by the company’s high return and never question them. This way people fall into the trap of Ponzi Scheme.

Now, you have understood the claims of the company are bogus but there are some payment proofs from the members or maybe the person who introduces you to with the company. Actually, what happens the working of the Ponzi schemes as aforementioned is based on the new investment from which they pay to its existing members. The company does pay to its members initially or in the starting period to project themselves a genuine company. In reality, they are just grasping people attraction by showing some legitimate transaction. Due to this many members also show their payment proof.

Such companies get collapse soon or may take some time, it totally depends on the company offers. Some companies offer very low ROI and some offer high ROI. Low ROI companies sustain for a long time as compared to the high ROI offering companies. Ponzi schemes in which company pay low ROI sustain long because they keep paying their investors by calculating the ratio of their daily withdrawal money versus new deposits coming into the company. They only pay until when the new investment become negative as compared to the withdrawing money. After it, the company stops their payment programme and without giving any notice to its investors they just run away with the investors or members money.

Earlier Ponzi schemes are used to work only in a local area or small circle. In present digital world, the scammers and unscrupulous people working on the internet utilizing every technology available to them. They have now globalized the Ponzi scheme. Today, anyone can scam anybody while sitting in any corner of the world. This makes the work of the people very easy. They pretend people to be a genuine company by showing their attractive online website. They deceive innocent and ignorant people by lying them about the company to get their investment.

Ponzi scheme examples; List of Ponzi Scheme

In 2008, a man named Bernard Madoff was convicted of running a Ponzi Scheme that falsified trading reports to show a client was earning a profit.  He conned about $65 billion from investors who came from all walks of life.

But now people are scamming using different subjects like real estate, oil refinery, pharmaceutical and others. Recently, due to the bitcoin price surge. A wave of Ponzi scheme used the bitcoin mining and investment their main subject. If you want to see the sites that are using the Ponzi scheme and also their working then you can visit our page of “Not Recommended” list by clicking the link:


There is no use to work on any Ponzi sites. Therefore, beware of such sites that are offering the very high ROI because it might be a Ponzi scheme. They lure people by making them believe that they are earning money. People also invest their money in an illusion that their money is increasing. In reality, except the company, nobody is earning. There are many sites available that are genuine and good; that help people to have an extra income while working on them. The income might not be much but still, you are going to receive money instead of losing your own money. If you are interested to get the name of such site, you can visit our list of “Legit and Trusted Work” by just clicking the link: https://onlineincomeresources.com/legitimate-work-at-home-opportunities

If you are looking to build your own online business or work on your own to earn a fulltime income then we recommend you the Wealthy Affiliate Company. This company is not working to provide you the quick money. But they train people to have a sustainable income on the internet by using their training programs and services. To get more details of the Wealthy Affiliate Company please click the link given: https://onlineincomeresources.com/the-wealthy-affiliate-review-scam-or-legit

If you have any doubt regarding Ponzi scheme then you can simply comment on our comment section. We will be happy to help you. 



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