What are the differences between Ponzi schemes and pyramid schemes in the context of cryptocurrency?

1 answers

• Jakob ÖstgrenJun 18, 2025 · a month ago
  In the context of cryptocurrency, it is essential to understand the differences between Ponzi schemes and pyramid schemes to avoid falling victim to fraudulent activities. Ponzi schemes typically involve a single fraudster who promises high returns on investments in cryptocurrency projects. They use the funds from new investors to pay off earlier investors, creating an illusion of profitability. However, when the flow of new investors slows down, the scheme collapses, and many investors lose their money. Pyramid schemes, on the other hand, rely on a hierarchical structure where participants recruit others to invest in cryptocurrency projects. The participants at the top of the pyramid earn commissions from the investments made by their recruits. As the pyramid grows, it becomes increasingly difficult to sustain, and eventually collapses. To protect yourself from these schemes, it is crucial to conduct thorough research, verify the legitimacy of investment opportunities, and seek advice from trusted sources.
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