People are nowadays willing to take risks to be a multibillionaire. When we say risk, we mean any kind of risk. This is people are nowadays turning towards decentralized finance investment. Some put their money in this domain of finance wisely whereas some do so blindly. This is where people fall victim to Ponzi schemes in this domain of finance while looking for the best coins to invest in.
What is the Ponzi Scheme in Cryptocurrencies?
The degree of the doctorate (Ph.D.) is not required for the execution of a Ponzi scheme in the domain cryptocurrency. The only thing required is a perfect investment scheme and some sharp mind. The idea is to convince people that some coin is the best coin to invest in.
Therefore, a scammer or hacker proposes to you some kind of investment scheme. He/she then initiates a well-thought-out communication with you. In case you trust him/her, the swindler then tries/her best to make you believe that some coin is the best coin to invest in.
Swindlers often have a set pattern for this purpose. Talking high about some venture and their coin is also an integral part of their strategy to fool you.
How Exactly Ponzi Schemes Work?
This is something you must know about before looking for the best coin to invest in. Scammer associates a couple of initial investors with his fake scheme and assigns them the duty of making more investors sign-up with the scheme. Those who encourage more investors to sign-up, get some commission in the form of cryptocurrency.
In simple words, once a new investor signs-up, the older one gets the payout. This process remains active only until the entire flock of investors runs completely out of money.
All in all, the only one who stands out victorious is the scammer whereas investors end-up pulling their hair in frustration.
This is the way swindlers make the best possible use of Ponzi schemes in the domain of DeFi.
How To Stay Miles Away From Ponzi Schemes?
This is something all of you must know about while searching for the best coins to invest in. You are advised to exercise the following list of cautions to save yourself from Ponzi schemes in this domain of finance:
- Never trust anyone proposing cryptocurrency investment plans blindly.
- Visit the website of the cryptocurrency investment plans being presented to you. This is where you will get to know about the following for taking the right decision:
- The team.
- Business model.
- Ecosystem development.
- Research in-depth and study the DeFi investment plans being presented to you in detail.
- Consider reading the whitepaper.
- Think about searching its name and performance graph on reputed exchanges like CoinMarketCap and Binance.
- Check the background of the person or the group communicating with you the investment plan.
Everything said in this post is merely for the purpose of educating readers.
The purpose of this post is not to advise anyone to invest in the domain of decentralized finance by any means.
Readers are strictly advised to be wise and do some research about it on their own before or while choosing the best coin to invest in.
The Bottom Line:
Invest in the domain of decentralized finance is subject to market risk. This domain of finance is highly volatile. Therefore, you are advised to seek full and reliable education about every concept of DeFi first.
This is why we have decided to educate you about posts on daily basis. Hopefully, you like this initiative.