Topic: Why Ponzi schemes are called "Ponzi" (Read 461 times)

I think it's different, with pension funds being deducted from salaries, not harming others. as far as I know the Ponzi scheme, in the end there will be people who are harmed, but for those who follow it in the beginning it will still be profitable

Is pension also working as ponzi?

I was thinking pension is some percentage of money deducted from worker's salary and saved for the worker plus the percentage coming from the employee, paid to the worker at retirement.

I guest the slide difference between a ponzi scheme and insurance is that most insurance companies charges their client on either monthly basis or quarterly basis which they call servicing fees in my country, but ponzi scheme on the other hand require a just one time deposits, ponzi is not institutionalized but insurance is and ponzi is just a way of robbing peter to pay Paul but insurance have a central account.

My understanding so far is that we buy bitcoin and sell bitcoin in the same market, and then other people buy it and sell it back in the same market without the products spinning there. this is like an asset that has been mocked by many people, so many call it worthless.

When it's too good to be true then come to think of it and back off. No decent investment will give us a quick profit unless it's illegal and scam. Some people that fall for this are the one that's greedy yet don't have knowledge what he's doing. So yeah Charles Ponzi is now a legend though not in a good way.

This is a very pleasant and informative topic, thank you very much. also; What to do if you’ve been a victim of a Ponzi scheme?
If you’ve been investing money in a Ponzi scheme then you should:
1 Break off all contact with the fraudsters and don’t send any more money.
2 Contact your bank to let them know so they can flag any suspicious activity.
3 Keep all written and electronic communications.
4 Contact Action Fraud to report it.
You should also beware of follow-up scams, where fraudsters contact you claiming they can help you get your money back.

I agreed, Ponzi scheme could let a person to survive with its profitability but not on a large scale. It's like having an insurance firm with yourself as an employee. The Ponzi scheme has this great system that is very logical. If you have great analysis and encounters postal letters frequently, you will actually know how this system work and how will earn from the scheme. However, because of its popularity today, the Ponzi schemes are practiced less compared before because the people are so much familiar about it already.

Whatever form or shape it is, Ponzi scheme is just a way to scammed people of their hard earn money. Others may call it Pyramiding or Networking but the output or the goal is the same. Recruit as many people as you can, entice them to invest lots of money and sign under you.

As I have said, this has been practiced before until Ponzi gave it a name, so just be careful and never blindly trust someone, specially if it involves investment and huge amount of money.

Ponzi already profitable for first member but he should recruit new member to build a pyramid. Mostly ponzi dont have a product and its like a money game. Sometimes its hard to recognize a ponzi

In many parts of the world nobody knows what a Ponzi scheme is. These are called pyramid schemes or financial pyramids. I haven't heard of the term Ponzi Scheme until I came to Bitcointalk. This is an American expression.
This scheme is very easy to identify but people still fail to do so. When someone offers to double your investment in a year you should be very suspicious.

And that rotten scheme is still being used, even those who fallen to the that trickery are not just those with low education.
This must be stopped, pension funds must come from personal funds and awareness, not other people's funds. There must be someone, maybe a social activist or even someone in the government who are aware of this and maybe something must be sacrificed for this.

In my opinion, insurance is more alike to a joint venture system and funds will be disbursed to the entitled people just as in the agreement, if there are differences in class it is natural, because the monthly fee is more expensive.
Yes, but if the person does not have insurance, they must pay full the health costs, but if the person has insurance, they don’t need to think about the costs because the costs are covered by insurance in accordance with the agreement.

its start with a man call Charles Ponzi, where he propose that he could promise 100% profit in 90 days for the investor.

Obviously, that's not what everyone wants, because there simply isn't a way for everyone to profit. People need to stop acting like a bunch of empty headed chickens, especially here in the crypto world.

We're at a point at which people know that they pump money into a scam, but they wrongly assume that they can walk out with profits before the scheme implodes, which is ridiculous.

The moment people realize that they are about to lose their money they start complaining and call out whatever they invested in for being a scam. Does that make sense? These people don't have the right to complain at all.

If you're out to gamble, accept that you can lose.

Yes I think marketing of some sort has the underpinning of ponzi. If where you buy one product and, it is  attached to buying another product ,then that in itself is ponzi. Some shops these days requires someone to introduce another person to the shop and a commission is paid to the first adopter's bank account- they are all ponzi. Ponzis are not reliable because they depend on referrals to continue to an extent where the bubble will burst right there in an unlucky late comers face.

Who doesn't know about charles ponzi ? How do you not know about him at all, if you knew what ponzi is and ever heard ponzi before your life you must have heard about charles ponzi at one point in your life. For example during his worst times he took money from Al Capone himself, of course knowing if he just gave him his money back than Al Capone would have reinvested it until Charles wouldn't be capable of profiting from it and doubling it from other peoples investments.

Charles knew it was unsustainable so he decided to bring the money back, just as it is without touching it and told Al Capone his investments failed so he brought the money back, Al Capone apparently loved his honesty and let him keep the money since it wasn't important to him and let him go his way. Dude was smart.

I have come across this story before, to the extent of knowing the name was from an Italian guy but I didn't know much more. I do wonder if he initially set out with the intention of operating it in such a way or he began paying investors with new investors money purely because he couldn't stand the thought of his idea/business failing?

Well thanks for that since that word is literally not a word at all.

Looks like every scheme now will be connected with him since they keep on using that so called Ponzi scheme. Even scams are being called the same way by now.

Maybe more people should look at this story since I can see the same scheme all over the world. Name it. It is always that same pyramid where the upper class goes richer taking money from the late comers.

Never joined any investment like that. Maybe I should just create one than be under them.

The Ponzi schemes are called Ponzi for the style of their csmpaign in inviting investors to join their , scheme is they promise to give investors a good profit when tge investors join them and invest mobey for them , and then after sometime they will pay the profits of the old members from the money from the new investors , if there no available new investors then the old member will have to wait for his profits , so this is ponzi scheme.

Maybe you could consider insurance types as a legitimate and friendly “Ponzi Scheme.” I have recently encountered this type of structure, and it has been linked with tour packages and some affiliate marketing schemes. I don't know if Affiliate marketing could be considered as another Ponzi scheme, paying with investors money.

I think as long as you profit from those kinds of things, you would be happy. I think that's what everyone wants.

But I guess governments around the world doesn't want to used the word Ponzi because of the negative connotation about it but its obvious that they've been pulling this kind of stunt for their populace hehehehe. Well crypto is a good way if you really wanted to have a retirement plan, just imagine investing just small amounts and accumulated it overtime like 10-20 years, it will be huge.

Great comparation bro, here in Croatia is same thing. We have ratio something around one worker for one retiree. I am a bit worried about that and I must have my own retirement plan where crypto could help me with.

Ponzi schemes are still everywhere. It is much popular in countries which are still developing or underdeveloped where many people would subscribe to investment deals with high interests as returns in order to  get rich in a quick way. Most of these investments ends up as being scam. Online ponzi schemes has also become much more popular in this digital era on the internet.

Some retirement plans are Ponzi schemes.

In Brazil the official retirement plan made by the government is a ponzi scheme.

The ones who are retiring now didn't contribute enough to pay their pensions. So the ones who are working now are paying for the olders pension. And so on.

The problem is that our life expectancy ia getting higher and people are having less children. So soon the new people wont be able to pay for olders pensions...

I listened to an audiobook and a podcast that is about Ponzi, the history of it. Where it builds a continuous revenue or until they call the bubble, bursting. And I have learned that they are just cycling that and indeed is risky. I have experienced and encountered right on Ponzi schemes that are too obvious, and I have asked this many times to them. ”How long are you existing? My rule of thumb when I hear about that. It's a chance to profit! It's risky but gives excellent returns. Too good to be true things are probably scams or someone would get hurt.

The similar scheme is well known for the Russians. I can intimate you that there was a quite famous person in Russia who could do the same in the scale of the whole country. His name was Sergei Mavrodi (https://en.wikipedia.org/wiki/Sergei_Mavrodi) who was found the pyramid called MMM. Why is he so notable? There are some interesting facts about his activity. For example, he could accumulate and manage 1/3 from the all ruble cash in the country. Just imagine the scale whether it is possible that somebody in US will accumulate and manage 1/3 from the all dollar cash in the country. Also he had a direct dialog with the government where the officials tried to negotiate with him but as far as I know they could not. Eventually the pyramid was crashed and he did not repay money to his investors.

I have been read his history too through an internet article and scheme pyramid called ponzi because he was the first time to use this method to scamming people even more than a years he still can scamming many people use this method but unfortunately his legacy method still exist until now continue by greedy people who only care about money

The first time I learned about the Ponzi system was a very logical system, because my friend, who taught me this system, trusted this system incredibly. When I invested my money in the first ponzi system, even though I liked this system because of my income, I learned how dangerous the system was after. Of course, at the end of all these experiences I did a little research and I had a very good information about the system. Although it was not surprising that the system was taken from its founder, the logic used in the system was very interesting. Although I have no extra knowledge other than the points that you specify, I think it is possible to say a lot about this system. Finally I want to leave a note. The largest known ponzi scheme in the cryptocurrency market was BitConnect.

Interesting.

Has anyone ever thought insurance could be similar to a ponzi scheme? 

Well, I have wondered if insurance could be similar to a pyramid scheme or ponzi in that there are those on the top of the "pyramid" whose costs are being covered by those on the bottom. The main differences may be ponzi schemes relying more heavily upon a growth of their userbase to sustain costs, wheras insurance tends to be more institutionalized with a more thoroughly saturated userbase. And of course there is a necessity context to insurance.

I guess the main question is whether insurance policies are officially mandated to produce greater profits for various institutions. Or whether they're necessitated by other factors. I think historically people had healthcare long before health insurance was invented. There could be historical precedents for systematically analyzing and perhaps even putting forth a decent argument contending that various forms of insurance could be eliminated and replaced with better frameworks for achieving identical goals.

I was curious about this name, so I decided to dig a bit into this topic. I feel it may be interesting for other to know where this expression came from, so here´s what I found.


PONZI comes from Charles Ponzi. This Italian guy was born in 1882 and died in 1949, so 62 years old, not bad in those times with the two World Wars in the middle. The scheme was based on "investing" in postal reply coupons.

A postal reply coupon was designed to allow people to send a letter from any country to another without having to buy local stamps. For example, you live in Australia and send a letter to your mom in Germany. You send her a postal reply coupon so she can redeem it for enough German stamps to send you a letter back.

In theory, the money would be made with the difference in costs between the cost of the coupon in one country and others. You would pay 5 Australian dollars, but the coupon in USA may be worth more because it is more expensive to send the letter from there. So you would get in the USA stamps for a value that is higher than those 5 AUS, thus making a profit.

But in reality the profit is not nearly enough to make this a real business, so Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi (full name of the guy) was paying old investors with money from new investors. That is, I will pay you with the money I get from the next guy. The question is until when can I keep the whole scheme going forward.

The most ridiculous thing about these schemes is that they are still happening. The most world-wide known recently has been the Bernard Madoff scheme. While Carlo "Ponzi" rised 20 million USD, Mr Madoff reached around 50 million. However, the former is much larger than the recent one, since 20 millions at that time were like 1000 today.


I am glad I looked into this. You can learn more here and here.