Back to Course

1. Beginner Course

0% Complete
0/0 Steps
  1. 1. What are these cryptocurrencies?
  2. 2. Bitcoin - the story of a technological revolution
  3. 3. Satoshi Nakamoto, who is the creator of Bitcoin?
  4. 4. Vitaly Buterin – the creator of Ethereum
  5. 5. What is Blockchain, and how does it work?
  6. 6. What is an NFT token?
  7. 7. What is money?
  8. 8. Cryptocurrencies vs fiat money, which will win?
  9. 9. What is DeFi (Decentralized Finance)?
  10. 10. DeFi: opportunities, advantages and disadvantages of decentralized finance
  11. 11. What is an altcoin?
  12. 12. Stablecoins - What are they?
  13. 13. Cryptocurrency wallet - what is it?
  14. 14. Why do we talk about bull and bear markets?
  15. 15. Security in the crypto market - what rules are worth following?
  16. 16. What is the seed phrase in cryptocurrencies?
  17. 17. Dogecoin and memecoin - what are they?
  18. 18. What is a Ponzi scheme?
  19. 19. What is Ethereum? 
  20. 20. What is a soft and hard fork?
  21. 21. Blockchain - examples of use
  22. 22. Is blockchain safe?
  23. 23. Smart Contracts - what are they?
  24. 24. Liquidity pools in the cryptocurrency market
  25. 25. What is cryptocurrency mining?
  26. 26. What is the mining difficulty?
  27. 27. Inflation and its effects on financial markets
  28. 28. What is compound interest, and how does it work?
  29. 29. Cryptocurrency wallet diversification
  30. 30. Blockchain and NFT games - how to make money on them?
  31. 31. Decentralized Apps – what are they?
  32. 32. What is Proof of Work (PoW) and what is Proof of Stake (PoS)?
  33. 33. What is the Proof of Authority (PoA) consensus mechanism?
  34. 34. What is Proof of Burn (PoB)?
  35. 35. What is CBDC - central bank digital money?
  36. 36. What is Cryptocurrency Airdrop all about?
  37. 37. What are the types of blockchain networks?
  38. 38. Key differences between ICO, IEO and STO
  39. 39. What is IoT - the Internet of Things?
  40. 40. What is the difference between Circulating Supply and Total Supply?
  41. 41. Everything you need to know about gas fees in Ethereum!
  42. 42. The most important cryptocurrency acronyms/slang you need to know!
  43. 43. Halving Bitcoin - what is it, and how does it affect the price?
  44. 44. What is the Fear and Greed index for cryptocurrencies?
  45. 45. APR versus APY: what is the difference?
  46. 46. Snapshot from the world of cryptocurrencies - what is it?
  47. 47. Know your customer (KYC) and Anti-money laundering (AML) what are they in the cryptocurrency industry?
  48. 48. What is a whitepaper? What is its purpose, and how do you write it?
  49. 49. How do you transfer cryptocurrencies?
  50. 50. What is EURT? How does it work?
  51. 51. What is Regenerative Finance (ReFi)?
  52. 52. Bitcoin Pizza Day
  53. 53. What Is Stagflation and Why Does It Have a Negative Impact on the Market?
  54. 54. What are decentralized DAO organizations, and how do they work? What are DAO tokens?
Lesson 18 of 54
In Progress

18. What is a Ponzi scheme?

In the cryptocurrency industry, one often hears about the term ‘Ponzi scheme’. Well, even in February this year, the deputy governor of an Indian bank stated that digital assets themselves are similar to it and should be banned. However – is it really? And what exactly is this denied Ponzi scheme…? We will answer these questions in today’s article. 

Ponzi schemes – definition 

A Ponzi scheme is nothing more than a large-scale investment scam. It promises investors a high rate of return, with little risk. How does it work? It repays older investors with money collected from new investors. As a result, investors at the bottom of the blacklist – the newest ones – may never see their profit. 

The companies that have decided to take part in this illegal procedure focus all their energy on attracting as many new clients as possible to their investment. 

And now a few words of history. The definition owes its name to a fraudster – Charles Ponzi.  He became famous in 1920. In contrast, the first examples of investment scams using the scheme date back to the mid- to late 19th century. 

How the scheme works using an example 

You are an investor. You are approached by a person who promises you a substantial profit,  e.g. PLN 2 000 000 in a short period of time. In fact, he or she even promises to pay you back your investment with an interest rate of 20% within the next 30 days. You do not analyse the subject – you agree. Within 30 days, when your repayment is due, the mystery person persuades three more people to invest. On the repayment date, he hands over your  £2,000 + the interest he has earned from the new three investors. He will probably invite you to reinvest. Through such actions, the scheme loops around and can function. As it grows,  the mysterious person has to keep finding new investors who, unaware, will join the procedure. Otherwise, he will not be able to repay the other members of the scheme. As a  result, after some time, the project will cease to function and be viable. The mysterious person will be caught by the authorities or disappear with the investors’ money

Are cryptocurrencies a Ponzi scheme? 

When we think deeper and analyse, the answer is simple – no. Unfortunately, there are projects that are based on cryptocurrencies but have been created according to this scheme.  They are popular mainly in poorer countries, where access to the Internet to do your own research is limited (Malaysia, India, Thailand). Unfortunately, they are also sometimes recommended among the Polish community, so be sure to do your research on the project you want to invest your funds in.


You have learned today what a Ponzi scheme is all about. This is very important knowledge, which you will certainly use when researching and before taking risks. Remember that any form of investment where someone promises you millions of coins in a short period of time with virtually no risk is probably fraudulent. Never invest in something you are not familiar with or do not understand. Good luck! 

Make your first steps on the market with Kanga Exchange