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  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 a Soft and Hard Fork?
  20. 20. Blockchain - examples of use
  21. 21. Is blockchain safe?
  22. 22. What are the types of blockchain networks?
  23. 23. What is blockchain network congestion, and how does it work?
  24. 24. Cryptocurrency wallets: Hot Wallet vs. Cold Wallet - key differences!
  25. 25. Cryptocurrency wallet diversification
  26. 26. Halving Bitcoin - what is it, and how does it affect the price?
  27. 27. Blockchain versus databases: key differences!
  28. 28. How do you transfer cryptocurrencies?
  29. 29. The most important cryptocurrency acronyms/slang you need to know!
  30. 30. The memecoin story: madness or great investment?
  31. 31. What is Ethereum? 
  32. 32. Everything you need to know about gas fees in Ethereum!
  33. 33. Gavin Wood: Blockchain Visionary and Co-Founder of Ethereum
  34. 34. Decentralized Apps – what are they?
  35. 35. What is Proof of Work (PoW) and what is Proof of Stake (PoS)?
  36. 36. What is the Proof of Authority (PoA) consensus mechanism?
  37. 37. What is Proof of Burn (PoB)?
  38. 38. What is a whitepaper? What is its purpose, and how do you write it?
  39. 39. Smart Contracts - what are they?
  40. 40. Know your customer (KYC) and Anti-money laundering (AML) what are they in the cryptocurrency industry?
  41. 41. Blockchain and NFT games - how to make money on them?
  42. 42. Liquidity in the cryptocurrency market
  43. 43. Inflation and its effects on financial markets
  44. 44. What is stagflation and why does it have a negative impact on the market?
  45. 45. What are utility tokens and what use do they have in the cryptocurrency sector?
  46. 46. What is cryptocurrency mining?
  47. 47. What is the mining difficulty?
  48. 48. What is compound interest, and how does it work?
  49. 49. What Are Privacy Coins and Are They Legal?
  50. 50. What is CBDC - central bank digital money?
  51. 51. What is Cryptocurrency Airdrop all about?
  52. 52. Key differences between ICO, IEO and STO
  53. 53. What are decentralized DAO organizations, and how do they work? What are DAO tokens?
  54. 54. What is EURT? How does it work?
  55. 55. What is the difference between Circulating Supply and Total Supply?
  56. 56. Snapshot from the world of cryptocurrencies - what is it?
  57. 57. What is the Fear and Greed index for cryptocurrencies?
  58. 58. APR versus APY: what is the difference?
  59. 59. What is an Initial Farming Offer (IFO)?
  60. 60. What is Regenerative Finance (ReFi)?
  61. 61. Who Is Craig Wright, the Alleged Creator of Bitcoin?
  62. 62. What Is Bitcoin (BTC.D) Dominance?
  63. 63. Michael Saylor, Self-Proclaimed Bitcoin Maximalist
  64. 64. Bitcoin Pizza Day
  65. 65. AI blockchain - a new look into the future?
  66. 66. What is WorldCoin? Everything you need to know about this cryptocurrency!
  67. 67. Azuki NFT collection guide: everything you need to know about it!
  68. 68. The 10 most expensive non-fungible tokens (NFTs) ever!
  69. 69. The Bored Ape Yacht Club (BAYC) - the story of the popular NFT collection!
  70. 70. CyberPunks - the story of the most popular NFT collection in the crypto industry!
  71. 71. NFT Art: The digital art revolution - history and examples!
  72. 72. Who is Changpeng Zhao, CEO of Binance?
  73. 73. Who is Brian Armstrong - CEO of Coinbase?
  74. 74. Who is Galy Gensler and the SEC? How does the Securities and Exchange Commission (SEC) affect the cryptocurrency market?
  75. 75. Web3's most popular social media platforms! Will they replace the platforms we know?
  76. 76. What is IoT - the Internet of Things?
  77. 77. On-chain analysis in the cryptocurrency world: Everything you need to know about It
  78. 78. Can you pass on your cryptocurrencies after death? How do you pass on a cryptocurrency inheritance?
  79. 79. What is the Howey test? What application does it have in cryptocurrencies?
  80. 80. The use of blockchain technology in the world of sport
Lesson 18 of 80
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! 

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