Grassroot Crypto Education | Series 2 Volume 7 - Scams in the Crypto Ecosystem (Part 1)- Ponzi and Pyramid Schemes by @junst

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Hi Steemians, it is a well pleasant time to be once in steemkidss. This is my third time of participating in this Crypto education for kids like me.

Crypto is an important aspect in life, due to the advancement toward it. But still we should try and acknowledge the risk and careers done in crypto.

That's why our topic for this week is based on risk associated with crypto. Which is scam in the crypto ecosystem.

Source

Scam In The Crypto Ecosystem

Yes scam to my own research and understanding means, the act by which someone defraud another person in terms of money, bussiness or any thing. We usually heard about scamming and scammer.

Scamming it the process of defrauding someone

Scammer is the person who defraud another person

So scam in crypto is like an area where someone prove to be honest when dealing, with crypto assets and turn back from being truthful to untruthful. This can be when investment packages arrived or when someone prove to pay you with false evidence and then you send the person the result.

Example
When I want to sell 10 Usdt in binance, then I go to the P2P option and select the person I want to sell to. I will then see an evidence or proof that the money has arrived, then I send him the assets. But in a flash light, the money can bounce back to the person and that mean he has defraud me.

Also it can be when someone is trying to link you to an investment package. Then you pay in, within a short time the investment platform might crashed or close.

We have types of investment scam and I will be discussing on two investment scam. It is the Ponzi and Pyramid Scheme.

What is your understanding of Ponzi and Pyramid Schemes in the Crypto Ecosystem.

Ponzi Scheme
It is a type of scam which is belief by investors, in which the invest and get there interest and gain when matured. This was in existence since 1920s and was through Charles Ponzi, the first scammer to defraud investors in crypto ecosystem.

This occur in an advanced way, by which the investors finds it an investment package to invest and would have an interest rate, which could be withdrawn when the capital has matured. But in this term, it is a false beliefs to ecosystem, because when you start investing it might crashed and so ends the platform.

This is sometime affected by greedy people, who wants to get more interest or income from an investment plan and will end up loosing, because the investor will even deposit huge amount money and that is greediness. It also affect people who wants to start raising fund for a certain purpose, but at the end it will crash.

This package is designed in a way where the name of the platform is benefits investment then the will use USD or other crypto assets for the transaction. It will be like when an investor deposit 150 USD, then the interest rate will 10% which is earning 15 USD daily in 10 days. But it will be false when it crashed and would affect the investor.

We need to be careful in this kind of Defrauding package, beacuse it will be real in your eye, but unreal to the result of it.

Pyramid Scheme
This is similar to the Ponzi scheme, where you invest and earn interest when matured. But the only thing in pyramid Scheme is that, you refered user to join and invest, when the invest you can earn some percentage as your profit.

It is just like advertising a investment package of a company. So the more you invite, the more you earn. It will be given to you in form of license when you registered and you begin to invite or refered people to join.

But this can crash when new users are not been registered to the investment package. This occur when you refered investor and the invest like 200 USD then your profit or commission rate will be 6%, which mean that you will be earning like 3 USD daily when you invite someone to invest in the platform with the same ration of money i.e 200 USD.

So this could be crashed if only no registration is on, then it can be closed, then some people might loose and it is a scamming term.

State the Similarities/Difference between both Schemes. How would you react to them, Adopt or Stay away? Explain.

Similarities and Different between both schemes

• The both schemes give investors chance to earn when the invest and depends on inviting more people for steady operation

• The both can crash at any time and will lead to loose of funds to the investors, beacuse no one knows when it will be shut down or closed

• The only difference in Ponzi scheme is that is only depends on a fixed capital by the investor, which can guarantees huge interest rate in return. While Pyramid Scheme depends on offering the investor more chance to make gain by inviting or referring new users to invest.

Will I adopt or stay with them? Explain

Yes I will only adopt with them, only if the investment is still coming out new, then I would have hope that it can be prolong to and extend. This can give me more interest rate.

I would also try and invite users to join and invest, inorder for me to cover up my initial investment and also earn more for them.

Conclusion

I would like to thank @fredquantum for his effort in giving us lecture and assignment in crypto. This would be nice, if it continues like this in Steemkidss. I hope we the kids will be a better users in investment package. We can also acknowledge the term scam of crypto ecosystem.

We would be careful of what is happening around us in crypto ecosystem. Because, scammers are everywhere on crypto ecosystem and any minute you are scammed is the minutes you realize your regrets in crypto ecosystem.

Thanks