[raw-23]

I hear this alot and do not understand it. How is it a ponzi scheme? there is no fraud taking place, people are aware they are buying a token for 300k and taking on that risk themselves. If they lose money there is no one to charge as no fraud has taken place.

[willcipriano]

You buy a NFT at the ground floor. You know it's worthless, but you also know about hype. You go on Twitter, tell your friends about NFTs, shout about them from the rooftops. The price goes up, you sell before the reality distortion field collapses.

The early investors are paid by the newest ones. Ponzi scheme is a good word for it even if it doesn't fit perfectly. The moving of bits around on the blockchain is just misdirection. A decentralized ponzi scheme promoted by many unrelated actors simultaneously.

[SOLAR_FIELDS]

Isn’t the better term “pump and dump” then? That’s basically how penny stocks operate.

[fknorangesite]

Or wash trading.

[perl4ever]

How is it a Ponzi scheme? Or why do people call it that?

People use the term loosely to refer to a situation where money has been put into a system, and nothing productive has been done with it, such that taking your money out as soon as possible is probably prudent, before the market decides it's worth zero because the supply of greater fools is used up.

[ohiovr]

It isn't really a ponzi. It is just greater fool theory investing.

[ALittleLight]

If it's greater fool plus no inherent value of the underlying then that's a Ponzi Scheme. You aren't buying anything, no revenue stream, no dividends, no assets, no cash, etc, just the hope you can sell to a greater fool. A Ponzi Scheme is the same thing - you can make money if and only if suckers keep putting money into the scheme (and you cash out at the right time).

[ohiovr]

Ponzi works like this: Say this big shot investor invites you into his fund that gives a great return of 16% compounded year over year. The investor encourages his investor to put in regular amounts over time. He's got a fancy website that tracks your account balance which of course is only a ledger he owns. No financial institution seems to carry any money. It is a confidence scam. As long as you are confident that your money is being increased regularly and you are waiting long into the future to take it out it is never discovered that the Ponzi scammer is stealing all the money and living an extravagant lifestyle.