Crypto Ponzinomics Explained In Basic Terms

How many of us here went to school to study crypto? I guess none of us, we all learnt from the internet either through blogs or YouTube, does that mean that we are all certified now? I guess not, I guess that is the reason some one can just wake up one day and create a crypto token add some liquidity and scam people. Crypto is economics and is part of economics because it’s associated with money and this can be extremely complex. Humans are naturally greedy and most times don’t care to understand the tokenomics of how crypto works or the mechanism of how liquidity is provided but only just want to earn and make money, this has affected lots of us badly.

We have seen a lot of developers and projects make making money their only goal, thereby focusing more on trying to convince you to invest instead of actually providing better information about the project and it’s utility. Most times they provide a shortcut to wealth because they know that that is what attracts most people into investing in projects. Who doesn’t like shortcut wealth? But it comes with a very big risk. Gamblers are usually their target audience and that is how crypto ponzinomics works.

Look at crypto ponzinomics as a man or a person who rares cows but is looking forward to creating wealth with his cows, he has just two cows. How does he create wealth with these two cows? Being a mischievous person, he decides to lie to the public that he has 5 cows, to convince people that he can produce enough milk to sell. He then lies further to the public that his cows produce better milk than other cows and his cow milk is richer and creamier than others urging the public to buy from him. Then people start patronising the person, the person then claims to be a great business man and tells people to invest in his cows and they will make money, because his cows are better. He claims that this money will be used to buy more cow that will produce more milk to sell to more people to make more money.

This person now makes a lot of money and starts attracting big attention because everyone is talking about him. They are getting milk and getting return of investment, this will make the regulations, authorities and SEC to come knocking on the person’s door trying to ask questions. But unfortunately this person is unknown, or rather anonymous. He has been doing it anonymously without a physical address or physical stores or picture. No one knows what he looks like. One thing about fame and success is that people will always be in your business trying to bring you down. While being in your business and trying to bring you down, they will discover that the person’s milk is fake, it’s been milk flavoured water. Because there was too much demand for the milk, this person started making milk flavored water to sell as he doesn’t have enough cows to produce that much demand for more milk.

The people are angry, they are furious, they stop buying the “milk”. They start requesting for their investments back, but it’s already too late, this person is already rich and anonymous, he can afford to go anywhere he wants to go, no one knows him. This is what crypto ponzinomics feels like.

Posted Using LeoFinance ^Beta