Before We Can Answer The Question It Is Necessary To Define What A #PONZI SCHEME Is, And What An #ICO Is.

The PONZI SCHEME

There’s A Lot Of Confusion About A Ponzi Scheme Is.

Really. A. Lot.

One Of The Most Common Belief Is That It’s A Pyramid-Shaped System Where People At The Bottom Shuffle Money Toward People At The Top, And That That Is Illegal.

However This Definition Is Faulty For Three Reasons:

1. All Governments, Banks, Cultural Institutions, Business Corporations, Religious Structures And Organisations In General Are Set Up In A Pyramid Shape: Most People At The Bottom, Tapering Up Toward The Top Where Only A Few (Or Only One) At Its Peak. So… To Say That It’s A Pyramid-Shape Is Like Saying That Every Liquid Is Wet… Duh! aaaaaaaa
2. Also The Shuffling Of Money From The Bottom Toward The Top Is An Unclear Definition, Because The #Pension_System Of Most Developed Countries Works Exactly Like This. aaaaaaaaaaaaaaaaaaaaaaaaaaaaaa
3. There Is Nothing Illegal About Pyramidal-Shapes Or Money Flow-Through Systems. If There was Then It Would Also Be Arguable That The Pension System Itself Is A Ponzi Scheme… But This Is A Discussion For Another Time. It Becomes Illegal Only When There Is A Fraud Involved.

 

The Oxford Dictionary Of English Defines A Ponzi Scheme As:

“A Form Of Fraud In Which Belief In The Success Of A Non-Existent Enterprise Is Fostered By The Payment Of Quick Returns To The First Investors From Money Invested By Later Investors”

This Definition Is Much Broader And Encompasses Things Which Have No Pyramidal Structure At All, Concentrating Instead On The Fraudulence Of The Operation.

And Here We Also Get An Additional (And Extremely Relevant) Piece Of Information: “…A Non-Existent Enterprise…”

Yes, This Is A Key Factor.

 

Let’s Keep This One In Mind And Move Forward With Defining What A #ICO Is.

ICO Means #Initial_Coin_Offering, However ICOs Don’t Actually Offer Any Coin. ICOs Offer #Tokens, Which Are Promises That The Holder Will Receive Coins When (And If) The Cryptocurrency Business Will Take Place.

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An ICO Is Fundamentally A Gathering Of Funds (Money) To Finance A #Business_Start_Up. And The Tokens Can Only Be Used Within The System Set Up By The Company That Begun The ICO, And Nowhere Else. So There Are Serious Considerations About The Value Of Those Tokens (Which Are NOT #Cryptocurrencies).

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When Looking At An ICO The Questions That Need Answering Are These:

• Is There A Business In The Making Or Is It A #Fraud? (Bringing Us Back To The “Non Existent Enterprise”)
• Is The Business Viable? (The Business Exists… But Is It Good?)
• Is The Business Plan Viable? (The Business Is Good, But Is Managed Properly?)

These Are All Basic Questions That #Professional_Investors Ask (Or Should Ask) When #Evaluating_A_Business.

According To #TOKENDATA (An ICO Tracker), In 2017 Alone There Were Over 900 ICOs. Of Those…

• 142 Failed In The Beginning (Not Viable As Businesses)
• 276 Took The Money And Ran (Fraud And/Or Not Viable As Businesses)
• 113 Are About To Fail (Not Good Businesses Or Not Good Management)

That’s Roughly 60%, Just Last Year! And These “Businesses” Were Able To Gather Over 5.7 Billion Dollars In Funding. This Year (And It’s Only March) We Are Already Witnessing 2 Billion Dollars Of #Crowdfunding Invested…

Let’s Have A Look At Some ‘Nice’ Examples:

• An ICO For “Skincoins” Offered Tokens To Get ’Skins’ For Guns In Video Games. We Are Not Talking About Real, Physical Objects. These ’Skins’ Are Design Variations On The Image Of Guns Used In Video Games… (It Actually Raised 3 Million Dollars In Capital!)
• An ICO For “Neverdie” Never Realised Enough Money… But They Insist That They Are Still Alive… If This Is Not Irony…
• An ICO  For “Benebit” Raised Cash And Then Disappeared (Fraud) With 2.7 Million Dollars.
• An ICO  For “Apex” Raised Cash And Then Disappeared (Fraud)
• An ICO  For “Prodeum” Raised Cash About ‘Revolutionising The Fruit And Veggie Industry Through Blockchain Technology’ And Then Disappeared (Fraud) Leaving The Word ‘Penis’ On Its Main Page Website. This Was Actually Nicely Done (Except The Fraud Part)… Clearly By People That Know The Market And How To Raise Cash.

 

And Then There Are ‘Successful’ ICOs For Tokens With These Inspiring Names:

Funfair

Bread

Legolas Exchange (Lots Of ICOs With Names From The Lord Of The Rings…)

Bftoken

Basic Attention Token

Ripio

Pundi X

Swissborg

Salt

Wax

Polkadot

Fortknoxster

Lalaworld

Matrix

Cobinhood

Indahash

Napoleonx

Karma

Footballcoin

Game Machine

Mothership

Hellogold

First Blood

Scorum

Cannasos (Platform For The Cannabis Industry)…

… And So On.

And The Thing Is That Most Of Them Are Not Even About Cryptocurrency At All!! One ICO Is From Matchpool (Dating Site), Another One From Hubii Network (Digital Content Marketplace), Another From Trueflip (Gaming, Gambling, Lottery), Another One From ICOO (A Platform To Invest In ICOs!!), And Etcetera…

Reading About These Feels Like An Afternoon At The Comedy Store… Until You Realise How Many People Lost (And Will Lose) Money On It.

So, What’s The Moral Of The Story?

1. Learn To Distinguish What’s A #Good_Business From One That It Is Not
2. There Is No Substitute For Hard Work (Studying What You Are #Investing Into)
3. Don’t Believe The #Hype
4. Sometimes The “To Good To Be True” Is Actually The Bargain Of The Century, But Most Times It Is Not!

Plus… Fellas, Kilmarnon Consulting And The PPPinvestment Club Offer Plenty Of Free Education On #Entrepreneurship And Investing… So You Do Not Really Have Excuses!

To Your Success.