What is the ponzi scheme?

Ponzi scheme is an investment system that is focused on providing revenues to the first investors on the occasion that is taken from the funds collected from later investors. Ponzi often occurs legitimate, the Ponzi scheme usually collapses, as the ability to continue to obtain paying investors begins to fail. In some cases, the Ponzi scheme is carried out with sincere efforts to eventually make profits and be able to honor all obligations received to investors. Other times, this program aims to generate wealth for the incitement of a small or no effort to generate profits. After a successful immigration to the United States in 1903, Ponzi launched an investment opportunity built around the arbitration of coupons. In the Shot order, funds collected since the last investors were about to pay return to earlier investors and, moreover, help to build a considerable amount of wealth for Ponzi in person.

While the Ponzi scheme is often considered a variant of the basic pyramid scheme, there are several fine differences between the two approaches. While both strategies are examples of an illegal investment system that uses impressive technical conditions and promises of high yields in a short period of time, Ponzi has a central figure that is the recipient of most benefits from the system. On the other hand, the pyramid scheme involves building a network of investors who also act as active recruiters and which somehow benefits from any investment as a result of their efforts.

The real scheme of Ponzi is also not only relying on the new investors that will work. As an accompanying strategy, the Ponzi approach will also include a return to earlier investors who have received a certain type of return on their initial investment and convinced them to invest again as the original amount plus any profits. It also differs from most pyramid programs thatThey rely on constant recruitment of fresh or new investors to continue operation.

While most countries have laws that make practices of this kind illegal and are subject to various sanctions, including imprisonment, it is sometimes very difficult to identify the Ponzi system at the beginning of the process. Over time, the operation of the scheme is easier to recognize the strategy of what is really and to be able to take steps to turn off the operation. Until then, however, many investors have suffered severe losses that will probably never be obtained.