MMM Nigeria is a multi-marketing Ponzi scheme recently announced that it is enabling Bitcoin as a form of payment. MMM was founded in Russia in the 1990s by Sergei Mavrodi , with the original scheme collapse resulting in participants losing billions of dollars.
However, it has been rebooted recently with a model where participants are committed to sending money to other participants and after a month, they got their ‘investments’ back with 30 percent interest from other participants of the pyramid. Along with their reboot MMM announced the introduction of Bitcoin-based currency, MAVRO-BTC, as one of those payments accepted for the scheme.
What Are Ponzi Schemes?
Ponzi schemes work with the continual recruitment of new members or ‘investors’ who pay a joining fee. That fee is what ponzi schemes use to pay existing investors. The second the recruitment stops, so does the return on ‘investment’. This is why ponzi or pyramid schemes are not viable models nor are they a real investment model, that they claim to be.
Generally these schemes are fraudulent in the way they sign up potential members or ‘investors’ with not being upfront on how their ‘investments’ are simply just a recruiting fee; not informing members that they can and will go bust in the event they run dry and are unable to continue recruiting new members; and pitching their scheme as a legitimate ‘investment’ when it is nothing more than a recruiting fee based model.
The difference between ponzi and pyramid schemes with real investments are their return on ‘investment’ is not based on the legitimate maturity of an asset or gain in a market trade, but based on recruitment fees of new members. Usually these dealings are not made clear to those whom sign up and they end up losing their life savings in a fraudulent investment model. Had they have known clearly up front, they would not have signed up to begin with.
What does Ponzi Schemes Have to do with Bitcoin?
Bitcoin is a legitimate digital currency, that itself has nothing to do with ponzi schemes. It has multiple markets where it is legitimately traded among users, which is seen in the daily fluctuations of sales in the market price of bitcoin each second of the day.
However, due to the price rise in Bitcoin, a lot of organisations mask themselves as fake digital currencies that profit from this rise in the market. When in actual fact they are ponzi schemes that are run off newer ‘investors’ buying into the ‘digital currency’. Those newer ‘investors’ who are putting money into the fake digital currency, are simply the ones paying the older or existing ‘investors’ of the fake digital currency.
In reality there is no digital currency that exists, just an organisation shuffling money around to make it appear as if there is a increased market price, for that fake digital currency. The easiest way to spot these fake digital currencies is through no legitimate market offering that digital currency, with the organisation only offering internal websites and information as to the price of the fake digital currency.
For more information on MMM you can read the full article here and for more information on the different types of scams you can find that here.