Misconception About Steemit as a Ponzi Scheme.

Season greetings my fellow steemians in the Steem Alliance community. Hope we are all doing great in our respective locations. It is another awesome week of learning new concepts and ideas from this great community.

Welcome to my blog where I will be attempting to clear off some doubts many users and non-users from my country think that steemit is a Ponzi scheme.

First, I will like to share my experience while introducing Steemit to some people and they laugh at me. I was baffled as they think steemit will one day crash down and we will lose our funds.

In Cameroon and I think also in other countries, investors have lost huge sums of money on Ponzi schemes. I was once a victim as well and I understand their fear. Each time I approached some potential investors, once you mentioned they will receive rewards in cryptocurrency, the answer is “...I am not interested in anything that has to do with crypto currency...”

For the benefit of those who do not know what Ponzi schemes are all about, I will give a brief explanation.

Understanding Ponzi Schemes.

From my understanding, Ponzi schemes are fraudulent business platforms using virtual currencies to entice investors to invest and get high returns as rewards from their investments with no risk.

That is, an investor is asked to pay a certain amount of money to the platform and rewards in the form of returns. One funny thing is you as an initial investor, are required to bring in more other users to gain more returns.

The goal of Ponzi scheme is to lure more investors into the business, raised huge sums as capital from those investors, use some to pay returns to initial investors and use the remaining cash for their personal interest. Once they raised enough capital, and used for personal gains, they will eventually be unable to pay returns to all investors. That is how the business will collapse.

Easy Ways to Identify Ponzi Scheme.

• Any business platform that promises high returns as rewards with little or no risk involved is a Ponzi scheme. We all know that in business high returns required high risk. If you come across such businesses, rest assured that one day, they will collapse.
• Promise consistent rewards. In any business, there are moments whereby market conditions are not favorable and this will also affect returns. But with Ponzi schemes, promise consistent rewards regardless of the market conditions.
• Ponzi schemes are unlicensed. Always check such businesses if they are licensed. This means that such a business should be registered with the state before operation.
• You cannot withdraw back your initial investments in case you decided to quit. With Ponzi schemes, investors are not allowed to withdraw the initial amount invested in case they change their minds to quit the business.
• Investors are required to bring in new investors to receive more returns.

Should we Consider Steemit as a Ponzi Scheme?

After going through the above explanations, should we consider Steemit a Ponzi scheme?🤔🤔🤔.

• First, we should all know that Steemit is a social media platform and not a business platform. I know some people will ask questions about how we earn cryptocurrency as a reward for our content. Of course yes but it still does not change the fact that it is a social media platform.
• Steemit does not force existing users to recruit more new users to gain more rewards. Users are free to decide whether or not to recruit new users.
• Constant power-ups are not to entice users to hold their funds and eventually shut down the system. Rather power-ups are a way to increase market capitalization and influence the price to increase.
• No user is promised high returns once you join the Steemit platform. Your rewards are based on your hard work and consistency in creating quality content.

Conclusion.

In sum, Steemit is not a Ponzi scheme. Steemit has come to stay like any other social media platform. Invest in your future through Steemit because Steemit is the future.