Cryptocurrency Gambling on the Rise
When it comes to the cryptocurrency gambling niche, wagers are made directly with a cryptocurrency supported by the platform. Since the introduction of cryptocurrency into the digital wagering market began a couple of years ago, only a small number of gambling services had used them.
Cryptocurrencies do not require the provision of personal data, and quicker allow transaction times, without limits, and significantly reduce the lower payment threshold. This advantages allow for nefarious play, making a dangerous recipe for those looking to wager with cryptocurrency without due-dilligence.
What is a Ponzi Scheme?
A Ponzi scheme is a scam, in which the existing investors earn a profit by attracting new project participants and their investments. When the flow of new investors stops, the scheme collapses. The Ponzi scam is named after Charles Ponzi, a clerk from Boston who first organized a fraudulent collection of investment back in 1919.
In its turn, the Ponzi scheme in cryptocurrency gambling acts as one of the ways to quickly obtain (“win”) tokens and looks approximately the same every time:
- The player is invited to make a certain contribution (the payment scheme itself can be further supported by smart contracts, in order to deliberately emphasize the “reliability” of the project);
- In order to increase this contribution, the existing player needs to attract new players;
- After attracting new players on certain conditions, the existing player gets a fixed percentage from this.
Gambling with cryptocurrency is obvious for the above reasons. Unclear regulations make this a hotbed of scams and cons, here’s what you need to do if you want to avoid getting ripped off.
How to Determine a Trustworthy Cryptocurrency Gambling Site
You can naively assume that the main sign of cryptocurrency project that should not be trusted, is that a majority of the ICO is held by the founders. This is not at always true. The creators a suspicious cryptocurrency gambling site that is presumably based on a Ponzi scheme may not carry out a ICO or a basic sale stage at all. Moreover, the cryptocurrency itself may not even be a token, but a mineable coin that is already actively traded on several exchanges.
So, how can you identify which project is in front of you: one you can trust, or one that is simply luring money from gamblers? In fact, in this regard, there is no universal strategy. Just study as many trusted resources as possible in order to understand that your project of choice has not been included in any lists of those suspected of fraud.
Top 5 Cryptocurrency Gambling Confirmed Ponzi Scams
So, let’s find out which five cryptocurrency gambling projects have failed the test of reliability for investors.
You may have heard about this project, as it is most notorious among cryptocurrency gambling communities. Basically, each new player must buy a “key” in exchange for ETH. At the same time, the cost of such a key is constantly growing: right now it is smoothly approaching the 0.0001 ETH mark. FOMO 3D essentially pioneered the cryptocurrency smart contract Ponzi scam.
The purpose of buying such keys is simple: it brings players closer to receiving a reward estimated at several hundreds of ETH. As for how these keys work in the game, each newly acquired key adds 30 seconds to the timer in the game, and all ETH received from the purchasing of keys enter the prize pool. The player who will be the last to buy a key before the timer expires will be able to get the pool – that is, before the end of a day.
Obviously, a game with such a dubious principle of operation caused a whole wave of discussion and criticism, which, however, has had no effect on its popularity. The number of transactions conducted within the site exceeded 100 thousand at its peak.
What can be said about the reality of winning on this site? Unfortunately, it seems impossible. So far, there has been one jackpot winner. Nevertheless, players can get a certain income by attracting more and more new players via affiliate links.
PoWH3D is another scam based on cryptocurrency, but it utilized smart contracts to create a Ponzi scheme. Within this project, commissions on all transactions are automatically assigned to the owners of the token, which leads to universal passive income based on transaction volumes.
The Ponzi scheme is reflected in the description of a money-earning method: passive income in the form of ETH is obtained directly from fees charged from all participants who make transactions with P3D tokens. These fees are equally distributed among all owners of tokens as a form of income. At the same time, all financial transactions are backed by smart contracts, which indirectly indicates transparency and the possibility of early exit, because developers cannot delete a smart contract.
However, agreeing to become a member of this scheme, you need to remember that you have to wait until you get back those 10% that were lost as a commission when entering the project, and another 10% that will be lost when leaving the project. It is also necessary to take into account that the P3D to ETH rate on the domestic exchange is changing, and it is natural that the purchase rate of intra-platform tokens can differ from the selling rate.
The LastWinner project was developed by a Chinese company. After analyzing the code, experts managed to find out that the smart contract behind the project is very similar to the FOMO3D game.
According to the rules of the game, a user needs to buy a ticket to participate in the lottery, and the winner is the player who bought the last ticket. According to experts, the majority of transactions in the project are generated by bots, which intentionally prevents winnings and creates a fake impression of the game’s popularity. As you can see, this project is just another incarnation of the Ponzi scheme.
Ratscam is another game that is almost identical to FOMO3D. Its creators claim that they improved the principles of the prototype, simplifying the structure and forming only one team (this should eliminate any confusion for newly arrived players). In all other respects, this is the same Ponzi scheme: the distribution of funds that came into the game through the purchase of “rats” (the Ratscam game unit) is proportional to how many new players each particular player has engaged.
And, of course, the CTA does not inspire any trust. It literally plays on gamblers’ greed and sounds like: “Too late to join Fomo3D? Here is your last chance to grab everything! 1 Hour Rather Than 12 Hours to get your bonus! More Pot! More Dividend! See how much greedy you are, See how much money you can earn, See how long will it take to make you the next Winner! Join this Game NOW! Take dividends more than anyone else!”
The last one on our list is an already closed project with a name that speaks for itself: PonziCoin. Its founders guaranteed a 120% return on investment, which, for an inexperienced gambler, sounds tempting.
As for what they accentuated to lure in new players, there was an extremely aggressive marketing strategy (you can see this for yourself by visiting the Bitcointalk thread). It was also claimed that the payment scheme in this project is much simpler than that of its competitors. Here, the game payments are based on a much more complicated scheme and are fully automated. The entire balance on the owner’s wallet can be used in each next game round, underlining the transparency of operations and eliminating the risk of fraud on the part of the project owners.
In every other respect, this was still the same old Ponzi scheme. As a result, PonziCoin ended up being closed.
Cryptocurrency Scams are Widely Present
Cryptocurrency scams are constantly evolving, and the latest in Ethereum based smart contract gambling Ponzi schemes are just one of the latest developments. It is important to stay informed and active in the community. The most reputable investment is not through a third party, especially an unknown internet developer. Passive income appears to be the greatest lure for these scams, and sadly such a thing is hard to come by. Income comes from work.
Any crypto-based investment/activity should be treated with great care. In this case, you will be able to reduce the risk that your investment will go straight into the pockets of the founders. Still, we strongly recommend memorizing the three main features of the Ponzi scheme listed at the beginning of this article, so that your desire for passive income does not result in the loss of your money.