Your typical historical ponzi scheme consists of a clear number of stages:

• dangle a impossible promise/return in front of greedy people to make them ignore the risk (the ‘make money fast’ crowd)
• rely on the piramide effect to let your victims do the marketing for you, which creates a exponential number of new “customers”
• do a rug-pull or go down with the ship, when the scheme is no longer viable

But we now have modern ponzi schemes that differ from the old schemes in that at least the majority of the participants know that they are in one.

3 examples of modern ponzi schemes are:

Collectables

In history we have had a lot of collection crazes. People used to believe that the value of coin collections would go up forever. People collected baseball cards, and paid insane amounts of prices for rare cards. The issuing of limited postal stamps used to be main income source of small nation states. In more recent times the collection of chocolate easter eggs and beanie babies were a thing that never seemed to end.

Those “investments” have now dropped heavily in value. And the last big collectable craze (NFT’s) has also sizzled out.

But new trades have sprung up in place of these (Labubu for example).

Meme-stocks

Consider the case of the so called meme-stocks.

The case started humbly enough. Some small stocks were shorted by commercial short-sellers, while the real value was understated. Added that some of these stocks were sentimental, and that by buying them you could drive the short sellers into heavy losses, this was a big middle finger to nasty commercial vampires.

But a strange thing happened. People involved in this trade discovered that buying these stocks created a self-fulfilling prophecy, which is that if people kept buying these stocks, and if nobody sold them, the ‘paper value’ would only go up. This trade is of course not perfect, since the companies issuing the stock can always create more shares (gameshop, etc), but the case is clear for everybody to see.

Everybody can be a (paper) millionaire as long as nobody sells. Of course the people who got in first get more, just like in a piramide scheme. The big thing is of course that everybody needs to be convinced NOT to EVER sell the stock. If nobody sells, then the stock can only go up. This behavior (holding) was strongly encouraged in the Reddit groups that initiated the buying of the stocks in the first place.

Did(do) the people buying these stocks know this dynamic? Yes, almost everybody was in, which makes this a form of willing collective `pump-and-dump, except people are not dumping. They explicitly acted and conspired to not sell, in order to push prices up thereby becoming a ‘paper milionair’.

Did these people knew (and know) that they are creating a “willing ponzi”? For the most part, yes. At least they did there very best to shutdown their brain, and actively look away to any inconvenient fact.

Crypto coins

Is there a more extreme case of this dynamic? Yes. We can see it in the price and behavior of crypto-coins, like bitcoin.

It started small, with the typical tech promise that a new kind of tech would disrupt the world of finance.

But the cases for bitcoin and other crypto-coins started drying up faster than new cases could be created. Bitcoin has long ago ceased to be the micropayment option, then it ceased to be a viable option for international banking, and even the idea that it could be a safe store of value has disappeared (its value drops when gold rises and in general it is highly volatile due to very thin trades).

The most promising solution of bitcoin (money laundering) was undermined through the fact that the bitcoin ledger can be tracked better then any cash transaction ever could, and the privacy coin (Monero) is now going nowhere.

In short: bitcoin is limited in the number of transactions, expensive to use, no good value for storage, and not even usable for laundry. It’s not even secure (see the use number of hacks). The usage of bitcoin is even deflationary, since the costs of rewarding bitcoin miners is de-valuating the value of the coin. It even has a number of serious security attacks such as the 51% attack. The only thing it has going for it, is that it was the first crypt-coin.

Is there any remaining business case for bitcoin left? Yes: HODL (hope that numbers go up, and convince others to hold as well). Speculation, in short.

So the behavior of new victoms is: buy bitcoins, take loans against it, and use those to buy more bitcoins (leveraged trade) This leads to ‘whales’ (owners of lots of bitcoins) to periodically sell a bunch of bitcoins, which causes forced selling (margin calls) of the bitcoins held by the suckers, which causes prices to drop more.

When prices begin to stabilise, the same whales again buy enough bitcoin to drive prices up to the previous high.

And in case that was not enough: the so called ‘stable-coins’ don’t keep the dollars they receive in real life “liquid assets” with a underlying value, but use them to buy up more bitcoins and other crypto, in order to drive up those prices (and give loans in the same stablecoins to other crypto entities who also drive up prices).
All crypto together has literally no value besides acting as part of this “willing ponzi”. And everybody who has crypto coins knows it. There are no victems in this trade, except perhaps a few senile old people who trusted some grifter.

Conclusion

People have always been prone to hypes and ponzi schemes, but what is new is that huge numbers of smart people have consciously stepped in on what they knew (and know) to be a willing ponze scheme.

They openly discuss ways in which they try to pump values, recruit new people, and create memes & propaganda to encourages their fellow member not to sell (“We gettin' rich together”, HODL, “To the moon”, etc).

We have become a society of grifters.