Is DRIP a Ponzi Scheme?

TL;DR: It’s not — and here is why.

I am truly grateful for the comments on my articles.

His comment was polite enough, but there is simply not enough room in the comments section to give it a polished answer, so I had to write this article instead.

“It’s a Ponzi!!” you scream! So what is that exactly?

A Ponzi Scheme, named after Charles Ponzi, who conned many people in the 1920s out of millions of dollars, is a form of financial fraud, that lures investors by promising abnormally high returns. Money brought in by new members is used to pay the scheme’s founders, as well as its earlier investors.

The scheme was set up in a way that led investors to believe that the returns came from legitimate business activity, and they remained unaware that other investors were the source of funds.

Now if Charles Ponzi would have been subject to any kind of financial audit when times were high, his whole house of cards would have crashed and burned a lot earlier. His system relied on a total lack of transparency.

Compare that to DRIP today: DRIP is a smart contract, hardcoded on the Binance Blockchain and it’s there for anyone to see, to inspect, to audit, to dissect.

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