# Last edited on 2014-02-05 01:02:13 by stolfilocal

How to run a Ponzi scheme with Bitcoin:

  1. You open an exchange. 

  2.  You post bids yourself to buy BTC at 10% above market price, say 1100 US$ instead of 1000 US$.

  3. Client sees the spread and rushes in to sell 1 BTC.  You enter 1100 US$ into his account and tell him that it may take several weeks to withdraw.

  4. You sell his BTC at another exchange at 1000 US$; now you have 1000 US$.

  5. Another client comes in to sell another 2 BTC. You enter 2200 US$ into his account and warn him of the delay.

  6. You sell the two BTC at another exchange at 1000 US$. You now have 3000 US$.

  7. You pay US$ 1100 to the first client. You still have 1900 US$.

  8. More clients come in to sell 4 BTC. you enter 4400 US$ total etc etc.

  9. You sell the 4 BTCs at 1000, now you have 5900 US$.

  10. You pay 2200 US$ to the second client. You still have 3700 US$.

  11. More clients rush in to sell 8 BTC. ...

Sometimes a stupid newbie will want to [i]buy[/i] coins from you.  You buy it at another exchange and sell it for a 100 US$ immediate profit, without disturbing yourponzi schema.

Sometimes a client with pending US$ withdrawals may get tired of waiting.  He will buy back his coins with the money in his account, to take them out. 

Like any standard Ponzi, this one works while the clientele is growing exponentially. However you may have to increase the spread to get that,

It works even better if the price is going up, so that you lose less when selling their BTC.

Like any standard Ponzi, this schema will collapse suddenly if the clientele stops growing, or if the price crashes before you can sell the coins you bought.  Or if too many clients with pending US$ withdrawals get tired of waiting, buy back their coins and try to take them out of the exchange.