A Dogecoin fan pumped the hugely popular meme coin on Tik Tok, and an observer reposted the video on Twitter with an accompanying comment saying that the man had just flawlessly described a Ponzi scheme.
The unnamed Dogecoin enthusiast was keen to share what he said was “an incredible investment opportunity right now.”
The goal is for Dogecoin to reach $1, the Tik Tok investor said.
“If we get more people to buy it, the value goes up, right?” the Tik Tok investor said. “As soon as the value goes up, I make more money, they make more money. Oh wow, so let’s get more people to buy it and then the value goes up and we all make more money. So it’s one of those things where it’s like, if we do that enough times we can get to a dollar, which is the goal.”
Dogecoin was trading at $0.17 as of this writing. Its price rose as much as 33 percent on Dec. 14 after Tesla CEO Elon Musk, a fan, sent out a new market-moving tweet saying he would accept dogecoin as payment for some of his merchandise. Dogecoin rose from around $0.15 to more than $0.21 following Musk’s tweet, before falling back, but not all the way back.
“Everybody’s jumping around like ‘Oh, to the moon, to the moon, to the moon. Let’s get it to a dollar,'” the Tik Tok investor said. (“To the moon” is a slogan used by Dogecoin fans and high-profile crypto enthusiasts such as Tesla CEO Elon Musk.) “So it’s encouraging. It’s teamwork. It’s putting effort into it. It’s telling everyone who knows, shouting it from the top of the mountain, ‘Everybody buy Dogecoin because then everybody gets rich.’ Do you see what I’m saying?”
Dogecoin is a payment system created in 2013 as a joke to make fun of the speculation in cryptocurrencies. Based on a viral internet meme of a Shiba Inu dog, it is considered the first meme coin. Dogecoin’s price stayed relatively flat for eight years at around 10 thousandths of a cent per coin until January 2021, when its price started going up. By April 2021, price action was increasing significantly.
Dogecoin reached an all-time high of $0.7376 on May 08, 2021, according to Coinmarketcap. In the process, its market cap rose higher than companies such as Twitter and Ford. “But it doesn’t have any utility, and it doesn’t have any paid staff,” Motley Fool reported.
The Tik Tok dogecoin investor described how he thinks dogecoin can make everyone rich. “Everybody is just encouraging each other to get it to a dollar and every time it gets a little closer, we cheer: ‘Oh it went up a cent. Oh it went up another.’ Everybody gets all amped up about it, you know what I mean? So it’s almost like we’re all in this together, all a part of a team and we’re all trying to get it to a certain goal.”
“Mans just flawlessly described a ponzi,” @TikTokInvestors tweeted.
Ponzi schemes are named for Charles Ponzi, who was arrested on Aug. 12, 1920, in Boston for faking investments. In his scheme, early investors were paid with money from later investors, making Ponzi’s enterprise appear legitimate. Ponzi promised investors a 50 percent profit within 45 days and 100 percent profit within 90 days. Early investors got what they were promised and Ponzi soon had investors begging him to take their money.
Subsequent Ponzi schemes have proved that “too good to be true” can be too hard to resist. Bernie Madoff promised his investors a steady return on their investments via the asset management arm of his firm, which pretended to trade in securities using his “unique” strategy of picking winning bets. Madoff delivered through the recession in the 1990s and the 9/11 terrorist attacks of 2001 until the 2008 financial crisis put an end to his “big lie.” How the Ponzi scheme worked is that money given to Madoff by newer investors was used to pay older investors while Madoff manufactured counterfeit returns. In 2008, older investors pulled out, new ones evaporated and banks stopped lending. When Madoff’s Ponzi scheme unraveled, investors lost as much as $65 billion.
People begged Madoff to take their money. Madoff said that he waved red flags that should have been obvious to even an unsophisticated investor, according to New York Magazine. “They were all told by me, ‘Don’t invest any more money than you could afford to lose. This is the stock market. There’s always stuff that can happen. Brokerage firms can fail. I could go crazy and do something stupid. If you want a [safe thing], put your money in government bonds.’ So everybody understood this … Everyone was greedy. I just went along. It’s not an excuse,” Madoff said.
Madoff died in prison on April 14, 2021, at age 82 after being sentenced in 2009 to serve 150 years. He pulled off the largest Ponzi scheme in history.
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?