Ponzi games are ‘breaking out’ on the Ethereum blockchain

Ponzi schemes are rising and falling on Ethereum

One of the hardest obstacles for blockchain to overcome is trust.

The world of blockchain gaming is no exception either, as one of the oldest scams in the book resurfaces, at least according to an ongoing consensus, in the form of two games called Fomo 3D and PoWH3D.

Over the last 24 hours, both games have accumulated over 20,000 ETH ($9 million) in trading volume. To put that into perspective, when CryptoKitties reached its peak trading volume, it reached 3,784 ETH ($1.77 million).

At over 96,000 transactions and counting, members of the community have already begun branding the duo as Ponzi schemes.

JP Thor, CEO of CanYa gives a frank analysis of Fomo 3D and PoWH3D.

How they’ve gained traction

Much like a Ponzi scheme, these games gained traction due to the need for existing ‘players’ to bring in more players that pay to participate.

This system allows those already playing to earn money from each new entrant. The risk, however, is when new members stop joining, resulting in the collapse of the entire system.

These games, particularly PoWH3D were caught out and identified earlier as pyramid schemes by Dappradar’s founder in a Medium post from March 31st.

While it started as a joke, rather than distancing themselves from these games, they’re proving increasingly popular. Far from preventing them, Ethereum is giving people a new way to indulge in an old scam according to JP Konig:

Ponzi’s on their way to collapse

On the 22nd of July, the number of Ponzi-based games had increased to five, all of which were ranked among the top 10. Since then, only Fomo3D remains in the list but has since had its total ETH volume fall by 79% over the last 24 hours.

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