Are Popular Decentralized Applications For Ethereum Just Ponzi Schemes?

Bernie Madoff

I’ve been following an interesting phenomenon that’s been taking place on the Ethereum network for the past week or so: the meteoric rise in the usage of ponzi scheme games on the Ethereum network. These decentralized applications (dApps) are PoWH 3D, Fomo3D, and FOMO Short.

According to DappRadar, PoWH 3D has 2,988 users in the past 24 hours. Fomo3D has 2,849 users in the past 24 hours. FOMO Short has 752 users in the past 24 hours.

These games are literal ponzi schemes.

Sid Kalla, a member of the token project consulting firm Turing Advisory Group, said of these games:

“At the core, they seem to be taking the ideas of pay-per-bid auction models that were popular in 2009–2011, except instead of selling ‘real’ products for the bid price, they sell nothing tangible or of real value.”

Mind you, these ponzi scheme games have more users than decentralized exchanges such as IDEX, ForkDelta, and Bancor.

One of the main concerns that I have is that the public will misconstrue this information. Many people I’ve spoken to who are not in the cryptocurrency industry believe that all cryptocurrencies and blockchain are only useful for illegal transactions and ponzi schemes. The fact that the most popular dApps for Ethereum are ponzi schemes only emboldens their viewpoint further.

Ethereum gave promise of a global financial revolution. Instead, we got glorified ponzi schemes. Is this really the financial revolution we were promised?

Even Vitalik Buterin, creator of Ethereum, believes we have a long way to go. Last On Twitter, he asked last December:

“How many unbanked people have we banked?
How much censorship-resistant commerce for the common people have we enabled?
How many dapps have we created that have substantial usage?
How much value is stored in smart contracts that actually do anything interesting?
How many Venezuelans have actually been protected by us from hyperinflation?
How much actual usage of micropayment channels is there actually in reality?”

Whether you’re building dApps on the Ethereum network, working on a cryptocurrency/blockchain team, or just interested in cryptocurrency in general, these are questions that you should really be asking yourself.

We as a community should be better than simply ponzi schemes— and for the most part I think we are better than this. I’m well aware that many of the first use-cases for new technologies include gambling, among other unsavory things. But now we now also need to start focusing on working on dApps that provide significant value to a massive amount of users.

That’s why I’m working with projects like Datum, IDEX, and BitDiem, because I still believe that dApps will be able to truly positively impact peoples’ lives in a massive way. That’s the vision I signed up for.

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Are Popular Decentralized Applications For Ethereum Just Ponzi Schemes? was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.

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