I read the most bizarre statement concerning the latest Bitcoin exchange, Vircurex, to declare itself insolvent.
Rather than filing for bankruptcy, as Mt. Gox has done, Vircurex is locking down its existing accounts and has a strategy aimed at paying back all affected customers and returning the exchange to positive financial health. In order for its plan to work, Vircurex is betting that new users will continue to sign up to use its service despite the fact that it has become insolvent, while it is also relying on not being hacked again. Those are two huge risk factors, and it remains to be seen how the plan will play out.
Vircurex is “betting that new users will continue to sign up to use its service despite the fact that it has become insolvent” as a way to dig themselves out of their financial hole?
This is the most perfect example of a Ponzi scheme I’ve read in recent weeks!
A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned by the operator.
If Vircurex is betting their future on an influx of gullible dreamers, well, I suspect they will be in for a very rude awakening quite soon.
As I said before, if you own something but do not have access to it and you cannot sell it, then it isn’t yours.
It certainly is no “investment.”