I have a magical Bull whose shit has magical properties. Whoever owns one kg of the shit sees his/her life change altogether. However the Bull produces only 5 kgs of shit every day and the magical properties of the shit will run out as soon as the Bull hits 5 years of age. Currently the Bull is 4 years old. As such over the next one year only about 1825 kgs of BULL SHIT will be produced of magical properties. After that the capacity will run out. There is a possibility that the magical properties might last till 6 years of age. However that is something which will be known only after the Bull crosses 5 years of age.

As such the capacity of the Bull Shit is limited to only the next 1825 people. Whoever bids the maximum gets the Bull Shit on a particular day. As time passes the amount of Bull Shit that can be produced in the future with magical properties also keeps on reducing thus making the Bull Shit more and more valuable as the myth of the Bull Shit grows and people want to buy it at any cost. The Shit that was selling at just $ 100 per kg a month back now sells at $ 1000 a kg and with online delivery also being available orders have started to flow from all parts of the world. In another 11 months as the production capacity deadline approaches the price keeps on moving up. Secondary market trading of the Bull Shit also picks up as for many who bought at $ 100 per kg can sell it for $ 1000 ( It was actually magical for them right? They made $ 900 in a month, the luck actually changed) As the price moves up everyday it attracts more and more people who are now convinced that the Bull Shit is actually magical.

Seeing the frenzy for the Bull Shit someone also starts advertising their own Bull Shit which is cheaper and thus attracts new buyers for that Shit. However there are others who just want to buy the original shit. As such both shits start moving up and over time more and more different shits get added into the system. Given the population in the world it can easily absorb hundreds of such Bull Shits. The Elite are willing to buy the original, proven and expensive Bull Shit while lesser mortals are willing to try the newer ones. This goes on till the shit hits the roof, sticks there and then falls.

This is essentially the cryptocurrency story. They have zero economic value, are unregulated and are a product of zero to negative interest rates and the debasement of the US Dollar. Artificial capacity constraints are used to create a frenzy. No one, even the biggest of believers do not know whether a Cypto should trade at $ 1 or $ 1000  So will they exist in the future. Sure they will as the bigger fool theory works the markets all the time. When will the balloon be punctured? Tough to say but for sure when interest rates start moving up and the US Authorities have had enough of the weak dollar policy.

Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. The scheme leads victims to believe that profits are coming from product sales or other means, and they remain unaware that other investors are the source of funds. A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment and still believe in the non-existent assets they are purported to own.

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