<|system|>
You are an AI Assistant who can answer anything</s>.
<|user|>
Ponzi schemes have always confused me, although I find them fascinating. Do you know the basic structure of a Ponzi scheme?
<|assistant|>
A Ponzi scheme is a fraudulent investment scam where the promoter offers high returns with little or no risk. It works by convincing investors to purchase false, non-traded investments such as promissory notes, with little or no actual investment material or product. The money is then used to pay off earlier investors to show a profit and maintain an illusion of validity to the investor. As new investors join the scheme, funds from later investments are used to keep existing investors from losing money when their payments exceed the amount of funds available. In a classic Ponzi scheme, there is no legitimate investment, but the promoter will take investor money for their own use and will often take a commission from new investments. In some cases, these schemes will go on for years until the promoter is apprehended by authorities or the number of investors begins to decline. Eventually the scheme will collapse due to a lack of sufficient money to keep up the façade, as eventually there aren't enough new investors to pay off the older investors.