Ponzi scheme is a fraudulent activity whereby investors are being promised high returns on their investment. It is an easy and quick way to generate wealth but in an illegal manner. This is a way to earn money by fooling investors. The fraudster collects funds from the innocent investors on a promise to give them more than average return in the form of dividends by investing them in productive activities. But they use that money for paying dividend to the existing investor after keeping aside a part of it for themselves. They keep on doing this until they are caught.
This scheme collapses when the existing investor starts demanding for their money and no new investors are found. Number of regulations have been framed to prevent the investors from such fraudulent schemes but still people are falling prey to them and making huge financial losses. This is so because everybody wants to make money quickly and easily. This is the reason why people get easily influenced by these lucrative investment schemes. They also start convincing their friends and family to invest which further broaden this chain of investors. This is how it gets spread among people. Due to this ignorance, they all get themselves landed into huge financial loss.
It is suggested that investors should explore and research more and more before making an investment decision. They should invest only on reliable investment instruments.
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You can search for more such games as it is an easy investment avenue to generate a good return.