what is HYIP ? - eMoneySpace

Quote

High Yield Investment Program, also known as HYIP, is a type of investment program that yields high interest rates ranging from 5% to as much as 250% per month making it the top investment program. HYIPs accept investments that are as small as $10 and claims that they can provide high interest rates.

How do HIYPs work?

All transactions of HYIPs are done over the internet.
HYIPs utilize a lot of strategizing in order to yield the high interest rates that were promised to the investors. The money is placed on various investments such as capital management, metal trading, sport exchange, sport betting and forex trading. The irony of it is that some HYIPs also place an investment on other HYIPs.
HYIPs use E-gold in their transactions because it offers the most convenient payment system. E-gold suits best HYIPs because it has a feature that allows easy withdrawal of money making it a good option for completing online transactions. Moreover, E-gold is accepted all over the globe. Another factor that addresses the need of HYIP investors.

What is a HYIP scam?

It follows normal logic that you need to invest your money somewhere for it to earn interest. If you just keep your money, then it wouldn’t earn any interest. This is the simple idea behind every HYIP scam. HYIP scams will usually never place the money that they get from investors to investments so it will earn interest.

What are the risks of HYIP?

High yield programs usually involve high risks. HYIPs are not exemptions.
Most HYIPs are short-lived and are just Ponzi schemes.
Ponzi schems refer to HYIP scams. HYIPs that are short-lived are scams or Ponzi schemes. These schemes appear very attractive because of the promise for high interests.
Ponzi schemes do not have revenues because the money collected from investors were not really investments. As mentioned earlier, money not invested will not earn revenue. Investors were paid by money collected from another group of investors who placed their money to generate interest. The lifespan of every Ponzi will deppend on how long the HYIP is able to recruit new investors. The moment new membership stops, the Ponzi dies.

What’s the conclusion?

HYIP can prove to be profitable; however, be very careful if you're interested in this type of investing opportunity. On one end, it can prove to be very lucrative. On the other end, it can lead to big losses.

If you are really serious in being involved in a HYIP, make sure you do your homework well. Conduct a thorough research about the company you are getting involved in. Find out the operations of a HYIP and how your investment will get the promised interest rate so you will not be sorry.

Quote

A high-yield investment program (HYIP) is a type of Ponzi scheme, which is an investment scam that promises an unsustainably high return on investment by paying previous investors with the money invested by newcomers.

HYIP operators generally set up a website offering an "investment program" with returns as high as 45% per month or 6% a day that discloses little or no detail about the underlying management, location, or other aspects of how money is to be invested because no money is invested. They often use vague explanations, asserting little more than that they do different types of trading on various stock markets or exchanges to generate the returns they purport. The U.S. Securities and Exchange Commission (SEC) has said the following on the matter: "These fraudulent schemes involve the purported issuance, trading, or use of so-called 'prime' bank, 'prime' European bank or 'prime' world bank financial instruments, or other 'high yield investment programs.' ('HYIP's) The fraud artists... seek to mislead investors by suggesting that well regarded and financially sound institutions participate in these bogus programs."

Mechanics

Though Ponzis and HYIP schemes have thrived and multiplied since at least the early 1900s, the combination of the Internet and Electronic money has played an important role in the rapid growth of HYIPs in the first decade of the 21st century.

The use of digital payments systems has made it much easier for operators of such websites to accept payments from people worldwide. Electronic money systems are generally accepted by HYIP operators because they are more accessible to operators than traditional merchant accounts. Several digital currency companies responded by taking measures to discourage their system from being used for HYIPs.[citation needed] Some HYIP operators opened their own digital currency companies that eventually folded; these companies include Standard Reserve, OSGold, INTGold, EvoCash, and V-Money. StormPay was started in the same way in 2002, but has remained in business even though the HYIP that it was created to serve was shut down by the State of Tennessee.

Some HYIPs have incorporated in countries with lax fraud laws to secure immunity from investor laws in other countries. The operators have been known to host their website with a web host that offers "anonymous hosting". They will use this website to accept transactions from participants in the scheme. The HYIP scam may also create sites which employ spamdexing or other adversarial information retrieval techniques in order to attract potential victims by creating an impression that the company has done no wrong.

Examples

The largest documented HYIP scam was OSGold, founded as an e-gold imitation in 2001 by David Reed. OSGold folded in 2002. According to a lawsuit filed in U.S. District Court in early 2005, the operators of OSGold may have made off with USD $250 million. CNet reported that "at the height of its popularity, the OSGold currency boasted more than 60,000 accounts created by people drawn to promises of "high yield" investments that would provide guaranteed monthly returns of 30 percent to 45 percent."

The second largest documented HYIP was PIPS (People in Profit System or Pure Investors). The investment scheme was started by Bryan Marsden in early 2004 and spanned more than 20 countries. PIPS was investigated by Bank Negara Malaysia in 2005 which resulted in Marsden and his wife being charged in a Malaysian court with 97 counts of money laundering more than 77 million RM, equivalent to $20 million.[8] Even after these charges were brought forth, many of Marsden's followers and investors continued to support him and believe they would see their money in the future.

Some Ponzi schemes promise yields that appear realistic and as such are not considered "high-yield investment programs." Bernard Madoff's Ponzi scheme offered yields of only 5% per year, for example.