It has always been a matter of debate, especially amongst e-currency newbies, as to whether HYIPs are scams or not.
According to Wikipedia:
A High Yield Investment Program, or HYIP, is a purported investment program normally offered via the Internet. HYIPs typically accept investments of $500 or less while promising high returns.
No HYIP has, as yet, survived for very long without turning out to be a scam. HYIPs are Ponzi schemes, in which new investors (usually unwittingly) provide the cash to pay a profit to existing investors, which they typically then withdraw leaving nothing to pay the new investor. This approach allows the scam to continue as long as new investors are found and/or old investors leave their money in the scheme, known as compounding (because even higher profits are promised).
Most HYIPs transact only in e-gold, most probably because of the virtual anonymity is offers. Added to this is that, e-gold transactions are irreversible. These factors make e-gold a haven for scammers – em, HYIPers.
If HYIPs were not scams, why would the people behind them prefer e-gold? This does not any way imply that e-gold is a scam, or that only scammers use it. No. Its anonymity attracts scammers.
The text below from ciao summarizes my thought about HYIP:
A particular class of services that is available to e-gold users but not other payment services (due to their conditions of use) are HYIPs. HYIP stands for High-Yield Investment Programme, which generally seems to be another name for a hoax. For example, this might mean that you invest $10 and then get a dollar each week for the next 15 weeks, gaining a 50 per cent profit on your investment in theory. In practice, most of these programmes simply rely on new members to keep the system solvent, and when the influx of new members dwindles, the pyramid collapses with the result that the few first members receive a good profit whereas the majority who came slightly later will lose most of their investment. Try it yourself if you like risk more than your money, but don’t say you haven’t been warned.
