Why are there no legitimate HYIPs?

[Lorenzo]

Every single business following the HYIP model has turned out to be a ponzi scam.

I would think that a "legitimate" HYIP would be possible however. Think of the real estate business. If you have a rental property as an investment, it is possible to make a 8-15 percent annual profit. A business could buy a property and sell shares in the property which would return a weekly, monthly, or yearly profit. Shares could be resold once bought, hence leaving your initial investment intact.

There are also professional stock and forex traders who are able to earn a living by trading in these markets. A business could be set up that allows people to pool their investments together into a single fund. Successful traders would be given the option of using the funds in this pool in addition to their normal funds, and if they choose to do so, they would be entitled to a percentage of their profits. Therefore, a trader who has $100,000 of his own funds and normally makes $50,000 a year would be able to gain access to $1,000,000 of investors' funds and make an additional $500,000 a year. Even if he was entitled to just 10 percent of profits, the trader would now be making $100,000 a year and the investors would get $450,000. Everyone wins.

Finally, there is also an opportunity to profit by giving out loans. This includes mortgage loans. A business could be set up that allows investors to pool their money together and give out loans. The profits would come from the interest that is paid once the loan is repaid.

I can think of other business models that might be able to pool investors' funds and give out the profits in a weekly, monthly, or yearly manner. Life insurance, for example.

Got any other ideas?

[Este Nuno]

Every single business following the HYIP model has turned out to be a ponzi scam.

I would think that a "legitimate" HYIP would be possible however. Think of the real estate business. If you have a rental property as an investment, it is possible to make a 8-15 percent annual profit. A business could buy a property and sell shares in the property which would return a weekly, monthly, or yearly profit. Shares could be resold once bought, hence leaving your initial investment intact.

There are also professional stock and forex traders who are able to earn a living by trading in these markets. A business could be set up that allows people to pool their investments together into a single fund. Successful traders would be given the option of using the funds in this pool in addition to their normal funds, and if they choose to do so, they would be entitled to a percentage of their profits. Therefore, a trader who has $100,000 of his own funds and normally makes $50,000 a year would be able to gain access to $1,000,000 of investors' funds and make an additional $500,000 a year. Even if he was entitled to just 10 percent of profits, the trader would now be making $100,000 a year and the investors would get $450,000. Everyone wins.

Finally, there is also an opportunity to profit by giving out loans. This includes mortgage loans. A business could be set up that allows investors to pool their money together and give out loans. The profits would come from the interest that is paid once the loan is repaid.

I can think of other business models that might be able to pool investors' funds and give out the profits in a weekly, monthly, or yearly manner. Life insurance, for example.

Got any other ideas?

All of the things you speak of are already a reality but most people don't called them HYIPs. HYIP is just a euphemism for ponzi.

Hedge funds aim to yield high returns for its investors but you would never catch anyone calling one a HYIP.

There are investments with more risk that also yield high returns. Just beware of anything calling itself a HYIP.

[hollowframe]

HYIPs tend to imply that there is some kind of guarantee that you will actually earn high yields on your investment. It is simply not possible to guarantee that high yields will be achieved all, or even any of the time.

There are several investments that offer high yields, and that have, in the past gained a lot (offered "high yields") over time.

It should be noted that the more you expect to earn on your investment, the more risk you are taking. 

[maker88]

Finally, there is also an opportunity to profit by giving out loans. This includes mortgage loans. A business could be set up that allows investors to pool their money together and give out loans. The profits would come from the interest that is paid once the loan is repaid.

zopa.com? lendingclub.com ?
peer2peer lending is a thing already.

[IIOII]

HYIP has almost become a synonym for Ponzi scheme. I think the reason is the high loss rate of even those HYIP that weren't originally planned as Ponzis. Especially in day trading the vast majority of trader looses capital over longer periods of time. Those who are successful do not need to raise capital, because they already made enough (note that markets do not provide unlimited liquidity for trading). So there's a negative selection process going on: Traders that are offering HYIP to finance trading are most likely those that are unsuccessful.

Simple investment rule: High proposed return on investment = high risk.

[Golph]

That is why they are called HYIPs, how on earth are they going to make so much return in short time?

[KimNam]

Legitimate HYIPs ?
if successful trader get capital from HYIP "investor" and use it for daily trading, will investor get back their money if that trader suffered losses from trading?
HYIP is still HYIP, they aim greedy people by offered them crazy and high profit in short term
and run after that

[wotter11]

because in the long run you always lose with HYIPs.  When I was younger I put small bits of money in them and short term I made money but long term because I got greedy I lost it all.

Huge returns are not sustainable in the long run.  That and people just get greedy.

[galbros]

Think of it this way, a true HYIP would have a fee structure like a hedge fund where they take a cut of the profits and none of the losses.{1}  I don't think many people would contribute their coins to such a high fee scheme when there are so many other, usually illegitimate, funds.  It's a classic case of scammers destroying any hope of a legit market, which because of its fees, really isn't that attractive.

Good Luck!


{1} In the US most hedge funds are run on the 2 and 20 fee structure, 2% of assets and 20% of investment gains.

[SHA255]

because in the long run you always lose with HYIPs.  When I was younger I put small bits of money in them and short term I made money but long term because I got greedy I lost it all.

Huge returns are not sustainable in the long run.  That and people just get greedy.

It is more like that high yield investments carry a lot of risk and with risk there is a greater chance of loosing your principle. Over the long run it is very unlikely that you will earn more then 7% above inflation which is about what stocks have earned in the past.

[Xch4ng3]

As said by someone else, HYIPs were just a jazzy name given to Ponzi schemes. The only way they could offer you such high returns was due to the fact that they used new investors funds to pay off the older investors. Check any decent P2P lending / investment site, such as Zopa - they don't offer high returns but they give a hell lot more than what a bank would and the listings are backed by credit checks.

[Cicero2.0]

I have never heard of a legitimate one in the bitcoin world. Once we get through the wild west stages of bitcoin you might see some pop up, but for now if it seems to good to be true........

[Daniel91]

As said by someone else, HYIPs were just a jazzy name given to Ponzi schemes. The only way they could offer you such high returns was due to the fact that they used new investors funds to pay off the older investors. Check any decent P2P lending / investment site, such as Zopa - they don't offer high returns but they give a hell lot more than what a bank would and the listings are backed by credit checks.

Very well said.
It seems that this HYIPs programs become very famous, fast and easy way to scam people and earn good money for admins only.
Many people are financially despair so it's always enough victims for such SCAMS.
i tried my luck in a few HYIPs and lost my money in each of them.

[Soccruo]

I was very unlucky with HYIPs, every time I entered in, I was too late and in the final stage of the scam...

[Ron~Popeil]

I was very unlucky with HYIPs, every time I entered in, I was too late and in the final stage of the scam...

That happens to the vast majority of "customers" in these scams. As the bit coin economy grows we will see some less risky investment opportunities pop up. For now I think it is best to keep your bit coin in cold storage.

[luigi1111]

I was very unlucky with HYIPs, every time I entered in, I was too late and in the final stage of the scam...

I do believe that is the entire point of them. You weren't "unlucky", it was by design.

[InwardContour]

I was very unlucky with HYIPs, every time I entered in, I was too late and in the final stage of the scam...

I do believe that is the entire point of them. You weren't "unlucky", it was by design.

Yes, only the first ones are winners and are payed by the remaining people.
But even if you are among the first, the website can be taken down just because of some big investor which brakes the ponzi scheme.

[Harley997]

I was very unlucky with HYIPs, every time I entered in, I was too late and in the final stage of the scam...

I do believe that is the entire point of them. You weren't "unlucky", it was by design.

This is how most HYIPs operate. They promise returns that are larger then what is realistic. Then they lure in customers by paying the early customers/investors the crazy rates. Once enough money has been invested in the HYIP, the backers will typically disappear, along with their customers' money. 

[CurbsideProphet]

Finally, there is also an opportunity to profit by giving out loans. This includes mortgage loans. A business could be set up that allows investors to pool their money together and give out loans. The profits would come from the interest that is paid once the loan is repaid.

zopa.com? lendingclub.com ?
peer2peer lending is a thing already.

As someone who used to lend on Prosper, I'd advise to stay away.  There's a reason a lot of these people can't get loans from banks.

[sandykho47]

I think your idea is very good 
if there are HYIP like that, i would like to join

But, in reality. all HYIP i can find is ponzi / pyramid scheme

I was very unlucky with HYIPs, every time I entered in, I was too late and in the final stage of the scam...

I do believe that is the entire point of them. You weren't "unlucky", it was by design.

This is how most HYIPs operate. They promise returns that are larger then what is realistic. Then they lure in customers by paying the early customers/investors the crazy rates. Once enough money has been invested in the HYIP, the backers will typically disappear, along with their customers' money. 

That's true HYIP works like that, similar to Ponzi / Pyramid Scheme. It's classic HYIP trick