Warning! High Yield Bitcoin Investment Programs are Clearly Scams
High Yield Investment Programs (HYIP) are nothing new. Schemes which promise fast returns on your investments have been around since the 16th century. These days, scammers are using Bitcoin as a medium for running these scams – and many people are still falling for them.
This page takes you through how these High Yield Programs work, explains why they are fraudulent, and then finishes with some more honest alternatives for those who like to gamble with their money.
How High Yield Bitcoin Investments Operate
You’ll find a number of very professional looking websites out there with names like Bitcoin Financial or Hex Trader. These explain to you that you can get a return on your investment of between 1% and 10% every day on your BTC deposits. Starting limits are often low enough for people to forgo detailed background checks and give the schemes a try.
Next your balance will go up each day, and the scheme will appear to be working. You’ll often be pressured to deposit more BTC, and with the ‘proof’ (including smaller withdrawals if needed) that the investment is working. You will also be pressured to invite friends, family or co-workers to get involved.
In reality, there is no investment scheme at all on many of these sites. All of your gains are coming from people who join the scheme later. If everyone wanted their Bitcoins back at the same time, the schemes would crash immediately. These are pure Ponzi schemes – at some point down the line the number of ‘greater fools’ who invest late will dry up, and the scheme will go broke, taking your Bitcoins and ‘profits’ with them.
Is It Possible to Profit from these Schemes?
In theory, you could get in early, enjoy a small profit and withdraw your Bitcoins before the scheme imploded. There is significant risk to this, the biggest one being whether you will be able to withdraw at all. For me, even with ‘money you could afford to lose’, there are better ways to spend it than to take a big risk with a High Yield Investment.
Are There Legitimate Bitcoin Investments?
There is a lot of expansion in the world of BTC at the moment, with startups looking for investors, trading exchanges and new businesses accepting this for payment every day. Safe and legitimate investments as we know them in the form of stock market index trackers or bond funds can be mimicked through a stock trading exchange. If you are going to trade a traditional investment over the long term – then Bitcoin might seem like a strange choice of medium to trade in. On one hand you are looking for traditional security of your investment, and on the other you would be doing this with a volatile currency like Bitcoin.
Instead of High Yield Investment Scams – Why Not Gamble Honestly?
Gambling will lose you money over the long term, though it can be entertaining along the way – and hopefully provide you with some short term wins. One great thing about Bitcoin Gambling is that you can find games which are ‘Provably Fair’. The games come with special encrypted strings, which can be used to prove that the deal was random after the hand, spin or roll.
There are plenty of simple Bitcoin games, including dice, lottery and Scratch-Card type games. You’ll also find fully featured casinos (some with live-dealer games streamed to your computer). Sports books and multi-player poker games also run in Bitcoin. For those who want an option that involves more skill than luck, binary options are a viable alternative.
The message should be loud and clear – do not get taken in by the high yield Bitcoin investment scams. Be smart and don’t be the fool who’s money is easily parted with.