The normal way of operation is the first “investors” in a Ponzi Scheme do get paid in order to convince them that everything is working as promised and to encourage them to invest more and more into the service and to bring other people too. In reality however the “earnings” the earlier “investors” are getting do come from money that new users brought to the service are investing into it. And as soon as the authors of the Ponzi Scheme decide to get away with the all the money everything will fall down and some people will actually loose money. But even in this scenario if you are one of the “early investors” and use the service for just a few days with small amount of Bitcoins (never invest real cash into such Ponzi Schemes!!!) you might actually end up making some cash. Never, never and NEVER invest long term in a Ponzi Scheme or HYIP website, but what is even better thing to do is to stay away from such websites! We would not recommend to use services such as this one, even if there is some small chance to actually profit from using them, because this will be at the expense of somebody else just like you!
In short – if something looks too good to be true, then it probably is and you should be wise and best avoid it.
High-yield investment program (HYIP)
A high-yield investment program (HYIP) is a type of Ponzi scheme, an investment scam that promises unsustainably high return on investment by paying previous investors with the money invested by new investors. Most of these scams work from anonymous offshore bases which make them hard to track down. Operators generally set up a website offering an “investment program” which promises very high returns, such as 1% per day or even more, disclosing little or no detail about the underlying management, location, or other aspects of how money is to be invested. Or giving you a nice story about the whole thing such as BTC arbitrage, that may sound believable to newbies or people that are generally not very experienced and haven’t suffered yet from such a fraudulent scheme.
Ponzi scheme
A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from existing capital or new capital paid by new investors, rather than from profit earned by the individual or organization running the operation. Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent. The perpetuation of the high returns requires an ever-increasing flow of money from new investors to sustain the scheme. The scheme is named after Charles Ponzi, who became notorious for using the technique in 1920, even though he did not invent the scheme, but his operation took in so much money that it was the first to become known throughout the United States. Ponzi’s original scheme was based on the arbitrage of international reply coupons for postage stamps; however, he soon diverted investors’ money to make payments to earlier investors and himself.