So, I’ve owned cryptocurrency for almost two months now and what an interesting two months it’s been! I’ve learned a lot I tell you. I also made my first investment too – yay!
Admittedly, that first investment came from an emotional place. A common mistake for rookie traders to make, I hear.
I was fighting an uphill battle with iHERB, who were asking me to accept a 130€ loss on a package they had not successfully delivered to me.
It wasn’t a sure thing that I would win the dispute as they were being exceedingly difficult. So, at that time, I was looking for a plan B to recuperate my money somehow.
As luck may have it, the same day, I came across a new cryptocurrency HYIP (High Yield Investment Program) called King Coins. It was new, on its 5th day and promising a 144% return within 24 hours. Hmmm…
I’m not usually one to invest in programs like this. After all, I am a firm believer of the saying “If it sounds too good to be true, it probably is!”.
However, right now we are in the Wild Wild West of cryptocurrency. Surely anything was possible…
Investing in my first HYIP – King Coins
I first learned about HYIPs in a Discord channel I was a part of and was using to learn about crypto trading. The owner of the channel had jumped into a new HYIP named King Coins that had just opened.
He had been testing it for 2-3 days prior and was making money from it, so he advised his Discord wolf pack to look into it.
At this point, I had never heard of HYIPs before. I didn’t know anything about them. All I knew was that lots of people seemed to be jumping into it and getting something out of it. So I thought I’d take my chances and see if I could jump in on the action.
This was a classic case of FOMO (Fear of Missing Out). Not something I usually partake in, but on this day I was emotional. Emotional and looking for money. This seemed like a quick fix to all my problems that day.
Those were also my first two rookie mistakes…
Rule #1: Don’t ever make big decisions when you’re emotional
Rule #2: Don’t ever recklessly invest in something you do not understand.
On a rational level I knew what I was doing was risky. On an emotional level I was looking for a quick fix. Ready to pounce on anything and everything that could get me out of the emotional turmoil from before.
Luckily, I had a fixed budget set aside for crypto trading ventures (and mistakes), which kept the madness in check.
I also made a pact/deal with myself before I invested, which in retrospect I am happy about.
I told myself, I wouldn’t invest anything without being (semi-) fully prepared to lose it. If the venture tanked it would be my responsibility and nobody else’s. And I would have to live with that.
That being said, if I had known what I know now about HYIPs, I would likely have gone about my investment in a slightly different way. Let me explain…
What is a HYIP? (High Yield Investment Program)
Long story short, I have now found out that in most cases HYIPs are a type of ponzi scheme. HYIPs will open a site, ask you to invest and promise unsustainably high returns for your investment in a short period of time.
Similar to pyramid schemes, they make payouts to investors by using the money (or crypto) invested by new members to pay earlier members their dues.
Once they have reached a certain level of investment, they will then often shut down or stop payments (within 5-10 days of opening is quite common) and any money left on the platform is then gone – never to be seen again.
That being the case, there isn’t really a long window in which to make gains. However, if you know how to enter and exit them correctly, it seems they can in fact be quite profitable.
I have now seen many a video on the internet showing walk-throughs of payouts, which make this quite evident. It also seems referral links to these sites are rampant and can pay well too.
In fact I have a sneaking suspicion it is referrals that may in fact pay the most, but I have no way of proving that without trying it myself… and I don’t think I want to get into that given this most recent experience.
Choosing the right HYIP investment
Now this is where things get really interesting. You see when I first opened an account on the King Coins site, I just looked at the investment options and thought – ok how much do I want to earn?
It looked like a sure thing, the calculator was promising spectacular returns. The interface was clean and pleasing.
Based on that I, therefore, invested 350$ worth of Bitcoin (the minimum value of investment) in the 10% hourly for 24 hours plan. That’s it, investment done, no more need to think or worry anymore… right?
Not knowing how HYIPs work, I didn’t really know or appreciate the finer details of HYIP investment. Details that are really important to know before taking the plunge.
I’m going to attempt to break a few of these down for you in the following sections. Starting with my third mistake…
Rule #3: Don’t invest large amounts in a HYIP without testing your account first
In my case, after depositing my 350$ worth of Bitcoin into my King Coins account and seeing it successfully appear on the dashboard, I just eagerly awaited the 60 minute mark.
I wanted to see how my investment would do. I fully expected it to pay at least something out in the first hour like it said it would. It didn’t have to be much. It could also be a little. Just a little profit would be nice!
Unfortunately, 60 minutes later I was faced with a dashboard showing me a big fat 0$ return. Oh dear…
Panicking slightly, I wrote to the support email to see if something could be done about it. Surely this was a mistake. Perhaps my account just needed adjusting?
I suppose that was to be expected with a scam site. Although they did have a 24/7 support advertisement up… cheeky buggers.
After that I checked in every few hours to see if anything had changed. I still found 0$ on the dashboard…over and over again.
At that moment I thought everything was lost. I was upset and frustrated. Why did that happen to me? How could I have been so foolish? This was so annoying! How unfair!
Then I reminded myself of the pact I made with myself. Surprisingly that really helped calm me down. You see I’m a big believer in the power of choices and taking responsibility for your actions.
It was me who chose to invest in this scheme. That meant it was also me who lost. It was as simple as that really. Now I had to admit my mistake and move on. Sayonara.
Surprisingly, after 24 hours my dashboard eventually did change. It showed $1.76 profit. Time to celebrate?
Well… not quite. You see, it was at this point I also found out that I had made another mistake. And an interesting one at that.
Rule #4: Don’t invest into HYIPs with Bitcoin – use an alternative coin instead
Withdrawing profits from my HYIP investment
When it came to withdrawing my profits from King Coins, I didn’t think that the currency I had invested with could influence my payouts.
However, I eventually found out it could, which made investing with Bitcoin a mistake.
One of the earliest indicators of this mistake was the minimum withdrawal limit of $5 on King Coins.
This amount was higher than any other currency and would likely have set off alarm bells in a more seasoned investor for a number of reasons.
Reason #1: It showed Bitcoin was being stored
Seasoned HYIP investors apparently don’t invest with Bitcoin. I found this out after the fact. This means that HYIP sites like King Coins likely have lower reserves of Bitcoin than other currencies, which could make receiving regular Bitcoin payouts harder.
It also means that HYIP sites will need to manage Bitcoin wallets more carefully, which could put Bitcoin deposits under more scrutiny.
I think this theory was confirmed when my Bitcoin deposit was immediately put into a 0.5% return per 24 hours scheme and not the elected 10% hourly return for 24 hours scheme.
It also makes me think that larger Bitcoin deposits likely to be at highest risk of losses. Especially since I rarely saw any high Bitcoin payouts ($100+) on the site throughout its lifetime.
Another contributor to this storage phenomenon could be that Bitcoin is currently the #1 cryptocurrency on the market. I could, therefore, imagine that it would also be the most valuable coin for ponzi scheme owners to hoard and eventually run away with.
Reason #2: It made daily Bitcoin withdrawals impossible
My investment being put into a 0.5% return scheme meant that I only saw $1.76 per day in returns. That meant that if I wanted to recoup my initial investment, the scheme would have to stay active for 199 consecutive days. This was very unlikely.
Additionally, the $5 minimum withdrawal limit meant I had to wait 3 days to make each earnings withdrawal, which naturally put my investment at higher risk of non-payment.
If you remember what I said earlier about sites closing down quickly, then you will realise that the flexibility to withdraw your investments is critical to your success as an investor.
King Coins stopped paying out right around the 11 day mark. That being the case, signing up on day 5 as I did was already risky. Having to wait 3 days for each withdrawal, made it even riskier.
Luckily, I was able to recoup $10.61 before all payments stopped. That may not seem like a lot, but surprisingly it did help lick the wounds a little bit. After all it limited my loss to $339.39 instead of $350.
As an optimist with a belief in silver linings, this did make me feel better. In the end it really could have been worse. Not much worse, but a little bit worse… and that was worth keeping in mind.
Understanding HYIP terms and conditions
Another point that I completely missed with King Coins was the investment’s terms and conditions.
For some reason, when I initially invested in the 10% scheme I thought I was guaranteed the return of my initial investment after 24 hours. Don’t ask me why… but I did.
When the site stopped paying, however, I decided to take a closer look at the terms and conditions. I couldn’t withdraw any more money, so my only option was to re-invest the earnings and hope they would start paying out again at some point.
That’s also when I saw the following:
This obviously showed that the principal return was not guaranteed, as it was included in the profits. It also showed that the principal withdrawal was ‘not available’.
This proved to me that payments really had completely stopped.
The first time I had encountered this screen, I’m pretty sure the Principal Withdraw line had shown something along the lines of “Available subject to minimum withdrawal limits”.
Not that it really mattered now, but it was interesting looking at this screen again with eyes wide open.
Conclusion – How do I feel about this first HYIP venture?
I think that even though I was definitely disappointed about losing this investment, I am also really glad for the experience.
It did take me a few days before I could come to this realisation. I’d never done anything quite as risky as this with my money before and so it was a bit of a shock to the system.
However, after the inevitable disappointment, I also came to see this as a great learning experience. I’m learning new things about the Crypto space almost every day and when you try something new you’re inevitably going to make some mistakes unless you have someone stopping you.
Being disciplined with my investments (i.e. having strict budgets in place) really helped keep the recklessness in check though and I am forever grateful for that.
And after all that I can say that if I ever did decide to go into a HYIP again it would be with a different approach for sure.
- Invest and re-invest early and small
- Only use alternative coins to Bitcoin
- Make sure to maintain maximum flexibility with withdrawals
- Get out as soon as I could
So with that being said and done, that’s the end of that adventure. Next stop: Day-trading!
// Have you had any experiences with HYIPs? If so, feel free to share your experiences(s) below //