A pyramid scheme is a type of investment scam where returns are paid to earlier investors using the capital from newer investors, rather than from profit earned by the operation of a legitimate business. This structure resembles a pyramid, with a few individuals at the top making significant profits while the majority at the bottom lose their money. In a pyramid scheme, participants are often required to recruit others to join, creating a cycle that is unsustainable. Eventually, the scheme collapses when it becomes impossible to recruit enough new members, leaving most participants with financial losses. Such schemes are illegal in many countries due to their fraudulent nature.