Many people are asking, "how does Bitconnect make money," "how is it profitable" and, "why isn't it imploding?" In real life, Multi-Level Marketing fails and normally because of the owners over everything. I don't actually know how BCC/BitPetite/similar works but I do know of a way they could work.
Freebitcoin offers a 0.0109586% daily compounding interest on accounts over 0.0003 BTC. If you created an account, earned, bought or transferred 0.01772 BTC 180 days after the first 24 hours your account will have accumulated approximately an extra 0.03495355 BTC, totalling 0.05267355 BTC (including initial investment). If you paid the user 1% a day they'd receive an ROI of 0.049616 BTC, leaving 0.00305755 BTC. The affiliate ladder generally ads up to ~15%, in this case ~0.00045863 BTC and leaving 0.00259891 BTC. This remainder is split in half 50% to the 'original investors & owners' pool the other 50% (~0.00129945 BTC or 7.33 USD) never leaves the stake as company return and to keep the system running for a very extended period of time. In case you didn't notice, I missed approximately 0.003% - 0.03% BTC from the compounding part of 'daily compounding interest'. This was done as a control and to reduce the number of mathematical steps.
What if we put in the high amounts like with bitconnect? The previous example was with a 100.00 USD in BTC deposit. So let's do a 10,000.00 USD in BTC deposit:
- 1.17679 BTC *0.0109586 BTC =0.01289597 BTC
- 0.01289597 BTC *180 =2.32127476 BTC
- the account, 181 days later has 3.49806476 BTC which is ~19,659.12 USD (according to Google at the time of writing this)
- the user is owed 3.259012 BTC, leaving 0.20305276 BTC
- 15% : Affiliate =0.03045791 BTC
- 50% of remainder =0.08629742 BTC
- final remainder =0.08629742 BTC
So at this point, all the final remainder never leaves the stake account. So if no more investments are made the account will continue to build up interest and after another 181 days, the account will have earned ~0.25652323 BTC. Split it in half for ~0.12826161 BTC. Still off that original 10,000.00 USD as BTC investment.
Just to show the maximum, what about a 1,000,000.00 USD or 177.1812 BTC investment?
- 1.94165789 BTC DCI
after 181 days: - 349.4984217 BTC earned
- user ROI =496.10736 BTC
- to investor pool =12.99321122 BTC
- kept in stake =12.99321122 BTC, equally ~73542.87 USD
This 1,000,000.00 example also does not including the extra percentages and steps in math. Also this example was from a 0.0000000 BTC before the one time investment.
How do they stay afloat with major profits?! Marketing! Enough early investors with these MLM schemes invested 10,000 USD - 100,000 USD every chance they had to get many use quickly.
These examples are on a 6 month or 180 day average of interest. Many MLM schemes work off 10 month - 15 month average before a user can withdraw and as you can see, even if not every investor, invests on the same day the system still earns a profit.