Want to turn $100,000 into $4,000,000 in a year?
With these bohemoth returns, the headline-hitting BitConnect is ruffling feathers well beyond the crypto-community.
By definition, BitConnect is a decentralized, open-source BitCoin investment platform allowing users to gain guaranteed interest just by holding onto their tokens- at the jaw-dropping rate of 120% per year (minimum).
Is it too good to be true?
Before you bite the bullet and part with your Bitcoin, let’s break it down and take a look at BitConnect to see how (and if) they will deliver these sweet returns.
What exactly is BitConnect?
BitConnect’s mission statement has all the charisma of a cult-leader and the grease of a big city car salesman, questions of legitimacy are popping up faster than Christmas decorations in December.
BitConnect somewhat vaguely defines itself:
BitConnect is an open source all in one bitcoin and crypto community platform designed to provide multiple investment opportunities with cryptocurrency education where it is entirely possible to find the independence we all desire, in a community of like-minded, freedom loving individuals who, like you, are seeking the possibility of income stability in a very unstable world.
All sales-talk aside, at its essence BitConnect is a Bitcoin lending platform that supposedly uses a trading bot to generate titanic returns for its investors.
How does it work?
If you were just getting your head around the concept of cryptocurrencies, you better buckle in for this one.
According to the site, this is how you cash in on their sweet, sweet returns:
- Deposit Bitcoin to BitConnect
- BTC is converted into (BCC) on their exchange
- Invest into lending schemes on their platform
- Interest is paid out daily in USD
As soon as you purchase BCC, it becomes an asset offering some mouthwatering ROIs. The catch? There’s a minimum hold period of 299 days:
All of this is achieved via their volatility software which operates by trading on volatility, a viable and widely successful strategy in the stock market. While BitConnect does not disclose how it works, many established and reputable trading firms hide the algorithms behind their methodology. If this software is indeed what BitConnect says it is, this would be revolutionary piece of trading technology indeed.
Success
All questions of methodology aside, you can’t deny the enormous success of BitConnect. With a massive following and some outspoken rock-solid advocates; its titanic market cap sits almost at $1.3 billlion, and a token value of more than $400.
All of this ticks the boxes, but there are some unanswered questions springing up left right and center.
Questions
Too good to be true?
How can BitConnect afford to pay out their bullish bonuses? Shh…it’s a secret, kept tighter than the Colonel’s blend of herbs and spices. BitConnect claims its trading bot leverages all the mystical powers of the universe to create these gains, but many question the sustainability of this operation.
BitConnect’s interest schemes reportedly pay out an a whopping 1% per day- turning your $10,000 into nearly $400,000 in a year. The elephant in the room is, what kind of Terminator-style cyborg could pull these kind of returns?
Or an even more pressing question is, if you had invented such a wondrously lucrative device, why would you bother creating an investment platform? The fact that BitConnect have not answered any of these questions makes the existence of Atlantis look more likely.
That said, many advocates have stepped in to explain plausible explanations- the most common stating that by capitalizing on the compounded gains of both BCC and BTC combined, the bot can comfortably pay out returns.
Ponzi?
A conceivable explanation is that BitConnect are deceptively using Proof of Stake to accrue interest on their gargantuan pool of pre-mined BCC coins. Their native token gains value via your BTC investments, they pay out a tiny portion of the interest they are acquiring. This all works very well, until new investments cease covering payouts for all. At this point, all of the artificially-inflated BCC is sold and they disappear into thin air, bags of cash and BTC firmly in hand.
Why BTC?
Users must use Bitcoin to acquire BCC, instead of purchasing it with fiat currency. This alone places a continent-sized question mark over the legitimacy of their operation- if BitConnect is a scam, they will still have a valuable stash of Bitcoin when the house of cards comes tumbling down.
Pyramid?
Aside from using MLM-style slogans like financial freedom, The scheme exhibits some classic pyramid-scheme approaches, giving users referral bonuses to actively recruit other investors. Amusingly, BitConnect is doing everything they can to distance themselves from the idea, quick to replace any pyramid-shaped infographics with less, ahem, triangular diagrams.
Team (or lack thereof)
All questions of the operation aside, the team behind the project are about as accessible as the Pope. BitConnect’s legal registered owner Ken Fitzsimmons has no public profile, contact information, or mention on the site- which has one port of contact in an online enquiry form.
Controversies
Another big red flag? BitConnect is drawing enough controversy to make Mike Tyson’s career look clean as a whistle.
Ethereum’s Vitalik Buterin dropped the P-Bomb (ponzi) on BitConnect, doing an A-grade job of hammering the nail into the coffin that is their credibility.
The blockchain community aren’t the only ones wary of BitConnect, either. In early November, the UK Registrar of Companies issued a death warrant for BitConnect, giving them 2 months to prove their innocence or face the full wrath of the law- “Upon dissolution all property and rights vested in, or held trust for, the company are to be deemed bono vacantia and accordingly will belong to the crown.” Yikes.
On the flipside…
Sitting at $471.71 (at time of writing), the BitConnect token is only growing and whatever voodoo magic they may be cooking up to achieve this, they’re clearly doing something right. If their volatility software is legitimate, they may have the chef’s secret sauce- leveraging gains on Bitcoin could just be the beginning.
Despite all controversy, they have a rapidly growing following that shows no signs of slowing.
While BitConnect does not exhibit the transparency you’d expect from a trading firm or investment fund, anonymity is a common survival mechanism in the world of cryptocurrency. This is a world that is still venturing into uncharted territory, and the law is struggling to keep up with the technology.
That said, the amount of unanswered questions surrounding BitConnect cannot be overlooked- with labels like scam, pyramid-scheme and ponzi having been tossed around more than the family football.
Yet, we won’t have to play the guessing game much longer; the UK Government’s two-month ultimatum will make or break BitConnect- proving they have a winning formula, or have been playing investors all along.
Even with normal MLMs and ponzi schemes, they survive and new ones are created every day. People are always going to try to join these things, cause we all just want out of the damn rat race, and sometimes the selling of this hope is enough to get hard working individuals to part with their money.
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