BitConnect is going to run off the rails
When will the BitConnect train will run off the rails? This is the question. I have seen a lot of people that are smart enough to see the ponzi, but can’t tell you when to get off the train. As a host of a Meetup group in Chicago, I encounter a new scheme every week. My goal is to share and learn with the members of our ChicagoHodl hive mind group.
Since we started, I have had to break 10 early investors hearts. The craftiness and sometime sheer ball size of of the would be scammers never ceases to amaze me.
Some of these are shady guys in a convention room as a seedy northwest suburban hotel. He tells you that OneCoin was such a good product that the feds had to crush it. Some are less obvious. As Riccardo Spagni said at Consensus 2017 “some of the scammers don’t even know they are scammers yet.” (paraphrased from memory) Let’s not get into ICO’s that are sold on a whitepaper and no product. Let’s not even discuss a coin that promises access to a non-existent future product.
Ponzi is a word that is thrown around the crypto space without much regard for definition. It is used to spread FUD more often than communicating one specific model that has a harmful economic outcome.
What's the difference between MLM and Pyramid Scheme? Fraudulent pyramid schemes - like Ponzi schemes - are illegal but…www.diffen.com
The main difference between a ponzi or pyramid scheme and a Multi-Level Marketing strategy is the existence of a product. MLMs are not inherently bad for the economy, however, they often use poor business practices that are a different danger from that represented by a true ponzi. There are also those that will have a product, but survive on enrollment fees. This is a ponzi disguised as an MLM. So which is Bitconnect?
In Steve Dell, the computer guy’s (haha) post on Medium from last November, he goes through the math well.
BitConnect is a cryptocurrency that was initially posted on BitcoinTalk in November 2016. Since then it has gotten a…medium.com
I would argue that BitConnect is a Ponzi Scheme. The point is made in Steve’s post. His post seems to indicate that this can go on forever. I want to discuss when, why, and how the train will go off the rails.
BitConnect has has a proof of stake component that can mine more BitConnect coins. The largest four wallets hold over 50% of the total supply. It would not be crazy to think the owner(s) of BitConnect is holding the largest wallets. This allows them to mint coins to payout as returns to the coin holders. Considering your only way to buy in is to send them Bitcoin and their website is littered in Bitcoin color and feel, this isn’t hard to imagine either.
The second important consideration is the ledger wallet. Your “interest” is paid to a “ledger wallet”. It is conveniently named “Ledger Wallet” so when people google the term, only information talking about how great Ledger Nano S is as a hardware wallet. Most people seeing their account raise in value would gloss over this lack of information. They may even buy in more.
The money in the “ledger wallet” is just a number, not a cryptocurrency. Only when you wish to buy out would you switch the currency to BCC. Then you sell the BCC on the market to get back to Bitcoin. Considering that 90% of the liquidity for the BCC coins is on the BCCexchange, not Poloniex, or Bittrex, or BitFinEx, this is a bad sign of market manipulation.
This presents two possibilities.
- The stake mechanism produces enough coins to continue paying out all coin holders “interest”. This would cause the value of the BCC coin to go up encouraging more people buy BCC with their bitcoin.
- The stake mechanism doesn’t produce enough to keep up with the supply of “interest” to be paid out.
With option 2, the owner sees that there is no longer enough BCC to pay out. Do you think they will give any of the Bitcoin you sent to make honest on their gaurantee?
With option 1, the owner will see when volume on the outside markets will surpass volume on the BCCexchange. This means the market would no longer be easily manipulated. The begin to sell off their BCC that was staked. This quickly ends the cycle of interest payouts creating a rush on the market. Everyone holding is the greatest fool. The guy with the Bitcoin walks away with your Bitcoin, plus what he got for the BCC he sold at the top of the market.
The real question is: Do you think you can trust this guy?
Acording to Companies House Uk (Oficial uk company regesry) Mr Ken Fitzsimmons Uk (British) * Business Owner * Born in…steemit.com
Another great article with a video trying to get the point across.