How I Predicted the Fall of BitConnect & Paragon
I have been involved in cryptocurrency for a really long time. Infact, an excessively long time (though I consider myself still a latecomer or could have came earlier). One of my charades was in 2017, whereas alot of people were asking me certain advice on cryptos. In terms of what I would not invest in, I told people: BitConnect, Paragon Coin, EOS Token, Tether, or Confido.
I wasn’t trying to accuse anybody of anything; I was simply stating cryptos I know for sure I wouldn’t put money on. Of that list, BitConnect and Confido have been classified as scams, Paragon have broken regulatory standards plus had “disappearing founders”, and EOS had its most successful period at ICO time. Both EOS and Tether are still live, but Tether has its fair share of controversy. Again, not trying to accuse anybody of anything, I’m just stating things that have happened in this timeline of events.
Now this article isn’t going to focus on the others. I want to focus on two specific cryptos that I believe fall within the definition of a full on scam: BitConnect and Paragon Coin. The question is how I was in a way able to predict such a fall or even why I considered it “uninvestable”.
BitConnect
Now BitConnect was pretty obvious from the beginning. It had many red flags and I remember people showing me their account saying, “see how much I made joining BitConnect”.
The old BitConnect graphic in representation of their business model used to be a pyramid, and then it got upgraded to a bunch of people also resembling a pyramid. Ofcourse, it didn’t help that they claimed to be “self regulated”, “allowing you to have stable income” or the “financial freedom you always wanted” (literally the words from their trailer and their site description).
The video was a low production animated talking head type video. This wasn’t too big of a red flag, but considering how big the market cap was, one would expect higher amount of time worked on the explainer video. Again, some people do that style of video much better and it wasn’t as big of a red flag as much as what was said in the video.
One of the biggest guys at the time promoting BitConnect was Trevor James. Many people accuse him of being a ponzi affiliate, and unsurprisingly he still has a YouTube channel. Now personally, I don’t feel convicted that the guy actually knew that BitConnect was a scam. Looking at a whole bunch of videos though that he has, he seems to be promoting cryptos that are extremely centralized or have no technologically valuable usecase.
Again, many of Trevor James videos have been previously deleted. I don’t wish anything against the guy and he seems to have a good sense of humor and all, but crypto isn’t his strong point.
Outside of the many YouTubers who at time were talking about how “good BitConnect was”, many obvious reasons were there to the savvy tech person on why this was not worth it.
BitConnect claimed to be using the “Supply and Demand” system for determining BitConnect’s value. They also claimed you can make interest on BitConnect coins and that the “more you hold, the more you earn”. Again, these were their words. This, plus the fact that you can apparently decide to “lend BitConnect”, and a referral network basically had the combination of a regulatory nightmare, a multi-level marketing scheme, and seemed like it was doomed from the beginning.
The codebase was also really bad. Most of it was white-labeled QT wallets and GUIs. You also had BitConnectX which was their “interest program”. Besides the regulatory mess, that project had 1 commit and most of the READMEs and documentation ranged between few sentences to 18 lines. The most impressive thing about BitConnect was how popular they spread, and how quickly they were able to make people the most hated among their friend groups.
Paragon Coin
Paragon Coin currently has a petition out in regards to them, claimed bankruptcy, went from $70 million to couple hundred, and now has the “founders disappeared”. In regards to a decent story regarding Paragon Coin, I suggest you read this Medium post by a blogger.
The details were in the pudding:
- Business Model as CEO with no business background
- Most business operations ran by model CEO’s husband with “niche startups”. By niche startups, I mean start a blog or Shopify store and get a relatively small customer base. Now I would have to estimate your business experience is about the same level as his.
- I don’t want to sound misrepresented by making claims of a “Model CEO” being a red flag. However, this was a tech startup mostly promoted by numerous provocative looking images. This includes a playboy shoot, around the same time of her crypto startup.
- Tying those images to a tech startup that claims to be inspired by somebody’s death seems quite insensitive, but who am I to judge.
- The way the ICO was conducted also faced noticeable regulatory hurdles.
- The whitepaper was extremely confusing and included details on some supply chain network, accelerator building, etc. that all seemed confusing as well.
- The codebase was extremely simple, and when asked about tech they said they were just “making an ERC-20 token” and provided vague details on functionality besides how they want the smart contract to interface.
- This article in relation to Tyler Sash, and his family saying, “If she wants to have a business that’s fine. We just wish she would leave Tyler out of it.”, was the biggest red flag.
- Then you have celebrities with no technological knowledge promoting the ICO to their impressionable audience, which I wouldn’t directly say is a red flag, but it looked problematic in my eyes.
Conclusion:
If you want to know if a crypto is uninvestable, here is what you look for:
- Poor Codebase
- Too Centralized
- Confusing whitepaper
- Little to no technological usecase
- Overhyped ICO or other attempts to raise ludicrous amounts of money
Most of my predictions are gut feeling. Again, not trying to call anybody out, I’m just stating my advice on what type of things I look for. I already called Paragon, BitConnect and Confido. EOS and Tether are still widely used, and may not necessarily be a scam. However, comparing my list of what makes a crypto investable vs. uninvestable, I personally wouldn’t have EOS and Tether on my investable list.
In my eyes, they are at least too centralized for me. I also am not that big of a fan of the whole “stable coin” concept.
Disclosure: Please keep in mind, everything I say is on an opinion based basis. This is not meant to be taken seriously or as actionable financial advice. Do your own due diligence and any trades/investments you do is at your own risk. We are not responsible, proceed with caution and we are trying to voice an opinion not meant to warrant action. This is solely meant to be viewed as a non actionable opinion not meant to be taken as seriously or as a form of actionable advice.
