Bitconnect is an obvious scam, with many egregious red flags. I'm truly amazed that anyone is willing to buy into it at $115, but history has shown that anyone able to pay out gains reliably for a little while can generate FOMO and rope in new money for awhile.
But I guess if a consistent scammer who pushes all his followers to lose money on mining contracts and scam coins so he can get more referrals tells you to, at least some lemmings are going to follow him right off the cliff.
For those who aren't sold on guilt by association, why don't we just take a look at a few of the most egregious red flags in Bitconnect, shall we?
Red Flag #1: Unsustainable Gains
I put our "top men" on this one, and they produced for me a high-budget visual aid:
There's just no possible way this is sustainable. It's only possible overbrief periods of positive variance, trading with either massive capital or massively risky levels of leverage and near-perfect decision making.
In other words, if it's real, it's either luck or insider trading.
Bitconnect claims to use these proceeds to run a trading bot / trading system, which they keep proprietary. Any bot that could sustain these gains would be so profitable as to make taking on investors pointless and needlessly risky.
Furthermore, you should be wary of anything that requires a "capital lock-up" without good reason, particularly if there is no way to cash out early with penalty.
Flag #2: No Exchange Support, also known as "completely fabricated market cap". - Coming in Part 2.
Sources: Google, Bitconnect.co, Bitconnectcoin.io, CoinMarketCap, CoinTelegraph, Reddit, Steemit, NY Daily News, Bitcoin Wiki, Seljaci.tk, Bitcointalk.org
I would like to add more red flags:
Flag #3: Their wallet software does not work. I downloaded and tried running their wallet on Linux and 1) it requires people to download dependencies first and there's no documentation (I'm technical so I figured out what's needed), 2) it actually does not work!
Flag #4: Complete lack of transparency. They are not showing their accounts nor transactions on the blockchain to prove their profits made by the bot.
Flag #5: They said it's "open source" but their GitHub site shows no activity, so clearly they dumped some shit on GitHub just to claim that it's open source.
It's clear in my mind with 100% certainty that BitConnect is a scam and a ponzi scheme.
I did invest a little bit into it to see for myself, so far received %10 of my investment back in profits and I am taking all of that out as soon as possible to recover some of the loss. Basically, I do consider the money I "loaned" to the trading bot to have been "donated".
Here are some flags I'd previously written up to add more posts on:
Flag #2: No exchange support
Flag #3: Bitconnect users unironically use the term "down-line"
Flag #4 Thailand
Flag #5 Secrecy
Flag #6 Reinvestment of proceeds
Flag #7: Github has only 19 commits on 1 tree. Compare to Steemit at LOTS.
It seems like we are thinking along the same lines.
"It's clear in my mind with 100% certainty that BitConnect is a scam and a ponzi scheme."
I think that pretty much covers it.
Virtu' trading bot whose public track record shown shows ONE trading DAY loss in 6 YEARS of flawless profitability, http://www.zerohedge.com/news/2015-04-16/virtu-explains-why-it-lost-money-just-one-trading-day-6-years
Interesting to add that Virtu also went public to raise more money even though they had this instance profitable bot with only one trading day loss in 6 years.
If you read the linked article on virtu trading, the only way it achieved its results was because the market consistently rose. If bitconnect is the same, it will fail in the event of a down turn in the price of bitcoin. As the market has been rising this year and they pay out returns in dollars not btc, they could have prob just held the btc and sold it when needed to make redemptions! They would still make a profit. Let's see what happens if the price of btc crashes for a sustained period
Yes, if the price of btc crashes we will see for sure what is going over there. I agree.
Virtu made their money from their Algo from frontrunning orders - market goes up or down is irrelevant.
Pls take a look at my post and let me know your thoughts on the point that btc prices falls:
https://steemit.com/cryptocurrency/@ka82/bitconnect-investment
Good citation. I saw that article as well, but it couldn't maintain these kind of gains.
As the article in your link points out:
" the market has become a regulator-endorsed cesspool of HFT fraud, where the algos make all the money due to countless predatory and parasitic practice"
Great job @lexiconal, Cryptos and Blockchain are very interesting and amazing but as any new technology there are a lot of scammers.
To all investors, please invest WISELY.
It always pays to be careful. Thank you!
Interesting...by capital lockup, you mean the requirements of them having to keep the bitconnect for 299 days fr example? Craig...is...both inspiring, a little weird...lol....I always wondered how he manages to do so well. Me, I've always believed half of what I see and none of what I hear.
Right, the 299 (or less if you deposit more) days. That's definitely a concern to me.
I can't stand people pushing mining contracts, they are garbage.
LMAO....Yeah...me and Slick wonder about those guys...we admire the brothers...But...yeah...at least with me...between you and I....very skeptical on how they do so well...Insider promotion maybe...I don't know. But you know what Lex, my way has always been from the bottom up....the organic way...I've never used bots...again not knocking anybody...But me, I've Never used bots, not into too many groups other than @Slickhustler007 Circle of Friends...other than that...it's been hard for me, I admit. But I give natural comments, natural replies...I plan to grown very organically....like my favorite Bud, White Widow. :)
I tried the bots a few times, when I had no Steem at all, to see how they worked. I find the process of using them annoying, and I'm not looking to be annoyed for 50 cents.
"Any bot that could sustain these gains would be so profitable as to make taking on investors pointless and needlessly risky." Yep. That's my take too! :)
Very good article. Same thoughts here. Don't be like those people who invest in any altcoin that shows opportunities based on an idea. Whatever you invest in, do your research properly. I found this great website: https://www.coincheckup.com They give great insights in the team, the product, advisors, community, the business and the business model and other techincal insights. Check for example: https://www.coincheckup.com/coins/BitConnect#analysis For a complete BitConnect Investment research.
Thank you for the link. Everyone should use a wide variety of resources for their research.
the steempower downsteeming of 13 weeks is reasonable I think since the content needs to be made in order to keep steem alive, as big players drop all of a sudden and add to the circulating or traded steem than It can kill the price instantly and steem wil lose a lot of users. I agree still it is not chill but a whole year ?? and you pay interests daily?!?! that's is killing you in a downtrend
Well, they pay you the interest on Bitconnect. At least until they run out of money. The lock-up period varies by amount you deposit.
I consider Bitconnect to be the safest investment in crypto right now.
I believe their returns will sustain for the foreseeable future. Certainly long enough to get a good ROI.
I haven't heard any strong arguments to the contrary, and I noticed you haven't provided any.
Perhaps you will explain your position better in part 2.
You don't find the claims of 5500% ROI to be a pretty clear ponzi?
On what basis do you call it safest? It's the only major coin exchanged only on an internal exchange.
Edit: Ah, I see, you're just here because you are a Bitconnect shill being flagged for spamming Bitconnect stuff. Here's what you said 2 weeks ago:
"I could lose my principle, and all the money I've reinvested for compound growth, at any time.... It is one of the more controversial projects I've participated in, and sometimes feels a lot closer to pure gambling."
Suddenly think it's the "safest", huh? Is it because you're writing posts about their referral program?
I had a single post flagged. So now I'm a shill and a spammer?
It's sad to see you resort to ad hominems. I've read some of your other stuff on Steemit, and I always found you intelligent.
How about you tell us when Bitconnect will collapse?
Let's get that on the blockchain.
I think anyone that promotes Bitconnect at this point is a shill, yes. I'm sorry if you don't agree, but the facts seem pretty clear on this. They may be an unintentional shill, but when this breaks down, being able to claim "useful idiot"status won't be worth much.
I should probably be more diplomatic, but I'm kind of tired of seeing people push mining contracts and ponzis. Apologies if you felt directly attacked.
If it crashed tomorrow, could you really look back and say "Yeah, those gains were reasonable, dark pool exchange makes sense for market cap, etc. I'm totally suprised by this." They're basically promising exactly what Pirate did.
I can't make a prediction on something I don't have data for, as the exchange and "volatility software" is all proprietary. It seems you want me to commit to a guess and later lose credibility based on the likelihood it will be wrong.
I'll personally be surprised if they continue to pay out for a year from now, however.
I may or may not finish this series due to popular demand, but here are a few more points:
Ill-informed, or just racist?
What do you have against Thailand?
Perhaps it is you who is ill-informed, if you must resort to accusations of racism.
Thailand is not known as a "safe" destination for white males, at least. There is a lot of industry there specifically to target naive tourists:
http://www.dailymail.co.uk/travel/travel_news/article-2833369/Thailand-one-dangerous-tourist-destinations-Earth-Ex-pat-investigation-lifts-lid-dark-Land-Smiles.html
I hope you can forgive me for the Daily Mail link.
There are also some choice quotes in here:
http://www.investopedia.com/articles/personal-finance/020316/how-safe-traveling-thailand.asp
“In one part of Bangkok, there were military police everywhere; two stops away on the Skytrain you wouldn’t know anything was going on. The Thais are used to coups.”
"Not long ago, a man was sentenced by the military junta to 30 years in prison for insulting the King’s dog."
Not a great place for ignorant westerners to go strolling around.