The Rise and Fall of BitConnect and the Shitcoins from Mars

Just a couple of days ago I wrote an extensive article about shitcoins and established criteria such as the developers' care for the actual technology, the relevance of the coin to real life problems, scalability, and credibility among other crypto creators. I must have upset quite a few people when I labelled BitConnect and TRON (TRX) as shitcoins, but the recent bloodbath has revealed a serious legitimization and yet another criterion for identifying failures (ability to withstand market crashes).

You can't go wrong with Bitcoin, Ethereum, Litecoin and the other coins that are backed by old and committed teams. They will go down with the entire industry and will probably be around for as long as the internet continues to exist. But shitcoins that are backed by Ponzi schemes? Well, they are bound to close doors as soon as an unfortunate and spontaneous market crash disrupts their questionable business model (for more or less legitimate reasons), and just like in the textbook example of such crooked economic maneuvers, the people who got fooled end up losing their money.

The same goes for centralized coins that plagiarize their whitepapers and reach the top just because the CEO continuously hypes partnerships that never turn out to reach the expectations. At this point, it's unlikely that TRX will make a recovery that brings it back among the top 10 coins.

Let's focus our attention on our falling star of the evening, BitConnect

As of the moment of writing, this shitcoin has suffered a drop of 91.77%, going from approximately $500 to $20.95 in a matter of hours. If you follow the narrative of the company, it is all due to a DDoS attack that affected their website and platform. For hours, users (aka investors) had been unable to access their accounts and the whole maintenance angle seemed to have calmed down the angry mob. But more recently, the official Twitter account of BitConnect has announced a 24-hour close of all trading activities, as users had been unable to withdraw money from their wallets.

However, the Twitter posts did not reveal the entire truth. As reported by the Twitter account of Coindesk and covered in a journalistic piece by Medium.com, regulators from Texas and North Carolina have taken legal action against BitConnect for the sale of unregistered securities tied to a token sale. The article cites an official press release from the website, but the reference link leads to a broken webpage which returns the "404 Not Found" error. Nevertheless, the structure of the title suggests that it was the post that was taken down and this isn't just a made-up journalistic piece that's meant to spread FUD (why would Coindesk compromise their integrity anyway?).

The news clearly points out to the fall of the biggest and most functional Ponzi scheme in the world of crypto.

According to the BitConnect business model, you would sign up with the Bitcoin that you had to transfer to their wallets, and then receive their own tokens in exchange. As their new costumer / investor, you were promised fabulous returns in US dollars, while their miraculous trading algorithms did their mumbo jumbo to make unbelievable profits.

Furthermore, just like in every respectable pyramid scheme, bringing new users would generate returns to your account. Lots of "Bitcoin millionaire" YouTubers promoted this system and promised a life of wealth and hedonism that's guaranteed after signing up with their referral link, and lots of them never shied away from showing off the earnings that they made on the backs of honest and hopeful small investors who believed the hype.

One of the YouTubers I've recently started to follow, Doug Polk Crypto, has done a more extensive research on BitConnect and the people who shamelessly promote it to uninitiated people who might think they're really jumping the Bitcoin train. You may check out his complete and venomous analysis here, and it's worth noting that he made all this effort in a time when this shitcoin was at its peak:

Maybe that this bloodbath isn't so bad, after all. It washes the market from all the filth and greedy ICOs.

And since this mid-winter cleaning has started, maybe that we should also reflect on our investments and think twice about the choices that we make and where our money really goes. Are we really financing a world-changing coin that promotes the ideals of decentralization and pushes for a way of exchanging value that's free of the intervention of governments of banks?

Do these projects actually have a future, or did we sign up for quick money-making schemes that reflect our inner greed and damage the reputation of the crypto industry at large? After all, are we here to make a statement about our willingness to break the institutional chain, or do we just want to make (hopefully) fabulous profits?

These are questions that we should all ask ourselves at this point.

But the question that I want to ask you directly is: which shitcoin do you think that will fall next during this bloodbath?