BitConnect: Scam or Not
Depending on where you get your cryptocurrency information from, you might have seen BitConnect often. Some people are raving about the returns and others are ranting it isn’t a long term steady investment. Many people are calling it a sham while others are creating non-stop YouTube videos of them making thousands of dollars by investing into BitConnect. The funny thing is these people were not public figures nor were they apart of YouTube until they “invested into BitConnect” which shot up their subscribers. Recently, UK threatened to close down BitConnect after BitPetite (another crypto lending service) randomly closed down.
BitConnect recently lost $1.4 billion overnight and recently changed their referral program. Their referral program on their site is visualized in the shape of a pyramid. First Level gets 7% of your referrals money. You get paid all the way down to the 7th level. BitConnect is a Ponzi scheme that is just in que to get busted and fully shut down.
There are two different aspects of BitConnect. There is the coin and the lending service but they go together. The BitConnect Coin is an open source peer-to-peer cryptocurrency that lets people use their Bitcoin and exchange it for the BitConnect Coin. An interesting part of the coins is they are Proof of Work (which you can mine to earn the coin) and Proof of Stake, which means you earn a dividend or interest for owning the coin. This helps the community not panic sell the coin so it’s more secure. According to them, “The moment you acquire BitConnect Coin it becomes an interest-bearing asset with 120% return per year. It is that simple.” That should raise some eye brows that you more than double your investment in a year by just holding the coin. Staking in other cryptocurrencies is usually a few percents to 10%. It has a total of 28 million maximum supply with 8.4 million in current available supply. It has a current market cap value of $572 million.
BitConnect Lending Service
The Bitconnect lending service is where things get shady. First and foremost, the SEC warns against investments that guarantee a return . Unfortunately, this company does that. They guarantee a return of about 1% a day. They claim to have trading bots which always give a positive return. You must use your Bitcoin to buy BitConnect Coins. When you want to cash out, you get paid in USD only. They also charge a 0.25% trading fee from buyers and sellers.