BitConnect Scam Shows You Can’t Act Stupid in the Blockchain
It had to happen, and this week was as good as any. On January 16th, the cryptocurrency lending-exchange platform known as BitConnect shut down its lending program. Further service cuts, perhaps including the complete collapse of BitConnect, is likely. What once was viewed as a bold, new way of making money off of cryptocurrencies has been found to be nothing more than a ponzi scheme.
Of course it was! I marveled at the people who dove into this platform, thinking that this time, it’s different! No. BitConnect had all the telltale signs of a classic ponzi scheme. Its lending exchange, which promised daily interest returns (!), featured a tier-level system (!). The more money you put in, the more daily reward payouts you receive (!).
As if that weren’t enough to tip you off to the ponzi scheme, BitConnect forced you to have their money in what is essentially a lockbox (!). Those who put in less money had to wait a very long time before being able to cash out their capital (!), while those who put in more money had to wait less.
If you thought that was bad enough, BitConnect had an affiliate program (!). Sucker your friends and family into investing in BitConnect, and you’ll receive even more rewards…of course you will!
With the recent severe correction in cryptocurrencies, people are finally returning to their senses. They’re finding out that the blockchain markets are just like any other investment sector: you will have bull cycles as well as bearish ones. Cryptocurrencies aren’t magic investments that rise in perpetuity.
In other words, you can’t be stupid in the blockchain. Just because a ponzi scheme like BitConnect supposedly utilized the blockchain’s revolutionary technology doesn’t mean it’s not a scam. We all know that gold bullion is the universally-accepted form of money. But if you came across a “GoldConnect” business offering daily payouts from gold investments, I’m sure you wouldn’t take the bait.
This is the allure of the modern day ponzi scheme. The scam operators earn an audience’s trust by invoking a truth, whether it be the blockchain, gold bullion, or some other reputable concept. From there, they associate the truth with a cleverly constructed lie. Add in the promises of riches, and you have the workings of a high-probability con.
The BitConnect ponzi scheme was particularly pernicious because, if you thought about it, it seemed like the daily payouts were possible. Cryptocurrencies have been soaring to the moon, and virtually everyone who invested in them were making money (prior to a few days ago). Daily payouts wouldn’t be possible with investments tracking the Dow Jones, but they just might work in the blockchain.
Obviously, BitConnect failed. It doesn’t matter how great a ponzi scheme appears. Investment markets, by their very nature, carry inherent risks. Nothing in the world can be based on investment markets to produce daily payouts. The business model is not sustainable, and never will be.
As we’ve been told all along, if it sounds too good to be true, it usually is.
Yeah Bitconnect was Ponzi lost $1200 as student..now in trouble.. well great article
Bitconnect was a scam and I think a good majority of people in it knew it was a scam. It was structured to be prosperous as long as new people keep using the bitconnect coin. This to me is very similar to how Bitcoin and other altcoins exist. Once everyone stops using them they will decrease in value and no longer be attractive in the market. What are your thoughts on this and also what are your opinions on cloud mining such as Genesis Mining and Hashflare?
Accurate characterization of the situation that will hopefully serve as a warning to those who may not have a clear understanding of how investments, crypto-based or otherwise, should actually perform.
Cheers for this!
Great way of putting it! BitConnect actually was a professional example of what we call a Ponzi scheme. Everything related to it "smelled bad" from the start. (Everything was fishy about it, especially people that tried to refer us promising marvelous things) Even though I look at myself as an emphatic person, I can't be emphatic enough to try to correlate with the people that lost money through BitConnect. Sorry peeps but it was all so obvious, no empathy can make me feel sorry for you. Have a nice day!
Very good article! RIP Bitconnect and probably all other new lending platforms. I also wrote an article about why I think the ERA for lending platforms is officially over now.
Feel free to check it out:
https://steemit.com/cryptocurrency/@maxdigi/the-downfall-of-all-lending-platforms-has-begun
I hope not a lot of people will fall for these ponzi-schemes now that Bitconnect is a proven scam...
Cheers!
Thanks for sharing!!!
Absolutely, you need to carefully watch what you are putting your money into.
Thank you for the article ! Bitconnect is a great example for what could happen even with such big companies
Excellent post. If you are drove by your ambition you'll be one more victim of such scheme. Steem on. Have success.
It was a Scam from beginning... not even trying to look legit... Anybody who understands investment a little , havent lost any money or time with this.