I came across this post How is Bitconnect Sustainable? How is Bitconnect Not a Ponzi? written by @craig-grant which seems like a nice guy but is clearly wrong on Bitconnect.
He "tried" to state the reasons why Bitconnect was NOT a scam.
Of course, he failed.
Why is Bitconnect a Scam? I will provide you with a thorough analysis.
Please remember just one thing before we start, DO NOT trust someone's advice / Comment / Youtube Channel if he is already invested in it. Finally, I am not invested in BitConnect's platform in any way (obviously) and I do not intend to hurt this project but just to warn investors with little financial knowledge to be careful.
1. "The Guaranteed Return" is too good to be true
First and most convincing argument.
I just calculated that if you invest 10 000$ and reinvest every penny you get from your BitConnect income, with a 0.5% daily interest you would have 10 405 071 in 2 years.
This is unrealistic and I do not think anyone would believe this is a "guaranteed return".
As we say in finance, there is no free lunch. I only wish there was...
2. Creating you own coin and printing money out of thin air
@craig-grant stated that "It is not a Ponzi because they create their own coin".
I see where you want to go, but the fact that they basically print money out of the thin air for the only purpose to pay back "investors' interests" is already a huge sign of Ponzi.
In addition, except paying back interests, what is the purpose of this coin/company? They are promising ROI’s, but have no external income sources to produce those ROI’s… Oh wai I forgot about their trading bot...
3. "They have bot to trade using complicated algorithms"
First, even in his post it is obvious that @craig-grant does not actually believe in it.
Let's imagine it is true and it works, Why would a company that has already hundred of millions the need to borrow money and pay expensive interests at around 40% per month !!?
If it works as they state, why would they have the need to? In addition, as you have more money (let's assume they did not lose most of it paying the first Ponzi BCC investors) it becomes difficult to trade with the same accuracy and making money out of trading is harder when you manage more funds. This is why most Succesful Investment Funds have a limit of money they can manage to obtain the same results as before they became "famous".
4. "Only and if only the price of BCC drops it would be in big trouble".
This is a typical Ponzi sign when a company or fund cannot pay back its investors because its currency / Fund Share Value is not rising anymore.
Stating this is already admitting that it is different than Ethereum/Bitcoin/Litecoin... All these coins even with their price slashed by 3 would be able to continue developing their Blockchain and Services.
By the way, if I was managing this Ponzi Scheme, I would carefully control the price to make sure that it does not go down too fast. I didn't find any Trading platform that allows me to Short BitConnect, do you know one?
5. 1-7% Referral Bonus for sponsoring new members?
Don't get me started on this... This is the Ponzi Pyramid all over again. Don't bring your friends/family onto this platform.
6. All these people on Twitter/ Youtube/ Facebook showing how rich they became
Just realize that they need you to invest in order to allow them to make more or to withdraw their own money.
7. We do not know the Founders. How weird & convenient...
8. The company is apparently registered in the Caymans Islands, How weird & convenient once again...
9. They are promoting their platform on CoinMarketCap to attract new "customers/investors"
I don't understand? Are they in an ICO process? Why would they need to have fresh money to make their platform work?
Here is their "Advertisement"
And if you tell me it's not them, it's even worst that investors would do that as they know it's a Ponzi and need fresh cash.
10. "But it worked, I really got paid thousands of dollars"
You are lucky and probably happy with the platform. I would just advise to not double your investment after this as it is what usually happened as people are reassured that "it is not a scam".
Just remember that Madoff has been able to fool Wall Street for years and it exploded because of the financial crisis.
And during these years he always paid investors even if he admitted he never invested a single $.
Did you realize that we almost didn't speak about the purpose of BitConnect?
Except making hundred of thousands (if you were early investors) through a Ponzi Scheme, what is the point of the company? None.
If you are stupid enough to invest, just do it but don't come crying when it will explode.
To all the current Bitconnect's investors, I am sorry and get your money out as fast as you can.
Please Help me to Share this post so new investors will not be robbed by this Ponzi Scam.
Edit on November,14th:
According to the The Next Web: "The UK Registrar of Companies has threatened to shut down the dodgy platform and dissolve its operation"*
Read more here: The UK Registrar of Companies could shut down Bitconnect!
Please remember this is my personal opinion and not a financial/investment advice. You need to do your own research to make your own decision. Investing in cryptocurrencies can lead to financial losses.