Bitconnet (BCC): Is it A Scam? Is It The Mother Of All Scams?

What is Bitconnect?

Well as Bitconnect.com puts it in their annoying seemingly scammy video that pops up the second you visit their web page (the above clip is actually two seconds in), "Have you ever desired to be financially independent, while fiscally safe? Have you, like many others, been disappointed by the interest rates and security of our current centralized banking system? have you or your loved ones shown concern due to lack of choices of how to invest your money, government oversight that has led to poor gains and frustrated consumers, or possibly the concerns of the growing threat of identity theft and credit card security all over the world?"

Let's give some quick plausible answers to those socratic inquiries: yes, yep,uh-huh, dang gubment, I've got to protect my identity.

Since we all nodded along through all that, then the clear answer to all of those quandaries is this: Blindly give all our money directly to this shadowy internet website right now!!
YUR FRENDS 2!!! Add me as sponsor ;-) REF = https://bitconnect.co/?ref=isveryclearlyascam!!!!

After all this isn't some lousy bank made of brick with an address, that you can report to the CFPB, or the FBI (or even the DSI LOL. maybe). It's an internet website with a server somewhere, run by someone(your guess where/who to sue is as good as mine - seems super safe to me!).

Regulations requiring liquidity and solvency and even giving people back what's left of their money once it all blows up sure do suck. Rather than embracing a bold new paradigm of decentralized applications and decentralized trust enabled by blockchain technology as an alternative, we could just set up a fanciful block parade signifying nothing, so we could simply give all our money as loans to this one single shady website. No smart contracts for escrowing. No nothing. Just a straight cash grab.

They do say they'll pay you back though. Hopefully they don't go belly up and run away with our money. Regardless,It's a very good thing for the safety of our identity that we gave them all of our names, emails, phone numbers, birthdays, and a password (that I'm sure none of us ever reuses) when we registered.

So yes, at its heart Bitconnect the coin (BCC), is a cryptocurrency whose sole differentiating purpose is for you to buy BCC from Bitconnect.co, the entity, with Bitcoin(now worth about $6,000/btc), so that you can then lend that BCC right back to that one centralized website.

As an aside, there was this one thing a company used to do back in the financial dark ages, when it wanted to finance its own operations with debt called a bond issuance. But that sure was pesky since you had to have silly credit checks, audits, and even had to reveal your identity to establish you as a credit worthy borrower.

Free unregulated debt financing for whatever the hell Bitconnect.co actually does with money. Vive la révolution financier! Other than that it's just another POS coin (in more ways than one)

Looking through Github, we can see that the vast majority of code additions were added in January 2017, and there has been zero wallet source code development since February 2017. However, there are 3 different websites (bitconnect.co, bitconnectcoin.co, and bitconnect.com), which is strange, annoying, and confusing. The Mac, Windows, and Linux Wallets from the '.com' direct download hasn't been modified since 2/8/2017, 1/10/2017 , and 12/29/2016 respectively. The ".co" sites point to the Github here, which also has had no updates since that time:

Per these links on staking , and POW mining, all mining[i.e. running the network, and adding blocks to the chain) is through aforementioned desktop wallets in theory.

One should be able to setup a wallet and do both POW mining and staking, and verify they are operating on the same blockchain. However I have been unable to do so despite following the aforementioned guide and this additional trouble shooting.

Regardless, this coin is almost certainly a huge scam. Even more accurately perhaps an elaborate, interwoven menagerie of scams. Examining the source code you will find that it is mostly simply a copy and paste Zerocoin(the uncle/cousin of Zcash) clone, with additional Novacoin and Bitcoin code interspersed(and altered by Bitconnect). I haven't found anything to alarming or unique in the source code. BCC is seemingly a pretty vanilla POS clone, but further investigation would be needed to draw meaningful conclusions here.

Its referal bonuses seem like a classic multi-level marketing/pyramid scam, as illustrated aptly by their own marketing materials:
But it wasn't painfully obvious and readily apparent if Bitconnect's scheme matched a 'pyramid' upon comparison to the reference materials:

Bitconnect.co controls 95% of all exchange volume on its own website's BCC exchange:

Bitconnect seems to have a very large percentage of the total current BCC supply based on the distribution of funds as pointed out by @cryptick in their series on Bitconnect:

Since Bitconnect.co has a lot of BCC, and processes(or fabricates) transactions and publishes the data accounting for almost all exchange volume it could easily control the price. Only Bitconnect would know if exchange transactions were fabricated or shilled, since their website privately holds all user data. They could echo (or not echo) the desired exchange transactions in the blockchain and vice versa as needed. Note that this sort of manipulation has nothing to do with the intrinsic wallet software or code parameters.

Alarmingly, compared to the exchange volume the amount of off-exchange (dark) volume on the blockchain comprises up to 80% of all volume:


Note that per the blockchain there were about 600,000 and 900,000 BCC transacted on the 26th and 25th. Total exchange volume was $15,882,500 and $17,013,600 on those dates, and the lowest price was $188. Therefore, the maximum exchange BCC volume was about 84,500 and 90,500 BCC coins respectively. Nearly ten times these amounts is being transacted off the exchanges for some crazy reason.

I suspect one likely reason for this may be to generate transaction fees to help finance the scheme. If Bitconnect holds the majority of BCC then it has the potential to mine the majority of BCC POS mining rewards.

Do you notice anything funny about the following charts?


The first chart shows the BCC/BTC price going back to January in orange. The second chart shows the price of Chinese CNY against the US dollar during a period of known currency manipulation by China to peg the CNY to the USD. The BCC price really does seem abnormally fixed/rigged to the Bitcoin price since about June.

It's important to realize that the loans are pegged to USD, such that if you lend bitconnect 100 BCC when the BCC/USD price is $100, when they pay you back if the price has risen to $200, they would only pay you 50 BCC and keep the rest. Thus as long as prices can be made to rise steadily over the loan term (about 1 year), Bitconnect can be guaranteed to have to pay out fewer BCC than it was initally loaned. So it seems Bitconnect might sell the initial investor (sucker) BCC , immediately borrow it back, eventually give the lender less BCC than they were initially lent, and lastly takes the remainder, probably for paying other investors (classic Ponzi scheme, except for the likely currency manipulation part).

The intermingling of these apparent elements(MLM-Pyramid/Ponzi/Currency pegging) makes it very difficult to predict how long Bitconnect might be able to kite along this scheme. If it does all blow up, it will be devastating to both the individuals who lose their money and the cryptocurrency community writ large. It's a shame.

I would stay as far away as you possibly can from this coin. If the Bitconnect.co becomes insolvent and their website and BCC exchange go down this coin will have essentially have no exchange value whatsoever(even if you were fortunate and smart enough to hold them in your own local wallet rather than storing it with or lending it to that one shady website).