Online Exchange and Lending Platform Bitconnect is offering it's members a variable 1% interest PER DAY on deposits.
When traditional banks are lucky to offer ~1% per year, is this too good to be true?
What is Bitconnect?
Bitconnect is a combination cryptocurrency, online exchange and community portal offering investment (loan) opportunities for it's members. It's currently ranked in 12th position as the cryptocurrency with the highest market capitalization when ranked against +1,000 different cryptocurrencies.
How it works?
Members of the Bitconnect community are given the opportunity to loan an amount (from $100 to $100,000) for a period of time between 299 to 120 days, after which the full initial (principal) amount will be repaid.
During the investment period, members will be receiving interest (from the earnings of the Bitcoin volatility bot), paid daily and averaging around 1% PER DAY.
Here are the earnings for the last 5 days:
What is the ROI for this investment?
After crunching the numbers, on average (based on historical values) members are able to double their investment in less than 4 months (or 100 days).
Almost sounds too good to be true - right?
Is BitConnect a Legitimate Business?
You are likely asking yourself - how are these rates of return even possible? Traditional investments can't even compete with these types of numbers. When you talk about doubling your money in less than 100 days, that sure sounds pretty far fetched.
I agree. By conventional standards it does sounds almost impossible. Until you look again at the cryptocurrency market. Every day there are coins and tokens trading that make 5-10x gains in very short periods of time. So earning high returns on a volatile market like cryptocurrency is certainly possible.
Has something like this been done before - Absolutely.
The traditional exchanges are almost exclusively run these days by automated systems (bots) doing split second trades and are still able to be profitable - even though there is only a fraction of volatility of the traditional market when compared to cryptocurrencies.
So, it is entirely possible that a trading bot that profits off the volatility of the market has been developed and in use today. And BitConnect may very well be proof of such a system.
In fact, when comparing interest earnings with BitCoin price swings there certainly looks to be a strong correlation. On many days where there were large price swings in the price of BitCoin, BitConnect Loan holders were receiving in excess of +2% interest PER DAY.
So it is entirely reasonable there is at least one company in the world that has successfully developed price volatility trading bot that wins on most days and maybe that company is BitConnect.
Is BitConnect a Ponzi Scheme?
BitConnect incentivizes it's members to recruit new members and this marketing approach has come under a lot of scrutiny with comments comparing it to a Ponzi scheme.
So, first let's look at what a Ponzi scheme is. It's an enterprise that promises the payment of quick returns to the first investors from the money invested by later investors with nothing of value offered to investors other than a promise of future payment.
On the face of it, it's easy to see how BitConnect could easy be associated with a Ponzi scheme.
However, it's important to note that online its been a long time practice to offer incentives (in way of commission) to those who bring in more business. It's more typically known as "Affiliate Marketing" and is a very effective system to recruit new sales. Even Amazon offers affiliate marketing to it's members.
However, what makes BitConnect different as it offers something of value - absent from Ponzi Schemes. It offers it's own cryptocurrency. How is the value of a cryptocurrency determined - It's determined by it's users (for the most part).
In fact, even if BitConnect was a Ponzi Scheme, I would argue it's pretty much a moot point. Simply because BitConnect is also the largest exchange to trade BitConnect coins - so not only can it control the supply and demand of these coins, it also has a considerable amount of influence over it's price.
Conclusion
Investing in cryptocurrencies is a risky venture. It's impossible to tell if a particular business is acting in the best interests for the community or not and for that reason it's up to you the individual investor to decide you level of risk for each of your investments.
A $100 investment, requires a $100 risk assessment. If you are investing $10,000 or more, then it requires a much higher level of risk assessment - A $10,000 risk assessment. The general rule of thumb for Cryptos - Don't invest anything you can't afford to lose.
If you want to learn more about BitConnect, check out this website video:
The Cryptocurrency market will always have it's share of unethical businesses and it's up to the community to support and cultivate those businesses which help to serve the community. As the cryptocurrency ecosystem continues to evolve, it will be a bumpy but potentially very profitable journey.
Until Next time.
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