What is BitConnect (BCC)?

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what is bitconnect“Ponzi Scheme?”

This wasn’t meant to be an opinionated piece, but the evidence and experiences cited for BitConnect are nothing short of scam level.

Even Vitalik Buterin (Ethereum creator) came out and branded it a ponzi scheme. The system is nothing more than vapourware, designed to try and pool Bitcoin for investment in a swathe of different projects.

Unfortunately, as is the case with many of these financial shell games, the promised returns (of over 480% in some cases) have signed up a myriad of unsuspecting users. This has lead to an outcry in the crypto space… but let’s be absolutely clear for a second – crypto is entirely unregulated, meaning that none of the financial safety nets in place for banks will be able to help you recover stolen funds.

The way it’s meant to work is that you will invest your Bitcoin into a decentralized platform, through which the community is able to vote on where the centralized funds will be allocated – all funded through Bitcoin.

In a set up very similar to the “DAO” system in Ethereum, the idea being that you could use your crypto holdings to essentially provide funding to projects that would never have received it had they been asking for money from banks. Whilst this is amicable, the issue is that the promised returns and general lack of accountability (no one knows who made it) have lead to a LOT of contention about who’s operating behind the scenes.

Whilst we don’t give financial advice, our recommendation here is to stay clear of BitConnect at all costs.

What is BitConnect?

BitConnect was originally meant to be a community that was designed to popularize Bitcoin. This is what most people based their investment decision on… however, the information on its website changed to portray them as their own company offering their own tokens.

The company they created is called BitConnect LTD in the UK, of which two exist on the Gazette. Unfortunately, both have been dissolved (no surprise there).

The problem with offering your own tokens is they need to have something to back them up. This is the primary reason why most institutional investors have labelled Bitcoin a scam – because it doesn’t hold value in itself.

To think that you’re building a platform on top of this which apparently is meant to allocate Bitcoin funds to a range of projects is ludicrous.

Several people have pointed out a number of specifics with the system being fraudulent, or downright shady, including…

1. Interest Paid Daily

The main problem with this system is the promise of daily interest.

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As a rule, “if it’s too good to be true, it probably is”. The idea that BitConnect is going to loan out pooled money and then you’re going to receive interest PAID DAILY on that loan is false. That’s not how the market works at all.

Furthermore, if you’re involved with lending out money to people – it’s important you know where that money is going. Most people don’t have any credit ratings and shouldn’t be borrowing money anyway. If your collective funds are allocated to poor credit people, what’s to say that you aren’t going to be the net loser?

2. Bad English

A number of people have noted that the majority of the content of BitConnect’s site was not only obviously written by a non-native English speaker, but spelling and grammar errors have remained unchecked.

The reason this is important is because it highlights the “boiler room” nature of the scam, whereby people will sit down and put out some product / service quickly in order to try and get customers on board. The issue with this is that if this was a real business, it would have someone on hand to provide perfect English… or even just paid the $50 for a translator.

Not doing this is highly suggestive of a “bait and switch” scheme – whereby the predicators will run at the slightest sign of problems.

3. Suspicious Business Practices

The whole setup stinks. You basically have to send them Bitcoin (not their own token), which is then exchanged by them for BitConnect’s coin (this is where the majority of their market cap has come from) – which you’re meant to receive a return on (paid in Bitcoin) after the investment cycle has ended.

Ultimately, for a system like this, you’d expect them to create their own currency which you’d buy for any other (Bitcoin, Ethereum, etc).

On top of all of this, there is very little by way of information as to who is behind the system or why it exists. They just decided to piggyback the BitCoin bubble with their own idea.

Red flag.

Who created it?

Good question. No one knows.

According to the UK company (10278342), the owner is…

One owner: Mr Ken Fitzsimmons

One company share: Mr Ken Fitz s immons

Employes: None

Assists: None

Income: None

Reported tax: None

Registered accounts: None

Due to the company being registered in the UK, it doesn’t to return accounts until 1+ year after it was incorporated. As such, in order to ascertain the true extent of the company, you’d wait until it filed these accounts.

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Unfortunately, the company was dissolved on 7 November 2017. This suggested to most in the Bitcoin community that this was nothing more than a huge scam.

Why it exists?

In short – to capitalize on the sudden growth in Bitcoin’s price…

You can view the Sales Presentation here.

Trajectory

Unfortunately, all the metrics of BitConnect are pointing downwards.

Their coin price sank by 10%+ and their overall market cap has shrunk as people have pulled their money out of the scheme. It appears a combination of lack of investor interest, and the realization that their promised returns are almost certainly unattainable have caused most people to pull the plug.

The system is a typical financial scheme play – promise huge returns based on speculative gambling and using collective money to fund it all. If the scheme fails, the fraudsters behind it will run away, leaving everybody else to pick up the tab.

The problem with BitConnect, as with the myriad of other scammy financial products, is it’s operated by people with very little background in finance. As such, the promised returns are either just made up (fictitious) or are based on projections which – as well know – are almost entirely false.

As such, if you’re looking at whether this is something to consider, avoid it like the plague.

At least Bitcoin has market forces behind it (currently). The problem with BitConnect is that even if it is as successful as people proport it to be, its entire market philosophy is based on the value of Bitcoin – if this tanks, then the value of Bitconnect’s investments are wiped out.

If you want to get involved with the cryptocurrency space, you need to buy one of the coins that actually stand a chance of lasting after the cliff that’s fast approaching. You may wish to look at Ripple, Stellar, Ethereum or Bitcoin itself.

Ultimately, don’t touch this with a barge pole. It’s the reason why China banned ICO’s and why many are citing that Bitcoin is a scam.

UPDATE: January 16, 2018 РBitconnect which was accused by many as scam, running a Ponzi scheme, shuts down. Turned out to be a fraud after all.

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