BitConnect (BCC) Summary: Is It A Scam?
If you do any reading up on BitConnect (BCC), there’s a word you’ll see plastered around a fair bit: ‘scam’. Let me start by saying that while I'm not fully convinced BitConnect is a scam, there are certainly a number of things about it which have made me hesitant to invest with them.
Here’s a brief rundown. BitConnect is an open source, peer-to-peer lending site where people can earn interest by staking, trading and lending BitConnect coin. Users can also trade on their exchange and access their mining software, which allows you to mine BitConnect without an ASIC miner like bitcoin. They have also pitched themselves as a community for general crypto education and news.
Taken from their website: “BitConnect is an open source all in one bitcoin and crypto community platform designed to provide multiple investment opportunities with cryptocurrency education where it is entirely possible to find the independence we all desire, in a community of like-minded, freedom loving individuals who, like you, are seeking the possibility of income stability in a very unstable world.“
Sounds odd right? In fact, their entire website is a bit unusual - they are clearly not native English speakers as the page has lots of grammatical errors and when I read a sentence I still don’t quite understand how it works. But let's not hold this against them just yet.
I'll focus on the lending aspect of BitConnect, as this seems to be where most of there business lies. Here's how it works:
- You send Bitcoin to BitConnect.
- You buy BCC using BTC.
- Your BCC is given back to BitConnect for a set period of time (usually ~10 months) where they use a 'trading bot' which apparently turns profit off the volatility in Bitcoin.
- At the end of the allotted time, your investment + interest is returned back to you in USD.
There are a few things which I am a bit iffy about here. First, this trading bot thing. There's no real information about how this works. Apparently it is software which buys BTC when low and sells when high. The daily interest you earn depends on how much profit is made on that day. If no profit is made then BitConnect eats up that loss and no change occurs to your investment. You can see the daily interest rate here. One thing I did notice was that in the last 90 days there were only 5 days where no profit was made (seems a bit too good to be true).
The daily profit rate seems to range between 1-2%, in fact their website labels this at up to 40% per month, or 480% per year. If you invest more, you also get additional interest guaranteed, as per the photo below. If you invest $10,000 they'll give you an additional 0.25% daily, or 91.25% per year. I simply cannot trust a company which claims to offer close to 600% risk-free return on your investment per year!
The other thing that concerns me is that your investment is returned back to you in USD. This means that even though you buy BCC using Bitcoin, if the price of Bitcoin rises over the ~10 month period your money is held by the company, you never see a dime of the money you would have otherwise earned by holding BTC. For example, if you invested 1 BTC at $5000 and the price of BTC rose to $6000 over the period of investment, you would receive US$5000 capital back and BitConnect would therefore keep the $1000 profit from the rise in BTC price. That's just not good enough for me.
I also cringed a little bit when I realised that you can earn money through BitConnect's referral program. Don't get me wrong, I understand referrals can be a necessary tool for building a client base, but the way their rewards are structured make it seem more like a multilevel marketing scheme - you earn more percentage return on your investment according to how many referrals the people you refer make.
The last straw for me when deciding to invest in BitConnect was this - there is no face behind the company. Where is their Charlie Lee or Vitalik Buterin? Why do they not list their main devs like most legitimate crypto teams? This hidden aspect of their company really concerns me. My biggest fear is that one day once fresh money stops coming in they are going to sell off all of the BCC, freeze the exchange, pocket all of the BTC and run. But maybe I'm just paranoid.
You may have guessed it already, but I'm not sold on BitConnect. I just get a bad feeling about it. I could be wrong, and I'll be happy if someone can prove me wrong and show me their profits (as long as they're not trying to recruit me!). There's no doubt that some people have made a mint off BCC (the price has gone from US$0.70c to $162 this year alone). But I would strongly advise you to look again before investing. Crypto Lark does a great video on it below BTW.
Ultimately, for me it comes down to the age old saying:
"If it seems too good to be true, it probably is."
Price at time of posting: US$162.
https://bitconnect.co/
https://coinmarketcap.com/currencies/bitconnect/
https://steemit.com/…/@coron…/bitconnect-scam-day-38-results