Bitconnect is a lending coin. Essentially this means, you:
1. Send Bitcoin (BTC) to Bitconnect's website
2. Convert your Bitcoin into Bitconnect coins (BCC)
3. Create a loan with your BCC which pays you a daily interest (~0.95% daily). Your loan is locked in for 150+ days. Meaning you can pull out your loan amount until the 150+ days are up. You instantly keep the daily interest. Most people reinvest it back into the site so they can get even more daily interest. Otherwise you can simply just cash out that interest completely.
Concerns and questions
How are they paying you this 0.95% daily interest? Where are they getting this money from to pay you this INSANE daily interest rate?
Fact
Banks pay you about 2-3% interest YEARLY. So how can this pay you 0.95% interest DAILY. Well they have a "volatility trading bot", which takes advantage of Bitcoin's volatility. There is A LOT of volatility in Bitcoin, so this trading bot make senses. However, there is no proof that this bot exists. It also doesn't make sense that there is not a single day where there was negative profits. There is no such thing as perfection, and if there is, why not show some sort of evidence or address this issue? If they did, I'd immediately flock to Bitconnect.
Possibilities/speculation/opposing view
The other side to this is that, if we look at Bitconnect's market cap, its sitting at $2 billion, making it ranked 7th in the cryptocurrency space by market cap. That's a huge amount of money. If that volatility bot exists, we can bet most of that $2 billion is that trading bot. That means bitconnect controls a huge chunk of Bitcoin's price. The market cap of Bitcoin is $122 billion, and $2 billion is controlled by bitconnect. That is a huge amount, so their bot could be in fact creating that volatility, hence no negative profits.
All these YouTubers are making a tonne of money, and they are getting paid, how do you explain this?
This is completely true. Bitconnect has almost run an entire year and its still going strong and paying out. People on YouTube have made hundreds of thousands of dollars. Now let me ask you a question, go to every person who positively promotes Bitconnect. Look at where they are recording from (usually their bed rooms which aren't that fancy). Look at their video production quality (whilst this isn't an indicator, if you were mega rich, I'd assume you could afford to pay people to edit, or at least get better equipment). Everyone who promotes this coin is essentially in desperate need of money. All their content and title's are focused around "get rich quick" and "use my ref link". These YouTubers are also most likely new to the crypto space and also most likely casual investors.
However, do you guys realize that a lot of what they earn are also from commissions of referring people. Their profits may not account to how you profit. Bitconnect's model seems like a ponzi scheme. What is a ponzi scheme? Its when the first investors gain profits by taking the second investors investment. Its basically like a pyramid scheme Example:
1. Bob invests $10 on Monday
2. Steve invests $13 on Tuesday. Bob gets a $1 interest paid from Steve's $13.
3. James invests $20 on Wednesday. Bob gets a $1.20 interest from Steve's $13 and James $20. Steve gets $1 interest paid from James's $20.
What happens if there is no one who invests after James? Then they exit scam because how else can we make money. HOWEVER, here's the clever part of Bitconnect. It allows you to reinvest the interest you gained as ANOTHER loan which is completely separate to your first loan. Therefore, the ponzi scheme, keeps looping and looping. A lot of people reinvest their interest, as that's the "strategy" to "win". This reinvesting can be seen as a nigher at the casino. When you win $100, you don't take the money and run, you keep playing and playing until you go bust. People are greedy and keep wanting more and more. It can also be seen as, you technically never winning, and just having your money looped around in circle. Profits will be made because your coin is being staked (hence circulating supply becomes lower, and if its lower, it means the bitconnect coin's price will be higher).
How long will Bitconnect last for if its a scam?
Bitconnect may last for as long as Bitcoin lasts and remains volatile. In saying this, that's still not guaranteed. There is no right answer to this question.
It's been running for so long, and its still paying great profits, should I invest?
Well that is up to you completely. If you want to invest, I would say $500-$1010 is a good amount to start off with. $1010 is the sweet spot but still a lot of money. Anything lower than $500 would not really be worth it, but again, up to you. I would also say, if you do invest, consider it as a VERY VERY VERY expensive slot machine spin. When you play the slot machine, you've essentially lost your money already. Consider Bitconnect as an expense and not an investment. Who knows if it will be online in tomorrow. We don't know anything about the dev's behind it, so that's also not reassuring.
What are your thoughts?