I would like to state ahead of time that I am personally invested in Bit Connect, however I am in no way promoting it or saying it is legitimate. I will merely state my thoughts and analysis for you to create your own opinions.
Part 1: BitConnect Overview
BitConnect states that it is an exchange and a lending investment program. However, what is it really offering us?
BitConnect has several main functions that I believe are driving the platforms overall success.
Exchange: They provide their own exchange for their own coin, you may buy and sell BCC with BTC in this exchange. They charge a fee that they profit from each and every transaction. Remember that you must exchange to be able to lend your coin, unless you go through a third party for your BCC.
Lending: They supposedly have a 'Volatility Software' that is creating automated gains each day on the volatility of Bitcoin. They pay out a small 'percentage value' in USD to investors each day based on their total investments. paid every 24 hours on the dot.
Lending wallet and reinvestment:
The lending wallet is actually a tool for bitconnect. They pay you a simulated USD value to the 'wallet'. However theres no actual USD stored anywhere on the site. You can do two things with this number. Either reinvestment in hopes of higher payments or withdraw this to your 'BitConnect Wallet'. If you withdraw to the Bitconnect wallet you actually gain some account value at that time. There is an actually token associated with the money promised. not just a number.
They are secretly hoping you will reinvest and not withdrawal, not necessarily because they want to 'steal' from you. Just because you lock in the funds with them. Hence driving the BCC tokens value further.
- Withdrawals: I am only mentioning this because they charge a .0007 BTC withdrawal fee.
At a 4000 USD BTC value that is around 3 dollars per transaction.
This would mean you would need at least 300 dollars in lending on average to make any sort of daily withdrawals.
Part 2: Common Misconceptions and What I think is really happening.
Now that we have broken down the main functions of Bit Connect we can attempt to understand what is really happening.
A common thing I hear about Bit Connect is "BitConnect promises a 100 dollar investment into a kajillion dollars in 10 years of reinvestment."
This isnt a real calculation but the number is very large. However this statement is false.
BitConnect promises nothing, other than your money will be returned in the specified time and any bonuses received for referalls or large deposits.
All you are really depositing is that dollar amount of bitcoin for that day.
All you receive is that dollar amount of BCC, then BTC for the day of exchange.
Another thing I believe they are doing is using the program to manipulate gains in their own exchange. They control such a large amount of bitcoin and BCC that they can manipulate gains easily.
Many worry that they will one day just disappear with all the money but I dont believe that to be the real risk.
The risk in my opinion is that the BCC token value will simply fail one day. If the BCC token is worthless and noone is buying into the program anymore, how would anyone get paid?
The program will never make it to the point that everyone on the program is making millions a year. By that point the program will begin failing, and eventually be forced to close. If they cant pay how can they continue?
Also I believe the company is making profit in the following ways:
Exchange fees
Withdrawal fees
Market manipulation (Which isnt really required while they are still growing naturally, Perhaps there is a trading bot to automate this)
Actual market trading (Maybe)
(USD, to BCC to BTC all possible)
Part 3: Signs its time to get out
I just want to say that if BCC continues to grow with Bitcoin the way it has been, I think thus program could potentially last years. However I dont think there will be some sudden collapse.
Some things I see happening that could indicate its time to be cashing out.
- Daily interest rate payments becoming lower over time
- Market Cap begins dropping while Bitcoin continues to grow
- BCC token value slowly drops lower and lower
I do not think any sudden drop in value is an indicator to get out. I am also not a financial advisor so do with this information as you wish.
Thanks for listening and please let ne know your thoughts.