What is Bitconnect?
In early 2018, Bitconnect and Bitconnect Coin (BCC) was found to be a Ponzi scheme and was promptly shut down. Bitconnect reviews all across the internet were hinting that the platform was suspect, and everyone’s doubts were confirmed when the company released a statement saying they were shutting down the lending program. The Bitconnect scam impacted many, and once they announced they were shutting down, the value of BCC dropped significantly.
Bitconnect is a P2P blockchain network with decentralized capabilities. Its goal is to become the world’s most cherished Bitcoin (BTC) lending platform. Like other similar networks, this community is powered by Bitconnect coin, which is essentially its cryptocurrency. The distributed nature of its ecosystem lets people store their wealth there without using government-backed coins. This means, whoever holds Bitconnect coins gets a substantial interest for assisting in the maintenance of its network.
Bitconnect promises financial freedom to those individuals who find the centralized banking systems and the promises of third-party financiers to be unreliable. Note that Bitconnect and Bitconnect Coin (BCC) operates along different lines. The former operates as a lending platform while the latter is a token used on the network. BCC’s value increases when you hold it for a long-term. Their 1% increase in users’ holdings per day is pretty lucrative, but some folks think it’s too good to be true.
How it works
For those who aren’t familiar with how Bitconnect worked, it was essentially anonymously-run site where users could loan their cryptocurrency to Bitconnect in exchange for outsized returns depending on how long the loan was running for.
When you buy BCCs from Bitconnect foundation, that amount is considered a loan which they use to buy Bitcoins. When Bitcoin’s value increases, Bitconnect’s ROI jumps a notch higher, and a portion of those profits is given you as well according to the size of your holdings. Find out more about their lending platform and interest rates. Those who wished to take part in Bitconnect needed to put down an upfront investment between $100 and $100,000 in order to start earning returns and for the compensation plan to kick in.
Where to use BCC
Currently, BCC is accepted by very few minority companies and traded amongst the community users. Anyone who adopts this currency either does it to expand their investment portfolio or just in the belief that cryptocurrencies are here to stay.
Pros of Bitconnect (Bitconnect was shut down)
Valuable – the moment you buy BCC and hold, its value starts to increase since it’s an interest-bearing asset.
Faster transaction – unlike Bitcoin’s sluggish transaction period, Bitconnect has a shorter processing duration thanks to its Scrypt encryption algorithm.
Combines both PoS and PoW – when proof of work is merged with proof of work design, more efficiency is attained and less power is used.
Cons of Bitconnect
Still struggling to prove its legitimacy – Bitconnect is required by the UK government to prove their legitimacy or risk being dissolved.
The company behind it is not well-known – there is very little info online regarding the company behind this venture. This is usually taken by shrewd investors as a sign that a company lacks a clear roadmap ahead and should not be backed.
SCAM and is shut down – Bitconnect has been widely regarded as a scam by many for suspicious business practices, too good to be true product, and many grammatical errors throughout the website. In January of 2018, Bitconnect was shut down.
Pro and con
Bitconnect uses Scrypt algorithm rather than SHA256 to validate transactions. This technique makes the platform faster at executing transactions but at the expense of robust security offered by SHA256.
Where to buy Bitconnect
(Not recommended to buy Bitconnect) Anyone looking to buy BCC can use Bitconnect Site, Livecoin, Hitbtc, and Novaexchange.
2018 hasn’t started well for this digital asset. It has been issued with a cease and desist order by the Texas State Securities Board on two allegations. First, it is blamed for not disclosing how its investors are going to be paid. Secondly, it’s been using dodgy language and not informing investors about the risks of trading in cryptocurrencies.
Towards the end of November, UK government also issued Bitconnect with an ultimatum to prove their legitimacy or be dissolved and its assets impounded. It was believed that Bitconnect was a sort of Ponzi scheme. A Ponzi scheme is a form of fraud in which those involved believe in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investor from money invested by later investors. Bitconnect was in fact deemed a Ponzi scheme in January of 2018 and was ultimately shut down.
A few founders of other cryptocurrencies criticized the platform for being a scam, including Ethereum founder Vitalik Buterin. Bitconnect received a large amount of backlash on social media and in the news as well.