Prediction: when Bitconnect ponzi scheme will implodesteemCreated with Sketch.

in #scams4 years ago

A gold age for ponzi schemes

I have been following closely some of cryptocurrency ponzi schemes. My main motivation is to study human psychology when it comes to money and investments. To tell you the truth, very often I get disappointed from humanity. Every day more people are faced with rising costs and empty wallets, a lot of people are falling for get rich fast schemes that lure desperate consumers with promises of unrealistic investment returns. Ponzi schemes existed for a long time ago, but now cryptocurrency is making even easier. It was impossible before por schemers to hide their identity. Not only they have an easier way receive investments, but also they can hide their identity.

From main three ponzi schemes that I was following, two of them already went belly up. It took less than three months for Crypto Solution and Control Finance to run with investors money. But Bitconnect is still up and running. Most "investors" i follow on youtube had money with all of them. I thought CF and CS will hurt Bitconnect credibility but I was wrong. That got me thinking, is there any way to predict when a Ponzi scheme will collapse.

In search for a mathematical tool to predict when a ponzi Scheme will collapse

It does not take a genius to figure it out that an investment platform is a ponzi schemes. No need for a math degree. It's very obvious that some promised returns are unrealistic. Unfortunately, there are still a lot of desperate people who are sick of their job, long hours with a minimum wage, mortgage payments, car payment, student loans, rising costs, you name it. Everybody needs a way out to a better life. Anybody else, rational enough not to be lured by false promises, will not fall for those scams. People still fall for Nigerian Prince scam, HYIP are too complicated for them.

As mentioned above, what is the difference between ponzi schemes, what can impact that some ponzies fall within weeks, and some can last for months, some even years. For example Control Finance and Crypto Solutions were short lived while Bitconnect is still up and running. The answer is yes, the math between a Ponzi is very simple. If there is more money flowing out then getting in. The problem is, here are many variable so it is almost impossible to predict when the scheme will implode.

Most important are:

  1. Support from social media like Youtube
  2. Money generated from new members within a given period
  3. Money generated from existing members.
  4. Percentage of returns that are getting reinvested.
  5. Bitcoin price
  6. Lock in period (how many days funds are locked)
  7. Payments to members within a given period.

Problem is that for most of them we can only guess.

My estimate when Bitconnect will collapse

Bitconnect has potential to be one of the greatest scams ever conceived. After Bernie Madoff of course. Main reason why they managed to stay floating so long is that they got lucky. Scam started when Bitconnect was low, around $1,000 and now Bitcoin price is trading around $4,000, or 300% up. For simplicity sake I don't want to get into calculation bitconnect coin, it's not that important too. Bitconnect receives investments on Bitcoin, and pays back on Bitcoin. But it calculates profit on US dollars.

Let's say that an investor did spend $1,000 to buy 1 Bitcoin and he invest that Bitcoin on Bitconnect platform. After 6 months, with compounding interest investor will have $4,000, his initial investment and profits. First investor can't withdraw all funds because funds are locked (up to 299 days). Even if investor was able to withdraw all his funds, his withdrawal will be $4,000 or 1 Bitcoin. Truth is Bitconnect did not pay him any real profits. Bitconnect does not keep USD, off course they don't, USD is easily traceable. They keep bitcoin. Until Bitcoin price keeps going up it will Bitconnect to stay afloat.

Second important thing is reinvestments. Bitconnect has great incentives to reinvest. I follow a lot of youtubers, most of them they are either $100 investors or $1010 investor. It is human greed to keep reinvesting to faster reach financial goals. I still have to find one person that withdraws profits on daily basis. One thing I learned watching others is that most of them won't start withdrawals until daily profits is equal to their initial investment. So people that invested $100, they will keep reinvesting until they total amount reaches $10,000. And so on, $1,010 investors are waiting for their $100,000 goal.

Most youtubers I follow currently are around 40% from their goal. With a simple math, it will not take more than 3 months before they reach their goal. Bitconnect to fail before New Year is my best guess, as I don't have access real data. Only a miracle, a huge surge in Bitcoin price can help Bitconnect postpone their doom.

Useless data from blockchain

There are two way I could get data. First is BCC blockchain. According to!rich there are 7540 BCC addresses, with 1 Billion market cap. Maybe somebody can make sense on this data, but this does not make any sense to me. I think there are way more than 7540 people invested with the platform. There are a lot of people that just opened an account and never invested a single penny, myself included. In theory I should have an wallet address on blockchain even though I have no money there.

Just as an experiment I opened an account with Bitconnect. Have two wallets with, a bitcoin wallet and a bitconnect wallet:

  1. My Bitcoin wallet is 14Fm4Fja3vV4x3pzUqXpLfANdSm9ySgszj it exist on Bitcoin blockchain here
  2. My Bitconnect wallet is 8YhKB8mrfKvYYvPT1mukWDcDWhktYp31yu and it DOES NOT EXIST on blockchain here

Feel free to send me a donation, I will withdraw it from there as fast as I can :)

I see a lot of people is trying to look at BCC blockchain to make sense of things. That blockchain is highly manipulated and in my opinion no useful data can't be extracted. I don't think there are only 7450 investors and 1 Billion market cap is unrealistic.

Using my favorite tool, google trends

Google trends is one of my favourite tools to find market extremes and public interest. A ponzi scheme is depended on ever growing new members to join in so they have constant flow of money from new members to pay old members. In my opinion google trends is the best indicator, because it can't be manipulated. A look at search result shows that bitconnect was exponentially popular from May till the end of August. Probably that was the time when it was getting new investor. Price hit a peak at the end of August after the panic when Bitconnect shut doors for a few days. Now looking at the incline it is not as steep as it was before although is setting to reach a new high. As a signal that end is near is when search does not keep rising, or not fast enough.


Predicting when a ponzi scheme will collapse is almost impossible. There are many different variables we have to take into account to estimate a date with a higher accuracy. One thing is for sure, all HYIP sooner or later will implode. As a general rule, HYIP that pay higher interest will implode faster than those with lower rate. For a 1% daily, they can survive up to a year.

Bitconnect is no exception, except it is more popular. It does not matter how many investors are in, what matters how many new investors are joining to feed the system. I tried to gather as much information I could get, my opinion is that Bitconnect will not survive 2017, most likely will shut down within 3 months. I base my opinion base on:

  1. Youtube recruiters are getting less new referrals
  2. Most people invested in the platform are halfway their target
  3. Bitcoin price is stabilizing, its very unlikely it will surge at least 50% within next three months.
  4. Shopping season is near. Bitconnect is very popular in US, most likely US investors will start cashing out
  5. Most investments are 100 to 1,010. They mature in 239-299 days. Investors can start withdrawing their initial deposit.

Follows and upvotes are appreciated :)

Disclaimer: The information contained herein is not guaranteed, does not purport to be comprehensive and is strictly for information purposes only. This is not a financial advice. It should not be regarded as investment/trading advice.


Really interesting analysis but I think you discounted the most important element, BCC. I appreciate it’s a complication and appears to serve no purpose but if that’s true, why is it there?
It’s there because that is how Bitconnect is able to continue paying out. They control the supply of BCC (due to the premine). In this way they can make me buy BCC, then use my btc to pay you!! It’s fiendish. It has to collapse sooner or later but I think it will run well past the end of the year!

I did not want to discuss about BCC because will only complicated it. My main motivation is to prevent innocent people falling for this scam. If I manage to save only one person, then this article was worth writing.
BCC is just a cushion between BTC and USD and of course it helped Bitconnect to run this long. It is highly manipulated by bitconnect exchange which controls 96% of volume. Many other steamers covered it, it was unnecessary and my article was long enough without it. Bitconnect might run pas a year, if they reduce payout or bitcoin price goes up. I think, going forward they will have trouble finding "fresh meat" to feed the system.

My apologies if you thought I was picking holes in your article. That was not my intent. I found it well written. I just think that with most people reinvesting, the fees they charge, the fact that they control the BCC market and price plus the btc bull market we are in, they will run well into next year. I may be wrong. However if bitcoin crashes or we enter a prolonged bear market I expect Bitconnect to collapse rapidly!

On contrary, you're providing move value. Thank you. Yes they can run into next year, a lot of things happen. But still there is a high chance of them failing this year. I would estimate 65% chance it will fail this year and 90% within 6 months. A lot of people still think BCC have a long way to go, years, and I think it is very unlikely.
I saw many people who invested $100 and now have 3-4K, they will soon start withdrawing after they reach 10K. Also Shredda has around 110K invested, he will start withdrawing as soon as he hits 150K. Last time he started withdrawing with CF, it went belly up.

If its a scam, they will pull the plug as soon as money coming in (from all sources including their manipulation of BCC) starts to be less than the money they are paying out. Obviously we have no gauge of those figures. But considering its based in Asia and that's a huge market........... Time will tell. Lets see if they go ahead with their October event where they invite (and pay) for people to go to Thailand or similar.

They won't pull the plug while money getting in > money getting out. We don't know when it will happen since we don't have sufficient data. But one thing is for sure, interest they pay and referral fees is unsustainable. Even if a great percentage of people on planet earth join, they will eventually fail.

I completely agree and is what I tried to articulate in previous comment! Glad we are in agreement

Wow. I think your analysis is right on! I looked at this almost the same way as you did. In fact I was predicting an implosion right after new years. I like your point about how the block chain does not have the address in it. Do you know if a wallet needs to have a transaction occur in order to be on the blockchain? That is a very valid point. The billion dollar market cap is easy to explain, they control 98% of the company so the prices rises. Anyway great article!

Hi Cryptick, thank you for your comment. I read all your articles, even commented on some. I agree with you about market cap, although did not explain very well. My article is long enough, I should have split it like you :)
I tried to say that BCC price is manipulated, 1M cap is unreal because all coins are held by Bitconnect. One might think that 1 Billion dollars was invested with Bitconnect, which is not even close.
I don't think that transaction has to be occurred to be on block-chain. Bitconnect can easily give you a wallet address which does not exist, if you transfer funds they will get burned and still they can keep track of your deposit. Lets say I transfer 1BCC to address ABC, that address dont exist on blockchain but they will count ad seposit cause they can link the transaction I did, wallet I have. Coins get burn, higher prices.
Alsi I think 7584 addresses I think is very unreal. I think way more people invested with them. I think there should be at leas 50k people, at least. What do you think?

Well I saw a you tube video where one guy in America had 2,300 people beneath him. I did math on the screen for investments total I saw on a video which is where I get my ~1,400 per investor. (I think they were different screen shots) (People in Vietnam and Indonesia where this thing started are generally poorer, so it likely got off to a slow start.) I don't really trust any numbers form the company. I think the internet traffic is faked like everything else. There has been less than 1,000 downloads of the android app. With about 15 reviews on both iphone and android. This would be indicative of a small number. The company has not collapse yet, since it pays out 1% a day it has to be growing 1 % a day. We know they are burning tokens to raise the BCC token price. If you look at 1% of the market cap, verses the day before and how many people would need to buy each day (at 1,400 a piece) and sum from the begining you get about 6,154 people. This is the amount that would need to have joined since the beginning to keep a 1% growth rate alive. While I value your thoughts, and wish I had more concrete numbers I keep coming back to the 7,000 subscriber number. It may be because most of my assumptions are based on the idea that that number is real, but that is my guess. I have even simulated when they run out of money in spreadsheet. It is when the lock up period (180 days for big investors 300 for little) ends. Based on the big USA push. I see this thing going till then (End of January) based on starting to get popular in late July. Of course if growth continues at 1% day untill end of January 7,400 will become 24,000! So that is by best guess!

The truth is, we don't have real data to have a better feeling when they will collapse. Blockchain is very manipulated. I have a lot of friends and family and they never invest on anything before asking me first what I think. I have a good track record and they want a second opinion. Thing is many people asked me about Bitconnect. That is what make me think that Bitconnect is more popular than 7000 investors. There are at least 1000 different youtube channels promoting bitconnect. I don't think that more than 1% of investors promote it on youtube. I might be wrong, but I just can't comprehend that there are 7k subscribers. Should be way more. I did not know that they have IOS and Android app.

One thing I think we agree, when it comes to ponzi schemes, Bitconnect is a masterpiece.

It is a masterpiece of a Ponzi scheme. Your point on the number of You Tube Channels is an interesting point, that could be the result of one person making a lot of money and then a bunch of people following him. I appreciate your thoughts on this, I haven't had many good conversations to debate these points. I certainly can be wrong here, am I am guessing. I shouldn't expect anyone else to trust my numbers more than me, when I don't trust any of the numbers I read about myself. I will be interested to know if you find more concrete numbers. Great discussion.

@ctyptouniverse you forget they also make money from ads and their press releases and trading fees in the platform.

Hi @sames, thank you for bringing that up. I don't think they get enough from ads that is worth discussing. We can calculate trading fees. Their average trading volume is around $8 Million, fee is 0.25%. So their monthly income from trading activity should be around $600K. Also, I did not take into account trading fees they pay to other exchanges to trade bitcoin plus office and research expenses.

My aim is to point out the elephant in the room, unrealistic return of 1% daily and their multilevel marketing scheme. Again, thanks.

@ctyptouniverse yeah i said it making them last a little longer. But i think they do make about more than 1K a month from ads.
Aka banner ads. ad networks, sponsored posts. Here how much they could make with ad networks alone

Yeah, whatever they could make won’t be nearly enough to cover daily interests they pay out. I don’t know how much their book investment is (investment + reinvestments people hold with bitconnect) my guess should be at least 100m, so they need to pay out around 1m a day. While investors keep reinvesting they will be fine, but when they start withdrawing things will escalate quickly.

but it making them last just a tiny bit longer than other ponzi schemes

Yes it did, but clock is ticking. Their time will come soon. Hopefully more investors pull out their initial investment at least before it's too late.

well said

I'll reply to this in 3 months.

You're always welcome 😀

Well then RegalCoin aka BCC 2.0 will continue to make people earn money after BCC is gone. So try it now

Stop spreading spam.