The demise of BitConnect has shown cryptocurrency investors how dangerous this world really is. In hindsight, there were quite a lot of warning signs along the way, though. In fact, most people saw this coming from miles away, yet thousands of people still lost money.
The BitConnect Writing was on the Wall
According to a recent interesting infographic associated with the demise of BitConnect, this project was destined to fail. One could even argue that everything about this notorious Ponzi scheme was laid out so carefully, it is rather worrisome that people didn’t notice it sooner. Even for those not familiar with the cryptocurrency ecosystem as a whole, there were plenty of red flags surrounding BitConnect from day one.
When BitConnect initially launched, most people could see the company’s vision was very different from what they would have people believe. Virtually guaranteeing profits to investors regardless of the changing overall markets is always worrisome. After all, there is no financial instrument which can guarantee profits from day one.
For those people who managed to look past that aspect, the company also had its own trading platform. As we have seen with other scams and Ponzi schemes in the past, any cryptocurrency primarily traded on a native exchange will eventually defraud users at some point. There have been similar programs in the past, although many people wrongly assumed BitConnect would turn out differently.
Over the months, BitConnect also garnered a fair amount of shills on YouTube. Although it is not abnormal for people on YouTube or other forms of mass media to promote cryptocurrencies, things quickly got out of hand with BitConnect. The similarities between this Ponzi scheme and OneCoin have become all too apparent. Unfortunately, this also heralded the demise of BitConnect in the long run.
Perhaps the biggest warning sign of all was the pyramid scheme structure, which also became more apparent over time. Every paying participant had to recruit two other people to provide returns to previous investors. Such a structure is not entirely uncommon in the world of investment schemes, but it is a worrisome sign. MLM schemes are usually perfectly legitimate, but the way BitConnect positioned itself raised a lot of questions from day one.
The last few months of this notorious Ponzi were not all that great for investors. Things quickly went downhill when the BCC value tanked by 90%, which was the direct result of the company shutting down the exchange which had represented over 97% of all BCC trades. As such, users could not withdraw their money in any official capacity. All other exchanges associated with BitConnect trading have also taken a significant PR hit, although very few platforms even listed this “currency”.