http://behindmlm.com/wp-content/uploads/2018/01/carlos-matos-bitconnect-event-US-october-2017.jpg

It's often said truth is stranger than fiction. When it comes to cryptocurrencies that cliche certainly holds true. This post is about the Bitconnect scam which was finally revealed as such by it's founders last week. More precisely, it's about the fact that many willing participants knew the entire thing was a Ponzi scheme but nonetheless chose to invest in it on the basis that they could still come out a winner and bizarrely, richer. Like the guy in the pic above.

Scams and Ponzi schemes are nothing new and Bitconnect wasn't the first and it won't be the last scheme to fleece fools from their money. But what I found particularly interesting about the Bitconnect scam was that a lot of the investors were forewarned or had knowledge that something was rotten in Denmark. Looking back on YouTube videos created in 2017 many were explicitly made to warn investors of Bitconnect or to approach it cautiously. Sadly, those overtures fell on deaf ears and greedy minds.

https://www.youtube.com/watch?v=7MeREnecIFw

Bitconnect was like every other Ponzi scheme. It promised investors insanely high percentage returns on modest investments. Take our friend Carlos above. He claimed to have made an initial investment of $25,000.00 and was earning a return of $1200.00 a day or roughly 20%. How was Bitconnect able to sustain these high yields? The answer: their secret trading bot and computer software which earns money trading on the volatility of bitcoin. But wait! There is more. Investors were required to purchase Bitconnect's own token "BCC" with bitcoins. They were then paid out in BCC, not bitcoins. Bitconnect invariably ended up with a heaps of bitcoins which they never intended to return to investors. They were even bold enough to put up pyramid shaped diagrams on their website to illustrate the apparatus of the scheme's profit producing and sharing method. If early investors wanted to cash out they would be paid in BCC for what it was valued at the time, then trade it for equivalent bitcoin, and then to fiat dollars. The scheme requires a revolving door of new investors to pay out old ones who might decide to cash out.

So what would motivate someone to risk financial suicide by knowingly investing into a Ponzi scheme? Greed and desperation. Unfortunately, the millennial generation will be written into the history books as being part of a society which was laden with personal debt. Mortgages, credit cards, student loans, car loans etc. A obvious Ponzi scheme could still be profitable if you are one of the first investors in and cash out early. I can imagine the thrill of someone who has thousands of dollars in student loan debt being told that they could pay it off in mere months if they invest into the scheme. Coupled with the fact that Bitconnect seem to have had many shills on YouTube peddling their scam (BCC to the moon!!!) by showing how much money they were allegedly making it was somewhat understandable that a lot of folks threw caution to the wind.

And then the inevitable happened. Reality knocked at the door, tomorrow was another working day, your student loans are still owing and outstanding, you've lost all your investment, and all you have is a bag full of worthless BCC coins.

https://www.youtube.com/watch?v=YagUXXtyFn4&t=88s