Bitconnect is the bitcoin community’s most notorious scam. Some describe it as a Ponzi scheme. Others claim it’s a HYIP-style lending platform. And some – the most gullible investors – believe it’s a legitimate business opportunity.
However you view Bitconnect, you have to admit something strange just occurred. This past Thursday, Bitconnect’s market cap suddenly jumped from $600 million to $900 million.
The market cap increase wasn’t related to some surge in price. Instead, the surge was linked to a sudden, mysterious 50% increase in circulating supply.
Typically, a cryptocurrency doesn’t experience a dramatic rise in circulating supply unless something big happens – like all of the founders suddenly sell their shares, or some massive amount gets distributed to the public.
The news was spotted by CryptoBull, known as @Crypto_God on Twitter.
“A portion of the supply is supposed to be locked up on their “lending platform”, explains CryptoBull. “$300m worth of tokens was just released. IDK why…”
Later, CryptoBull was asked if Bitconnect was a scam. He responded with a simple “yes”, which echoes the sentiments of most members of the cryptocurrency community.
“There is suddenly 3 million tokens on the market instead of 2 million. Not good. Anyway, stay away from this. It’s a ponzi scheme.”
Is This The Beginning Of The End For Bitconnect?
Bitconnect, like all Ponzi schemes, is built to fail. The returns of older investors are paid by the deposits of new investors. People think everything is great – until the entire scheme collapses in a short period of time.
Bitconnect (BCC) has a maximum supply of 28 million tokens. Just 3.2 million tokens are currently in circulation, with a total official supply of 8.4 million coins. We don’t know who has control of the majority of Bitconnect’s total supply. The founding team for Bitconnect has never revealed their names or identities.
However, based on this latest release of tokens onto the market, it could mean that the founders are getting ready to start selling off a large chunk of their reserves.
Others claim that Bitconnect is getting ready to release its debit cards, and needed to access funding for those debit cards – so they just printed more money.
Bitconnect also makes it notoriously difficult to withdraw money, forcing users to lock up their funds for a long period of time.
If a “bank run” on Bitconnect starts, then it’s not going to be pretty for investors. Your Bitconnect account may look like you’ve made a lot of money – but most investors will never receive anything close to their promised returns.
Bitconnect’s price, meanwhile, is up nearly 14% on the day – and yes, 97% of BCC trading continues to take place on just a single exchange controlled by the makers of Bitconnect.
Stay tuned to CryptoBull’s account for more information from the world of crypto trading.