Bitconnect is gone and not coming back.
The class-action suit will be filed against Bitconnect.
Before I even being this blog on this topic. I've noticed many, " I told you they were a scam " comments. Although that is partially true, the short answer is, the platform worked. It delivered what it promised, it paid its investors and plans to stick around.
Bitconnect released a statement on its social media channels and email subscribers list. The technology, already inner twined and Bitconnect plans to stick around as a wallet service.
Bitconnect DDOS attack and closing[/caption]
It's no secret, Bitconnect is gone. The platform once hailed as a saving grace for many is no more. Leaving a wake of destruction for a novice, new investors. The community is using the services of this law firm to hopefully recoup some of its losses.
If you aren't familiar with how Bitconnect operated, let us take it a few steps back so you get a better understanding of how almost ALL lending programs function.
Since the conception of Bitconnect, lending programs are sprouting up everywhere. Bitconnect set the bar for how most lending programs work. Many are following in the wakes of their footsteps. Others reaping the benefits of their downfall.
Lending programs mimic traditional money market and saving accounts, without the FDIC insurance and much higher interest rates paid and compounded daily. However with a twist and MUCH higher risk.
Unlike other traditional cryptocurrencies out there the end user locks in a loan and collects daily interest. Once the loan period has ended, the initial investment amount is released and the investor has the option to do as they wish with their coins or funds. But where does this company get all this money to pay the daily interest to the investor?
The short answer is this, they don't and you are within a loop of fictitious money.
Think about it for a second.
Initially investors, invest using Bitcoin, Ethereum or Litecoin. In return, investors, are issued a coin, the new company coin, which can be used to create a loan with a promise of .5% - 2.0% daily compounded interest. With your new coins should you choose to lend, are locked for the specified time period per company policy. The company has the initial BTC, ETH or LTC coins that you invested and you hold the company coins, in this case, Bitconnect, Hextra, or Davorcoin. After lending: the company holds the initial investment, their company coins and returns a percentage, daily interest in USD.
Every day the volatility software picks out an interest rate based on algorithms and pays the investor their daily interest. However, the interest paid is neither in the company coin or initially invested coins such as bitcoin, Ethereum or Litecoin. The interest, however, is paid in a fictitious USD currency. Now it's getting more interesting, the company is paying.
The investor can then use the daily interest convert it to the company coin while paying the exchange fees and sell it for Bitcoin. However who pays for the coins? Does the company buy the coins? NO. More investors are buying your coin. Not the company. Initially, the investor lends the coin, with a promise of a daily return of a partial percentage of that coin in return. The company holds all your coins. Then the loop continues.
Is this a Scam?
" I've always invested what I am not afraid to lose. "
Maybe, it depends on perspective or am I being a bit too naive here? However, I believe in blockchain and I do believe in lending platforms. I think a scam consists of not delivering what it promises. Although many good folks lost much, many almost everything to everything. Bitconnect delivered what it promised. Many initials investors quite literally are now retired. While others jumping from buildings like the stock market crash of 1929.
Hextracoin continues to poot poot along. Since the recent DDOS attack on Hextracoin, the investor community has hosted a long list of problems.
Following their social media channels, many claims on the successful sale of their HXT coins in the exchange, while others have sales pending for days, " like myself included ". Later to find out the sell order was canceled and price now doubled. While others are continuing to lend. At this point what other option are they leaving you with?
Since the DDOS attack, Hextracoin site went down for about 9 days. During that timeframe, no interest was paid. However, the site is back up now and functioning well. The interest rates are consistently good, and investors receive their fictitious USD interest value within their dashboard and convert for more HXT Coin.
However, with the inability to sell, these interest rates, coins are merely a number on your screen. Unless Hextra steps it up and opens the gates, I see this platform falling drastically along with the coin price, once their " Free Trade " is released in May.
In conclusion, I'm certainly not a financial expert, and investors should only invest what they can afford to lose. Cryptocurrency is the wild wild west at the moment with very little regulation and not guaranteed.
Although, neither is the stock market. Invest wisely.