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RE: Proof Bitconnect's Bot it Going Broke!
There is one thing that I don't understand. Why are you calculating with the Bitconnect/Bitcoin prices. In my understanding, the "Trading Bot" buys Bitcoin cheap and sells off Bitcoin at higher prices. And that is how he generates profit. Not by trading Bitconnect Coin against Bitcoin. So all these calculations make no sense, because you totally miss the point. You should do them, with the volume of Bitcoin and then we might see, that Bitconnect could eventually be real. I do have an active loan on Bitconnect, so my view might not be clear. But I think that you missed the point in this article, though I enjoyed reading it ;)
Yes that is the most reasonable argument against this. They could be first trading BCC/BTC then trading BTC/USD, which would not be captured in the volume of BCC/BTC. I can almost guarantee that BTC/USD has enough volume as you suggest to make this work. Your reasoning actually is very clear on that aspect. I hate to say it but yes what you have pointed out is the flaw in the argument, and I will admit that I am rather biased to calling it a scam. I will say when I looked at the math I think in an ideal scenario the bot could have moved about $730 worth out of BCC to BTC and beyond. You seem like a reasonable person and I am interested in your opinion. I have two questions. Why do you have a loan rather than simply holding the token? In almost any period longer than about 6 months the token has outperformed the loans and does not require you to lock up your capital. Two, if they are taking the BCC selling it to get BTC then trading BTC against USD or other coins, why make you convert to BCC then lend it to them? Also, do you really think the bot is real and the source of the profits. If it isn't real I don't know how they could be profitable in the long term.
I think there is a way for me to figure out the max they could have been trading BTC with at any given time and do the same kind of analysis. However, the volume limit won't be that of BTC, but what was the most they could have converted to BTC and USD. Now if we can assume the Bot is only allowed to hold BTC, USD, and BCC in various amounts this might work. If you want me to check if they were trading other alt coins against BTC I don't think I can. It will probably be two weeks before I get around to it.
Well, I think they do have various ways to earn money to pay their customers. 1. trading bot who makes profit with their own and borrowed BTC. 2. they hold a few BTC that we lend and profit from good BTC Price raise 3. we use lending program, they sell BCC against BTC. We buy 1000 coins for 5k in may, 180 days later we made 10k profit via lendig and try to rebuy BCC from lending wallet, for 15k (with capital release) we get only 150 bcc cuz they are worth far more, so they can keep the rest and profit from bcc price raise 4. they keep 0.25% from each exchange BTC/BCC & BCC/BTC. 5. i bring in a new referral who loans 100$, Bitconnect keeps lets say 20% of his earnings, over 300 days this is almost 60$, i get 7% referral bonus, thry keep the rest! All together this is a lot of money which they make. Might be sustainable. I dont know yet..
And it is not true that holding/staking BCC is more profitable than lending, IF you reinvest daily. With compound interest you will earn far more after a certain period of time. And BCC increased its value drastically since Junuary, there is no warranty for this to continue. Though it is possible.
I agree moeter. It is the compound interest that is key.The interest on interest is what will blow out. Just depends if people keep investing and bitconnect survives long enough ;)
Holding the coin also gives you compound interest. See the calculationgs in the comment I made to Moeter and you can see that over most time periods the token did typically outperfrom the lending.
Charlestines.com is correct. Since the loans are pegged at the initial loan amount in $USD for the term, the lender is paid a percent of the initial dollar value. The staker is paid a percent of BCC. So since if you loaned over $10,000 it would take 120 days for a ROC, the BCC price 120 days ago was about $50 (early July), so $10,000 would be 182 BCC tokens. 120 days later ( early Novemeber) the price of BCC is about $250, so to "return" the lender's capital Bitconnect would pay the user about 40 BCC ($10,000/250{$/BCC}). What happened to the other 142 BCC? The staker would've taken $10,000 worth of BCC in July, which would have been 182BCC. Fast forward 120 days, and they would have a BCC wallet with 182 BCC of principal. So assuming compounding (ignoring the $100 minimum) the lender would total $ 34,000 (($10,000 x 1.0125^120)-1) of interest, wheras the staker has made $14,500 (58BCC x $250{Nov. Price};58BCC = 182 BCC *(.08+.08+.08+.08{monthly stake interest})).
However, the lender's total is $44,000 ($10,000 principal + $34,000 interest), whereas the staker has $60,000( $250 * 182BCC principal + $250 * 58BCC interest). This even ignores the compounding of staking interest ((1.08^4)-1)
TL;DR take away over the last 4 months a staker would have $60,000 whereas a lender would have only $44,000 starting with the same $10,000 initial amount.
I agree that it won't continue haha. In all serious this though I think the results of lending and the coin are closely tied together. Using the volatility software on their site it says over the last six months the interest rate was 0.93%. So, if you were able to lend back every single dollar you earn $100 * (1 +0.0093)^(6*30) = $529.24. The coin last I check was $193.95 and 180 days ago (April 21st) it was $9.87. So, again if you invested $100 * $193.95/$9.87= $1965.05. Over any reasonable time period the coin has largely out performed the lending. Now I agree that won't last. In fact I speculate this is how they are making most of their money. Not from a bot. When token price increase no longer increases more than lending that to me is a signal it is about to end.
Over the last 30 days interest was 0.87% daily and the price of the token went from $106.84 to $193.95.
Lending: $100 * (1+0.0087)^30 = $129.68
Token: $100 * $193.95 / $106.84 = $181.53
Again I don't think it will last. However, if the token return doesn't do well and it is a Ponzi that won't be good. If it is a Ponzi it will have the same problem that Bernie Madoff did. Is started to collapse because the market turned and people wanted their money back.
I've made more then I lend, though I want to take it out my money stuck for a few more months.
That is great. I hope it works out for you. My personal opinion is that if you have money in it get it out as soon as possible. Sure you could make more money by leaving it in, but if it is a ponzi, which I believe it is, then you will just be making money via an illegal business.