RE: Incentive trees and what we can learn from Bitconnect
They do not guarantee 1% interest in their fine print. People assume because people are getting on average 1% interest per day that it is somehow promised or guaranteed. The document stated it is not, this doc: https://bitconnect.co/bitconnect-learning/6/earn-bitcoins-by-referring-new-members
and
https://bitconnect.co/bitconnect-learning/1/what-is-bitconnect
So the fact based on their own rules is that the fluctuating daily interest is not promised and may not last forever. It is merely a profit opportunity, and the commissions also are not guaranteed.
The vital quote:
Why BCC price and BitConnect ecosystem will show upward movement over the time?
The coin supply channel has fixed steady supply of new coins, where coin demand channel is more strong and will take over the supply channel with more community members join in Bitconnect ecosystem and lend or stake their BCC.
The reason Bitconnect works is that it is deflationary. The lending program locks coins up and staking locks coins up. Lending is a lot like Steem Power. The only problem is we have to trust they will actually keep lock tokens locked up, but they have the same economic incentive to see coin prices rise as the lenders.
The only reason the price of BCC keeps going up is the circulating supply goes down when people lend. A brilliant system and if it were decentralized by smart contracts so we could see the locked coins it would be provably secure.
So what service does BitConnect provide to the world? All it does is create an artificial scarcity. It adds nothing to the world. We already have BTC and much better digital P2P cash. We have excellent lending platforms like https://www.saltlending.com/ While BitConnect is kept afloat by the new money coming into the system. Bitconnect is simply the most sophisticated ponzi ever put into action.
Network effect. Read their mission statement. They are providing the same service to the world that Facebook provides. Their mission is to make the world open and more connected (the old mission of Facebook).
All the people who say it is a scam never actually read the fine print on the website itself. I'm not even saying they will not shut down. Bitconnect exists to connect and educate the world on Bitcoin and cryptocurrency in general. It also exists to financially empower it's users which is something none other platforms can say.
And if you are afraid of Ponzi why are you in Bitcoin? Bitcoin is no different. Why do you use Facebook? It only connects you with other people just like Bitconnect. Maybe crypto is too risky for you and you should stick to the bank account where your government can keep you safe.
People are getting rich with Bitconnect. I suppose that is the reason why so many are upset about it being a Ponzi. If it were banks, Facebook, even early adopters to Bitcoin or Steem, no one dare calls it a Ponzi. I say it is tribalism and bias, which clouds the vision of people on the inside of it.
Anyone who is at the top of Bitcoin will claim it is not a Ponzi. Anyone at the top of Bitconnect claims the same. The truth is that all fiat are Ponzi and Bitcoin is fiat. I am okay with it being a Ponzi if it provides more opportunity for people than the traditional Ponzi banking system does.
Financial freedom is adding something to the world. Education on cryptocurrency is adding something to the world. Bitconnect is doing both at the same time, promoting financial freedom while educating the world on crypto. So as long as it keeps doing that, it is doing what they said it would do, and cannot be called a scam.
Consider that some people in the world take the perspective that the government is never going to give them any financial freedom. That no one is going to save them from poverty. That everyone, including the Steemit whales, are working to keep them poor and dissolute. Bitconnect is so popular because there aren't a lot of investment opportunities which actually are paying people. Those ICOs aren't paying people, Bitcoin does go up but it doesn't pay dividends or provide income while it does, Steem doesn't provide dividends or interest anymore, so Bitconnect is the place to be for those seeking freedom.
I say until Bitconnect stops paying people, it is helping people achieve financial freedom even if it is doing it without the moral or psychological permission from the crypto government (Vitalik, you, and others).