The Irish media wouldn’t shut up about Dutch Tulips. It was a Pyramid Scheme a few hundred years ago, presumably something to do with Tulips and everyone getting financially burned. Every time Cryptocurrency was mentioned on the radio or television, the broadcaster would come back with: ‘It’s a bit like the Tulips that time….’
Meanwhile, Bitcoin was now up to to over €18,000. There was a time less than ten years ago when it was worth a cent so you can imagine the amount of people that cursed the current lack of Time Travel. Their only option was to invest now and catch the train going forward. Enthusiasts claimed it would hit $50,000. Some said half a million. John McAffee, of Anti-Virus fame, promised to eat his own penis if it didn’t hit $1 Million in the next five years. It was all very exciting.
Tim told me more about Bitconnect. It was mostly about referrals and getting a dividend from the amount of people that came in after you. It appeared all the money went into a big pot of Bitcoin somewhere and as the price went up – everyone got a share of the profits. Obviously, the more people that invested, the more Bitcoin they could buy and the higher the profits for everybody. Those on the top of the ladder, who had the most referrals and invested the most, got the largest piece of the pie and so on down the line.
‘Your initial investment is ring fenced and is always safe. So you don’t have to worry.’ He said.
But I researched it anyway. After wading through a myriad of online pub talk about the Tulips I eventually found some sage advice. Bitconnect was indeed based on a pyramid structure and was under investigation by authorities in the US for contradicting a colourful amount of SEC and Financial Rules. Worse still, key people in the company were going missing, Social Media stories abounded about ‘….difficulties withdrawing funds….’ and people like MasterCard and Visa had logged the IP address and were refusing to allow purchases go through.
The diehards said this was all “FUD” or Fear, Uncertainty and Doubt, spread by those that wanted to bring Bitcoin down. They screamed all over Twitter and Telegram that Bitconnect was the future and everyone just needed to “HODL” another crypto term meaning – Hold on for Dear Life – a reference to the wild swings and fluctuations traditionally associated with the unregulated Crypto market. I think the main issue for the supporters was they got commission for referrals so a lot of people had recommended a lot of people who had recommended even more people who were all getting commission from each other which now seemed impossible to access.
In light of the drawbacks, I refrained from investing in Bitconnect and held off for another while to see if there was anything less cryptorisky out there. Eventually I found Coinbase and that’s another story. Meanwhile, Bitconnect was hit with a Cease and Desist order, went bust, and everyone went broke. Bit like the Tulips that time.