The inevitable collapse of the MLM Lending model

[heallove]

MLM lending cryptocurrency as BitConnect does not create any real value. Therefore, these crypto can not generate profit for platforms paid to investors every month. So where does this money come from?

The first is from the value of Bitcoin. When participating in MLM Lending models, investors will have to transfer Bitcoin and buy the crypto of the Lending platform such as BitConnect to participate. Investors will keep Bitcoin, and the value of Bitcoin will increase dramatically in 2017. In fact, the amount of interest that investors receive is only a fraction of the value of Bitcoin.
Followed by the coming investors. This is typical of the Ponzi model - the most famous scam model in history. The lender will take the investor's money later to pay interest to the investor first. Thus creating a pyramid model, the multi-level MLM factor will help attract more new investors to participate.

So what happens when the Bitcoin value does not grow exponentially and the MLM Lending platforms have no new entrants? That's what happened with Bitconnect.

It is inevitable that these systems will no longer be able to pay interest to former investors. MLM Lending is actually a form of blood drawing of investors to feed the investor, without any value being created.

[131tc01n]

Sites like this are no longer worth to invest, because sites such as bitconek provide bait first and then lost to take the spoils.

[spiker777]

Yes, Bitconnect was reminiscent of the typically ponzi triangle, their rates were clearly unsustainable and have been called out numerous times in the past for this.

I think in future we will need an asset backed lending service, whether this be fiat, other currencies, formal loan agreements etc, as the risk of default with a crypto loan is so unusually high due to the nigh-anonymity. I suspect some levels of anonymity will have to be lost in order for a truly successful lending service to flourish. Though I'll be curious to see how it is eventually done, I will stay clear until it has proven itself safe (in the long term) for its investors.