Bitconnect - Legit or Ponzi?

After all that's been talked about this cryptocurrency, it's hard to figure out how to start this post.
It wasn't even among my plans to write about it, but since it hit the top 10 in market cap, they deserve to be analyzed.

WHAT THE COMPANY CLAIMS AND HOW THEY DELIVERED

Summing it up, Bitconnect company offers a cryptocurrency, BCC, that works the following way:

• First you deposit your Bitcoin to their platform.

• Once done, you use their exchange to convert your Bitcoin balance into Bitconnect Coins (BCC).

• Then you lend your Bitconnect Coins to their platform, where their trading bot will give you a minimum guaranteed interest rate over your principal (investment), depending on the amount you decided to lend.

On the following image, you can see how the payouts work:

Volatility Software Interest refers to their trading bot, which claims to make profit out of the price fluctuations of bitcoin against USD.

In the following image, you can see the daily interest rate that the software has paid out during the last 5 days, apart from the minimum guaranteed percentage:

So the last five days, if you have made an investment of at least $10,010.00, your profit has been:

6.76% = 5.51% (from the bot) + 1.25% (from the guaranteed profit)

It looks quite impressive, at least.

Now, let's take a look at their Projected earnings calculator, a tool from their website which uses their past performance to predict your future potential reward.

For the example, I will use a $10,010 investment, and their average interest rate of the last 6 months (the longer the period, the more accurate prediction).

Here's the result:

So according to Bitconnect, if I decided to invest $10,010 and forget about the money for 180 days, not only would I receive $19,279.26 as a profit, but I also would get my $10,010 back, making a total return on investment of $29,289.26.

As much as I have been digging around the net, I have not seen a single negative comment with evidence about failure to pay out, and there's a huge amount of positive feedback, both from people who have successfully invested, and those who are using the referral program to benefit from the juicy reward (7% from referred's investment)

WHAT I THINK, ON A PERSONAL LEVEL, ABOUT THIS

To me, there is no doubt whether this is a legitimate company or not, and I believe that deep inside, everybody knows this.

However, this does NOT MEAN that it's a SCAM!, as much as I am against they way it is promoted.

First of all, we have to take into account that whatever the intention of the creator/s is, this is a very well thought strategy.
The return on investment in paid on USD, and not on the amount of Bitcoin that you deposit or lend, as you can see from their FAQ:

At the same time, the following graph shows the price of BCC against USD, since the launch of the platform:

You can see that the price started at around $0.16, and now lies around $57.44, which means a 35,900% increase in price.

Finally, the following graph shows the volume traded on the markets where BCC is exchanged:

This shows that almost 100% volume comes from Bitconnect website, which means that tokens don't leave the hands of their owners, who are profiting from the huge price increase of their token.

At first, before digging into the company, I thought it could be nothing but a complete scam.
A clear ponzi scheme, such as all these hyip scams that pay old customers with money from new customers until they either gathered enough money to run away or they ran out of money to keep paying.

Nevertheless, after analyzing all what's into this company, there are two possibilities in my mind, which are the following:

• Most likely to me, they are a company who figured out the best strategy I have ever seen, to hype a certain product or service, and make its value increase exponentially.
  By this I mean that they created a scarce token (BCC), which would grow in demand if people felt they needed to buy it, whatever the cost.
  They attracted clients with a reward that at first sight seemed as the holy grail, and they delivered what they promised.
  When people started investing and successfully receiving their profits, trust started to increase, attracting more new investors, and skyrocketing the price of the token.
  Here is where the genius part comes. They pay in terms of USD, so if you made an initial investment of $10,010, and bought 62,562.5 BCC at a price of 0.$16 and lent it, using the projected earnings calculator, you would have made around $19,279.26 as profit, plus the $10,010 principal.
  If you were the real owner of those BCC, and simply held the coin without lending or trading it, your initial $10,010 investment would be worth $3,593,590. And that is what the owners have made, minus the insignificant amount they paid to their clients.

• The second, and for me less likely option, is that they started out with the intention to scam people, and found themselves with a tool that had the potential to make much more money by staying active than by running away.

Whatever the truth is, I do not believe there is such thing as a trading bot, and that is the reason why I call this a non-legitimate company.
However, with or without bot, they are managing to pay their clients up to date, and that's the reason why I say that although they are not legitimate, they are most likely not a SCAM.

SOME FURTHER THOUGHTS

As I have suggested with other companies such as EOS, the plan behind this company could go even further than mentioned before.

If we take into account that over 90% of the volume is traded on their website, and being such volume much lower than direct competitors, it would not be surprising if the Bitconnect team was in charge of increasing the price of the token, to attract even more and more customers, and make them deposit their Bitcoin.

Also, there's the fact that Bitcoin has gone up in price significantly since the launch of the Bitconnect platform, much more percentage wise than the interest rate they offer their clients.
So even if my two previous hypothesis were wrong, just out of the amount of Bitcoin raised from clients they could have made a huge profit and still paid out their obligations.

In the end, the only ones who know the truth are those behind this project, and sooner or later we will see what this was all about.
Meanwhile, as an investor, I prefer to stay out of this type of project.