The frenzy for the new BitconnectX coin is so high that the initial coin offering (ICO) has quickly sold out two days in a row.
BitconnectX's ICO opened yesterday and reached the daily sale limit of 261,333 tokens within hours. Today it took only a few minutes, according to comments on Steemit and Reddit. This, despite the BCCX coin being neither innovative nor a proven technology. Investors are chasing a dream that coins selling for $50 each now will somehow be worth much more once the ICO ends Feb. 23.
Tulips, people. Look it up.
According to the BitconnectX website, each day only 261,333 tokens are available for sale. The number represents the tokens available for the ICO (11.7 million tokens) divided by the number of sale days (44). Presumably, this limit was created to enable smaller investors to get their share of the tokens and to prevent "whales" (investors with deep pockets) from scooping up all the tokens on the first day of the ICO, which has happened with other high-demand ICOs.
But, the daily limits don't seem to be helping access much, because whales still have an advantage over the minnows. Each investor is limited to buying 100 BCCX every 24 hours. At the ICO offer price of $50 a token, that means anyone with $5,000 available can scoop up their daily allotment. In other words, 26,333 investors with $5,000 each to spend could shut down the daily sale within hours.
If 26,333 sounds like a large number, keep in mind Bitconnect has hundreds of thousands of users around the world, and some of them have very deep pockets. Dropping $5K a day would be like candy money for them.
Another explanation for the quick sell-out are the number of payments in the queue from the previous day's sale. Redditors and Steemians were complaining yesterday that transactions were slow, so their contributions were not being credited before the daily limit was reached. It's possible yesterday's contributions were credited today once the pipeline was opened at 12:00 UTC, meaning new contributions were again stalled in the queue.
I have no idea which is the case, because the BitconnectX team is being less than transparent about the entire scheme. The details of the ICO were kept secret until practically the last minute. So-called experts (promoters) were either being coy about not knowing what the ICO's purpose was, or they too were being kept in the dark.
Legitimate ICOs, meanwhile, are generally very informative about the goals and mission of their project well before the ICO launch. They usually publish a whitepaper detailing the technology behind the project and the specifics of its operation. BitconnectX and its predecessor Bitconnect have no whitepapers.
Other projects have also typically scheduled their ICOs to begin several weeks or even months after the initial announcement, as they take time to market their projects in the media and social media. BitconnectX, on the other hand, practically appeared out of the blue, with an announcement last month that the ICO would begin January 10, with no details what it was exactly for.
And once the details were available, it turned out the BitconnectX project purports to do the same things that a myriad of other projects already do quite successfully. We already have several blockchains enabling quick transaction times anywhere in the world, and there are dozens of exchanges -- both centralized and decentralized -- in operation; many offer the low transactions fees BitconnectX promises.
So why the hell is this ICO selling out so quickly?
I have some thoughts on this question. Feel free to comment on them.
Bitconnect from its inception in 2016 has advertised itself as a platform for the common person to make high daily returns on investments. And to be fair, it has largely succeeded in that mission, though the exact mechanics of how it manages to do it are still very obscure. I put in $120 in May and my total returns have been $395 so far, with no referral bonuses. More active boosters of the program have made hundreds of thousands of dollars, and these are not limited to the several vocal promoters extolling the virtues of Bitconnect on YouTube.
Bitconnect has made people richer than they were before. So, its operators have created a loyal fan base with the money available to spend on new projects. These same people are not deterred by the red flags popping up about Bitconnect and BitconnectX: the secretive nature of its operations, developers and officers, the lack of transparency about how the Bitconnect volatility software actually works, and now how the funds from this new ICO will actually be used. (Sorry, but saying some of the funds will be used for marketing, operations and administrative costs is still very vague, as we don't know who does the marketing, who is in charge of operations, and who are the administrators, and how many people we are talking about.)
So, we have a very loyal, well-off fan base lacking some valuable critical thinking skills, who all believe Bitconnect is the best thing since sliced bread, ready for the Next Big Thing that will make them all millionaires: BitconnectX!!
It's the perfect set up. The perfect con man's pitch. See how successful the first project was? Now, try our new project! It will be even better! Sign here.
I hope I am wrong. Otherwise, many people are going to realize next month that were cheated out of a lot of money to make a secretive team of operators very wealthy.
For other thoughts about the red flags about BitconnectX, check out this video by YouTuber DJNaydee (Begins at 10:35).
[This post is cross-posted at my website.]