Since the crash of bitconnect, there has been a lot of FUD about lending platforms. Are they scams, Ponzi schemes or does the trading bots actually exists?
Nobody really knows for sure. There’s a common saying going “If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck”. But why do we hate on ducks so much?
If we recognize it as a duck we will discover, that duck tastes delicious, that you can make a Wonderfull pillow from the down and you might even have a wish come true, by getting the bigger piece when breaking the wishbone. What I’m trying to say here is, that you can STILL make a lot of money on lending platforms regardless if they are Ponzi schemes or not.
So how do you do this?
- Get in early
You need to get into these lending platforms early and watch the price rise. The really big risk of these platforms comes when you buy in at 100dollars a coin in a platform that is 4 months old and then reinvest all your money because you are blinded by the concept of compound interest. While this is very tempting, chances are that the platform will crash before you get your investment back and then you have lost A LOT of money.
Recognize that all lending platforms are probably Ponzi schemes, so the strategy is to get in early and begin taking profits as soon as possible. It's never a great feeling to see a 20k loan vanish from one day to the other, but if its all house money and you managed to take out 20k in profits along the way, things a not that bad after all. That 20k in profits can be turned into millions if you invest it right.
- Diversify your investment.
With big money comes a lot of scammers and investing into ICO's is a high risk/high reward business, so you need to diversify your investment. If you invest into 10 different platforms you might get scammed a couple of times, but if only one of them becomes the new Davorcoin you will have made your investment back tenfold. The ICO stages is usually the time when you can get the coins cheap and you will be able to make a loan at a significantly higher price than your initial investment once the price goes up. But ICO's are risky. You never know when you might get scammed.
Another way to minimize your risk of getting scammed is to get in right after the coin goes on the internal exchange. Sometimes you will be lucky to see the price drop way below the ICO price as it recently did with Bankcoin. If you can get in a that point, you can be pretty sure that if they wanted to exit scam, they would have done it after the ICO.
- Take profit along the way.
Don't be blinded by the idea of compounded interest.
Let's say you invest 200 dollars into an ICO and the price goes up 10 fold. You will then be able to make a 2k loan and draw profit from that until the platform crashes (which it will do). With a monthly profit of up to 48 percent, you will need the platform to run for 2-3 months in order to justify lending and not selling. If the ICO is successful and the platform goes live, the chances of that happening are pretty good. Bitconnect lasted for a little over a year and I believe it's a good measurement for how long a lending platform Ponzi scheme can last. This means that you would be able to take approximately 8k out of the platform for your 2k loan. This is significantly less that the compounded interest of 2000 dollars over the period of a year, but it is real money, that you can invest into solid projects or other ICO's and THAT is how you are going to get rich of lending platforms.
This is my strategy for beating the lending platforms at their own game. If used correctly, you could make a lot of money to. Its all about building your investment portfolio one step at a time and can be a great way of exploiding the current maket situation to your advantage.
Until next time.
Yours sincerely
The Jan-man