EDITOR’S NOTE: On August 22, we were able to learn a few more things about AMBIS, the business referenced below as the “A” in the “ABCs.” We’ll share those below in the section marked “ABCs – A is for AMBIS.”
As a result of our continued due diligence, we have no choice but to remove all affiliate links for the AMBIS program. We’ll explain the reasons below.
Bitcoin, the original “cryptocurrency,” spawned hundreds of other currencies, but it also spawned a few other ways to potentially earn passive income through your crypto investments.
Since we’ve been at it here – this website goes back to March of this year, you can read our first post here, and “my how we’ve grown” – we’ve been able to try out quite a few sites that can potentially add passive crypto income to our wallets (and, of course, to yours as well). They fall into two general categories: (1) Lending and Volatility Trading and (2) Mining and Staking.
This post will walk through the ABCs of Passive Crypto Income but, to be honest, we’re more familiar with the machinations of category (1): Lending and Volatility Trading. We’ve dabbled in mining and staking sites, and we’ll continue to do that as the days go by. But, since we know more about lending, bot trading, and using volatility to your advantage, we’ll devote most of our time to that. (We’ll give you a link to two mining/staking programs that you can explore on your own; we promise a more exhaustive study in the next few weeks.)
Throughout this post, you’ll find AFFILIATE LINKS and banner ads – clicking on them and signing up through them can give us an affiliate commission, and we’re most grateful for your support. The more signups, the more time we can devote to continuing to study this space, and the more valuable information we can continue to bring you.
It’s time, though, for the CAVEAT and DISCLOSURE stuff: this is not investment advice, not trading advice, and you should seek the counsel of an investment professional, a financial professional, and your tax and legal counsel. Past performance does not guarantee future results. Bitcoin and cryptocurrencies are highly speculative instruments – do not spend more on them than you can afford to lose.
Let’s Begin: Lending and Volatility Trading Explained
If you’re familiar with Michael Lewis’s book Flash Boys, you know that there’s serious money to be made with high-frequency trading. Buying and selling securities – even sometimes the same security – over and over again, even with tiny profits of pennies per trade, can lead to huge profits.
Bots have taken over the stock world: automated trading strategies, featuring algorithms that look for those edges and take advantage of them, are really nothing new.
So imagine a world that is closer to the Wild, Wild West, in that these are currencies and tokens that are not regulated, decentralized, and entirely made up of ones and zeros. It should be no surprise that bots are trading crypto over and over and over again. And that’s where these platforms enter the picture.
Ah, another method to our madness: three sites that we will share these AFFILIATE LINKS for start with those letters:
- A is for AMBIS – which we can no longer recommend, see details below
- B is for Bitconnect
- C is for Control Finance
But the one we’ll focus on in this explanation is Bitconnect. Here’s a flashy banner ad for ya:
The reason we’ll start with Bitconnect is because they appear to be leading the industry, and that’s due in no small part to the coin that powers Bitconnect, BCC.
Its market cap as of this writing is rather huge ($658m) and its supply is low (6 million and change), which helps us to breathe easier.
Bitconnect calls it “Lending” because you are actually loaning BCC coins to them for them to power the volatility trading software. There is a term for the deposit you make; depending upon the dollar value (minimum of $100), your deposit is locked up for as many as 299 days.
In exchange for your lending your coins to them, they pay you interest on your deposit.
Here’s a chart of their recent interest payments:
Time for the caveat about language: we’re dealing with sites that are decentralized – Bitconnect’s most recent confab was in Thailand, so that’s the best guess as to where the closest thing to its nerve center might be – and ones whose websites are likely written by committee, written by computer programmers, and not written in plain English. I think the last sentence is actually the opposite of what’s at work here: if there is more volatility, there tends to be more interest paid back.
Here come the obvious questions:
If this is interest paid out DAILY, how in the heck is this possibly sustainable? How do I know this isn’t a pyramid or a Ponzi scheme?
There is no guarantee that any of this isn’t a house of cards. I’ll give you a couple reasons why it is likely legitimate – but I will also stress the fact that, with ANYTHING IN BITCOIN AND CRYPTOCURRENCY YOU MUST USE CAUTION.
Reason 1: Options and Derivatives
I look at these animals as somewhere in the same phylum as options and derivatives. In those cases, you’re not actually owning the security, but you’re owning a certificate that either gives you the right to purchase the security (an option), or a stake in a pool of whatever asset you’re getting a derivative of.
If you’re loaning your bitcoins to one of these platforms, you are sorta kinda purchasing an option or a derivative – it might be closer to, let’s say, a “Gold ETF.” It’s set to the price of gold and it is maybe a demand deposit in that you have $100 of gold if you have $100 of a gold ETF, but no one ever actually asks them to shave off the exact amount of gold.
Reason 2: Verified Returns
I’m a small player here – what is called in the trading vernacular “a minnow” – but I have 38 days worth of results to at least look at.
Here’s a snapshot from the Bitconnect site itself:
(Yes, I took a screenshot at the exact moment the site was refreshing.)
Here’s a copy of my Excel spreadsheet, showing where we started (July 10) and where it stands now:
I’ll talk a little more about the details below. But I want to share reason three next:
Reason 3: The Underlying Coin and the Blockchain
This is why I give Bitconnect the most ringing endorsement of the three lending and volatility trading sites I am using: the underlying coin (BCC) and the blockchain itself.
There is no argument that there’s more than enough froth in this market behind ICOs (Initial Coin Offerings), token sales, and cryptocurrency startups. The perception is that some of these ICOs are nothing more than the sock puppet behind Pets.com – limited business acumen, not much of a business plan, and a whole lot of buzz that eventually leads to an implosion.
In the case of Bitconnect, as we mentioned above, their coin is large. It is of course possible that their coin’s value could implode, or that Bitcoin’s value could implode, or both things could happen at the same time. But with the inflation control put in place in their own coin, and the inflation control in Bitcoin itself, stability – while not guaranteed – is more likely to happen with Bitconnect.
Then, once you have all transactions visible on the blockchain – as is the case with AMBIS and Control Finance and yes, those are AFFILIATE LINKS – you have less potential for an overnight disappearance.
Once again, and I’m going to say it over and over, these sites are not without risk. The blockchain and cryptocurrency is not without risk. So we’re presenting all of this information to help you potentially manage your risks; you will need to make your own decision as to whether you have the appetite for these sites.
Back to Bitconnect (the “B” in the “ABCs”)
You’ll see on the spreadsheet that I invested $110 on the 10th of July, then invested $20 again on the 26th of July. That was a “newbie error” on my part.
With Bitconnect, you need to manage your own account, and you are responsible for compounding the interest if you so choose. (We don’t have to tell you about compound interest and that Einstein said it was the most marvelous thing ever.) Bitconnect’s minimum reinvestment is $10, and reinvestments must be in multiples of $10.
We mentioned that your funds are locked down, but your interest isn’t. You can choose to reinvest it, or you can take the money out and do as you please. We choose to compound it because, let’s face it, that’s where the potential for real growth is.
Each reinvestment is, in effect, a new loan to the platform – and you’ll have to decide if you want your money locked up for, in this case, 299 days.
If you’re a “whale,” you may see value in holding onto your interest until you can invest a large enough sum to get the daily bonus. We’ve seen folks do that – and you can do the cost/benefit analysis of time vs. returns. You might not want your funds held up for the better part of a year, and that’s cool. Your call; we haven’t achieved whale status yet, so we haven’t done that math.
As we mentioned last week on this site, this is an experiment. Heck, all of crypto is an experiment. As for Bitconnect, it gets our largest thumbs up of the three sites.
Here’s that banner ad again if you want to sign up:
ABCs: A is for AMBIS (Updated August 22)
After further due diligence – as referenced above – we decided to remove the affiliate links.
We cannot recommend this program, for the following reasons:
- They are not up front about the fact that they keep your Bitcoin. The phrase “Principal is locked forever” appears only on the front page of the site – it should be a more blatant warning, in our opinion.
- Returns are only valid for a seven-day period (in our case). After that, you’re relegated to a 1% interest – still not bad, but…
- The “Principal is locked forever” really does smart. Bitconnect will give you your money back after a period of time (120 days is the shortest), and Control Finance APPEARS to allow you to withdraw your money.
- What else gives us extreme pause? The CEO, “Bradley Gough,” is a tough person to actually find on LinkedIn or anywhere else – and the company makes him sound like some sort of Bitcoin guru.
The heart of the team is our CEO, Mr. BRADLEY GOUGH. He’s been dealing with Bitcoin & Blockchain since 2011 & his ideas have always been innovative & ahead of time. AmBIS start was planned by him back in 2010 when he attended a conference dedicated to new Blockchain startups. It’s since 2010 that he’s been working on the concept with 2 more developers, Jan Grunnis & Mike Pearson, who have coded the main product of today’s Ambis – the perfect Bitcoin trading bot – AmbisBot.
Other partners in the team are Jack Wonderbilt, Tim Hankins, Lara Copeman & Dennis Krongmann. They are responsible for marketing & finance & report directly to CEO. We’ll be expanding our team in the near future.
Words like “perfect” are always tough to live up to.
IMHO, stay far away. We cannot recommend Ambis.
ABCs: C is for Control Finance
This one falls somewhere in between Bitconnect and AMBIS: Control Finance (AFFILIATE LINK) has pluses and minuses that give us a little more pause than Bitconnect, and less pause than AMBIS.
- The interest rate is a sustainable 1%.
- Website might be the slickest of the three.
- Name is okay and at least doesn’t make you start Googling for the acronym (like we did with AMBIS; something about Automation and Bitcoin and Investments).
- Instead of locking down your Bitcoin for a fixed term, you get the 1% for as long as you have an account.
- Their banner ads are so over-the-top that I won’t share them.
- Language skills are really pretty bad.
AMBIS has a US LLC – whether that puts your mind at ease, I don’t know – and Control Finance is incorporated in the UK.
Screenshots for this one:
We started small here: our original investment, counting transaction fees, was $105.31 worth of Bitcoin; while we put in $103.46 (good work finding low transaction fees, eh?) we received a bonus of $3.10 for signing up. Our starting balance was $106.56 on the site (so the bonus paid for our transaction fees and a little bit more).
Net net? We are up 6.34% in just a week.
We set this one to compound automatically, so we’re good on that front. We’ll just have to see how this one grows, too.
Other Thoughts on Passive Income
Passive income platforms abound in just about every industry – so it makes sense that these would start to follow in crypto. You’re going to have to ask yourself whether you want to focus on building a team (which is common in multi-level marketing, or MLM) or just sharing knowledge and looking for people to use your affiliate link.
In either case: this is actual work. For instance, I’ve lost track of the hours I’ve devoted to studying and researching the cryptocurrency space. I’m more than happy to walk folks through the basics – I did that just this week with a friend who was making his first purchase with Coinbase (yes, another AFFILIATE LINK), and it honestly doesn’t concern me so much if someone decides this whole crypto world isn’t their cup of tea. Or if they get into one of these programs and use their own affiliate or referral link so they can be compensated.
Two things I’ll suggest – and this is not investment advice or legal advice or any of that:
- Spread out your risk. Gosh, we’ve probably talked about that throughout our journey here. If you have all of your eggs in any basket, that could spell trouble.
- Do the math but don’t get carried away. You can find tons of videos on YouTube that talk about the staggering compound interest possibilities here. All can cause for minor heart palpitations – the good kind – but there’s, again, tremendous risk in cryptocurrency.
Wow…More than 2000 Words!
That’s right, we’ve told you lots about this world. And we’re here for questions: be sure to follow TeamMetacoin on Twitter and Facebook for more insights.
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