Bitclub Network Ponzi Scheme – Don’t Fall For It.
The Bitclub network was launched in August 2014; it successfully recruited 500 founder members shortly thereafter. According to a Bitclub meeting I attended recently; the club has since grown to over 17 000 members.
The Club describes itself as a team of experts, professionals, and programmers who set up the Bitclub membership for the average person to cash in on Bitcoin.
I see BitClub Network as a multi-level marketing (MLM) company that has identified the Bitcoin hype as an opportunity to exploit people who know very little or nothing about bitcoins, bitcoin mining, or bitcoin investments.
This BitClub Network Review will show that Bitclub network is a just a underground pyramid (or Ponzi) scheme riding the massive bitcoin wave. Please do not fall for their effective but deceitful marketing tactics.
1. How does bitclub work
Bitclub states that it has developed a software system that optimises the performance of their mining hardware, and manages allocations of mining profits to bitclub network members.
As a bitclub member, you’re not only entitled to share in the mining income, but you are also entitled to commission payments for referring new members to the club.
To become a bitclub member, firstly, you must pay the once off membership fee of $99.00. Secondly, you must join one of the 3 available mining pools:
Mining Pool #1 – Purchase a share for $500 and earn income daily for 1000 days straight to your account paid in bitcoins. 50% of the income will be reinvested back into the mining pool, and will increase your share in the mining pool
Mining Pool #2 – Purchase of a share for $1000 and earn income daily for 1000 days straight to your account paid in bitcoins. 40% of the income will be reinvested back into the mining pool, and will increase your share in the mining pool
Mining Pool #3 – Purchase of a share for $2000 and earn income daily for 1000 days straight to your account paid in bitcoins. 30% of the income will be reinvested back into the mining pool, and will increase your share in the mining pool.
There is an option to buy into all 3 mining pools for $3500 and become a founding member.
In addition to receiving daily mining income, bitclub will also reward you with referral commissions and bonuses provided you also refer your family, friends, work colleagues or any other people you can attract to the club.
I found a 2014 bitnetwork club presentation that explains the referral bonus system nicely:
1.1 BitClub Binary Commissions [Click to read]
1.2 BitClub 2 Level Matching Bonus [Click to read]
1.3 BitClub Level Up Team Infinity Bonus [Click to read]
Bitclut does not allow US citizen to join the club anymore; it is now focused on the third world and developing countries. South Africa seems to be their primary target.
2. Who is the owner/s of bitclub?
When Bitclub Network was launched, it was stated that people starting bitclub would deliberately remain anonymous in keeping with the spirit of Bitcoin founder, who remains anonymous.
However, I have recently come across a post claiming that Russ Medlin is the founder (and owner) of bitclub network.
3. Is bitclub network operating real cryptocurrency mines
A Business Insider article dated 13 August 2015 reported that Bitclutb network was the 13nth biggest bitcoin mining organisation in the world, accounting for 1.33% of bitcoins mined each day.
So Bitclub does operate a real Bitcoin mine, that is not in doubt.
However, if you have an interest in bitcoin mining, you will know that 3600 new bitcoins were released each day (1800 after the halving). So 47 (1.33% of 3600) bitcoins per day were produced by Bitclub network last year (August 2015).
Whether the production of 47 bitcoins per day was enough to pay members a decent return for their share, we will never know for sure because we don’t have enough inside info to perform the calculations.
When one takes into account that those 47 (now 23.5 after bitcoin halving) bitcoins should pay for bitcoin mining equipment maintenance costs, electricity, labour, rental costs, etc... as well, it becomes obvious that BitClub bitcoin mining is probably not profitable at all. Remember that 23.5 bitcoins have to be shared amongst the current 17 000 BitClub network members.
I know some people will argue and say that Bitclub is also generating income from other altcoins. Take time to visit crypto currency exchanges such as Poloniex.com, you will see that the value of other coins are very low compared to bitcoin's value. So bitcoin mining, and perhaps ethereum, are the main source of income for BitClub.
However, even if the mining is not profitable, it is not a problem for Bitclub owners or administrators as the members were never promised any profits from mining as stated in the Bitclub network guide.
So essentially what this means is that if members lose money, they cannot blame or hold anybody accountable as Bitclub administrators have made it clear that they don’t know if the mining will be profitable or not.
The question is why anyone would spend so much money establishing a bitcoin mine when they know that the chances of making money from it are slim?
The answer is simple; bitcoin mining is not the core business of bitclub network.
The core business of Bitclub is multi-level marketing; the business of recruiting and building teams for the sake of extracting money from team members.
Bitcoin mining is just a side show, a ruse to keep authorities at bay and attract people who know very little about Bitcoin mining to the business.
4. Is Bitclub Network a Ponzi scheme?
Before I attended a bitclub business opportunity meeting recently, I would have said that I am not sure if Bitclub network is a Ponzi scheme or not.
But after the meeting, I was convinced that Bitclub Network is a sophisticated Ponzi scheme.
If there’s one thing Bitclub network is good at, it is explaining the bitcoin concept very well. About 55% of the meeting time was spent explaining bitcoins and bitcoin mining to potential members (victims), 5% explaining membership and bitclub mining, and about 40% was spent explaining referral compensation plans.
It is clear that a big chunk of the money meant to purchase shares (mining equipment) in Bitclub network is directed to referral commissions and bonus payments.
In the meeting, we were told that a motivated member could easily make $23 000 per month from just recruiting family members, friends, and other people, especially if they recruited as well
The $23 000 referral commission will not emanate from mining new bitcoins; it will be sourced from new members who joined the network.
Using money from new members to pay members who joined earlier is a perfect definition of a Ponzi scheme. So, in my opinion, bitclub network is a Ponzi scheme.
Study the Bitclub Level Up Infinity Bonus slides (section 1 above) carefully, and you will see that a huge percentage of the share purchase money is directed to paying recruitment bonuses. Not only that, a percentage of the income from bitcoin mining is also used to pay team building bonuses.
5. Can you make money with BitClub Network
The answer is yes; you can make money from bitclub network. But the money won’t come from mining new bitcoins; it will come from bringing in more victims into the system so that you can be rewarded with their lucrative team building bonuses, namely: Binary Tree Commission, Level Matching Bonus, and the Infinity Level Up Bonuses.
Bitclub network business operandi is the same as Dragon Mine’s operation, so I will give the same advice.
If you’re a good networker and want to make a quick (unethically) buck from inviting new people into the system, then join bitclub network and make money. But if you want to make money from bitclub bitcoin mining, then forget it, it is not worth it.
The chances of even recovering your initial capital are slim, let alone making a profit. Even the so called legitimate bitcoin mining companies such as Genesis Mining have been offering clients unprofitable mining contracts.
6. Alternative to Mining Bitcoins
Trying to invest in bitcoin by mining it is unwise. It is better to buy it because experts believe it has a bright future; its price is expected to skyrocket over the next few years.
Therefore, making bitcoin part of your investment portfolio is a great investment strategy. You can invest in bitcoins by buying them
Knowledge is power. If you are thinking about buying and holding bitcoins, then I recommend you register for a bitcoin 'buy and hold strategy' course at Udemy. Navigate to Udemy website and type "bitcoin" in the search bar, then select any one of the dozen available video courses.
If you have an appetite for risk, there are legitimate alternatives out there. My current favourites is eToro Copy Trading System.