Introduction.

Since writing the “First Thoughts” article for Colobit (read it here), I discovered that they have a very informative and professionally done video introducing their program.  You can access the video by going to the Emily News monitor listing for Colobit and clicking on the word “Introduction” on the small video icon.  It will take you straight to the video.

I’ve thought a bit about what I wrote in the First Thoughts article concerning how the Colobit program works.  I think I was pretty much on the money.  If, in addition, you watch the video, you will get additional insights into their unique arbitrage approach to trading cryptocurrencies.  I wonder why this approach hasn’t been used, for example, in the trading of “normal” currency pairs — Forex trading…

Months ago, there was an HYIP online that used arbitrage betting to make money on sporting events.  In that situation, different book makers give different odds on who the winner of an event will be.  When trading cryptocurrencies, the published exchange rate is essentially the currency exchange’s prediction of the winner/loser of a currency trade.  This seems to be the identical situation to betting on sporting events.  Here’s what I wrote about arbitrage betting in the review of the sporting event program.  It might help you to understand the Colobit process…

Most commonly, this type of betting is applied to sports events because they occur on a very regular basis. People are constantly placing bets with book makers (bookies) who typically offer slightly differing odds as to who the winner and loser of an event might be. By carefully considering these differing odds and by betting certain amounts of money with different bookies on both outcomes of the event, it is possible to make money no matter what the outcome of the event is. Most commonly, this is called a “sure-bet.” Sounds simple? Not really. A good deal of math is involved and timing is of the utmost importance as the odds offered by different bookies can change at any time. Furthermore, you might have to bet a sizable amount of money in order to make a significant profit — one worth the trouble of going through all this.

I suspect that the last sentence of this explanation tells you the reason why Colobit is seeking outside investors in their venture…

The Colobit approach to cryptocurrency trading appeals to me.  I have a scientific background and I would much rather try to earn some money on a procedure based on math rather than on predicting the movements of the very volatile cryptocurrencies.  The Colobit procedure is based on science.  The normal procedure is based on crystal ball gazing…

The Colobit Investment Plans.

As indicated in the First Thoughts article, Colobit offers three investment plans:

The first plan pays you 115% of your investment after 15 calendar days.  The second pays you 0.21% hourly for 40 business days.  And, the third and final plan pays you 120% per month for three months.  All of the plans have a minimum investment of 0.003 BTC and a maximum of 50 BTC.  As you might have guessed, your return is included in your earnings for all of the plans.

Let’s take a look at the plans one by one…

The first plan is easy to understand.  Since your investment is included in your return, your total net interest for the investment plan is 15%.  Averaging that out over the 15-day investment period, you get a daily net interest (DNI) of exactly 1%.

The second plan is a bit trickier to understand as we are talking about HOURLY interest and payment on BUSINESS days.  First of all, since there are 24 hours in a day, 0.21% per hour translates to 5.04% per day.  Let’s round this off to 5%.  I suspect that this is what the folks at Colobit have in mind.  At the end of 40 business days, the total gross interest that you will earn will be 40 times this or 200%.  Since this includes your initial investment, you have to subtract 100% to get your total net interest.  This will also be 100%.  When comparing the profitability of different investment plans, we always compare their effective DNIs.  However, they are based on CALENDAR days.  There are roughly 22 business days in a 30-calendar day month.  Using this same proportion, you find that 40 business days is equivalent to around 55 calendar days (30/22 x 40).  So, averaging the total net profit of 100% over the 55-calendar day period, we get a DNI of around 1.82%.

To complete the picture for this investment plan, we should also find out when it will break even.  That’s easy to determine.  You divide 100% by the daily interest of 5% to get 20 business days.  Just like before, we can convert this to calendar days to get around 28 calendar days (30/22 x 20).

For the third plan, you earn 120% of your investment every month.  For the three-month (90 calendar day) period, your total gross return will therefore be three times this or 360%.  Subtracting 100% from this because this return includes your investment, you get a total net interest of 260%.  Dividing this by 90 days, you get an effective daily net interest (DNI) of 2.89%.

Maybe this is enough for now.  In Part 2 of this review, we’ll compare the profitability of the three investment plans as well as look at a few other features of the overall Colobit investment program.

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