This program has STOPPED paying! Do not invest there!

A few days ago, we introduced the Bitzz investment plan in our “First Thoughts” article about the program.  Here’s what we said about the plan at that time:

Bitzz offers a single investment plan.  According to the website, “The plan we currently offer is the same, no matter how much you invest. You earn a constant hourly profit of 0.2% as long as you keep your investment in the project.  You have the option of choosing any amount of investment, depending on your ultimate goal and the size of your profit.  Other plans with other trading companies offer a daily profit rate that depends on how much you invest. This means that you will usually only get a reasonable return on your investment if you invest large sums of money.”  In addition, you can request your principal back at any time.  However, there is a cancellation fee of from 30% to 100% of your investment.

I used the live chat feature of the website to ask how these fees work and was told that, on the first day, the fee would be 100%.  Every day after that, the fee would decrease by 3% down to a minimum withdrawal fee of 30% of your investment.  So, no matter how long your investment has been in place with the company, you will always lose at least 30% of it when you decide to withdraw it.  So, you might say that this is a “perpetual” investment plan minus 30%!

When we look at a company’s investment plans, we always try to determine how profitable they are and, on the other hand, what the company’s chances of long term survival are.  Bitzz only has one investment plan, which simplifies things for us in this respect.  However, as I just indicated, there is a fee to have your investment returned and this fee depends on how long your investment has been in place.  This complicates things a little.  And, finally, since the program is “perpetual,” we don’t have a definite term to work with.  The only way to handle that is to make a few assumptions.

First, since the fee to withdraw your deposit decreases 3% per day, it will take around 24 days for you to get down to the minimum fee of 30% that is required.  So, let’s assume that we won’t withdraw our deposit before, say, one month — 30 days.

The gross interest that the investment plan pays is 0.2% per hour.  Multiplying this by 24 hours per day, you get daily gross earnings of 4.8% per day.

OK, getting back to our 30-day example, the total gross interest that you would receive in this period would be 144% (4.8 x 30).  Subtracting your 30% fee from this, your total net earnings would be 114%.  If we divide this be the 30-day length of the investment period, the daily net interest (DNI) will be 3.8%.

In HYIP Insights #12, we suggest that programs based on investment plans with DNIs higher than 2% might have a poor chance of long term survival.  So, in that light, Bitzz could be a risky investment choice.  However, it would also be a profitable one.  After only 30 days, you are making 114% profit.  That’s a LOT.  So, a $100 investment in this plan would give you a NET profit of $114 after one month.

This plan is very lucrative for two reasons.  First, the interest rate is high.  Usually when a plan offers interest in this range, it does NOT return your deposit at all and, instead returns it as part of your earnings.  So, the fact that this plan charges you a 30% fee to let you withdraw your interest is a GOOD deal.  Most plans offering you this level of interest don’t give it back to you at all; you might say that they charge a 100% fee.  Second, this plan is perpetual.  Once you invest, you keep on getting returns FOREVER.  Most plans have a finite term and you have t o invest again — with new money — to continue to earn.  Unfortunately, while these “features” of the program are attractive for the investor, they are extremely detrimental to the survival of the program.

I had a little bit of trouble understanding precisely how the variable fee works in the investment plan.  So, I worked out a spread sheet to help me understand things.  Here it is:

Example:  Investment = $100
Day Gross Fee Net
n G= P(n*i1) F=P(1-(n-1)*i2)
0
1 $4.80 $100.00 -$95.20
2 $9.60 $97.00 -$87.40
3 $14.40 $94.00 -$79.60
4 $19.20 $91.00 -$71.80
5 $24.00 $88.00 -$64.00
6 $28.80 $85.00 -$56.20
7 $33.60 $82.00 -$48.40
8 $38.40 $79.00 -$40.60
9 $43.20 $76.00 -$32.80
10 $48.00 $73.00 -$25.00
11 $52.80 $70.00 -$17.20
12 $57.60 $67.00 -$9.40
13 $62.40 $64.00 -$1.60
14 $67.20 $61.00 $6.20
15 $72.00 $58.00 $14.00
16 $76.80 $55.00 $21.80
17 $81.60 $52.00 $29.60
18 $86.40 $49.00 $37.40
19 $91.20 $46.00 $45.20
20 $96.00 $43.00 $53.00
21 $100.80 $40.00 $60.80
22 $105.60 $37.00 $68.60
23 $110.40 $34.00 $76.40
24 $115.20 $31.00 $84.20
25 $120.00 $30.00 $90.00
26 $124.80 $30.00 $94.80
27 $129.60 $30.00 $99.60
28 $134.40 $30.00 $104.40
29 $139.20 $30.00 $109.20
30 $144.00 $30.00 $114.00

 

The spread sheet shows what would happen with an investment of $100 into the Bitzz investment plan.  The first column gives days; the second gives your gross earnings ($4.80 times the number of days); the third gives the fee (that starts at $100 and decreases by $3 per day till it hits $30); and the fourth gives your net earnings (gross minus the fee).

As we already discovered, after 30 days (n=30), your net profit would be 114%.  This is the same as saying that your net profit on $100 would be $114.  You can see a lot of other things by looking at the spread sheet.  For example, if you decided to close your account after 10 days, you would be charged a fee of $73 and you would wind up LOSING $25.  However, remember that this is a lot better than the typical investment plan that doesn’t return your deposit at all.  In that case, you would have made $48, but you would have lost your entire $100 investment giving you a net loss of $52 — which is a lot worse than losing only $25 in this plan that charges you a fee.  The point is that the fee isn’t a bad thing in a plan like this that offers a high interest rate.  Still looking at the spreadsheet, you can see that you will finally break even at day 14 when your net return becomes a positive $6.20.  Compare this to the situation where your deposit is not returned at all and it would take 21 days for your earnings to reach $100.80 (the column labeled Gross in the spread sheet) — which is when you would break even in that case.

Leaving the spread sheet, let’s assume that you leave your investment in place for a longer period of time.  Let’s assume a 90-day investment period.  In this case, your total gross earnings will be 432% (4.8 x 90).  Deducting the 30% fee from this you get total net earnings of 402%.  Dividing this by the 90-day length of the investment term, you get a DNI of 4.47% — around 4.5% per day.  This is REALLY a lot.  In a week’s time, you are effectively earning over 30% (4.5 x 7) profit!  Again, that’s in ONE WEEK!

It is hard to believe that a program offering returns this large can be sustainable.  However, we would LOVE to be proven wrong on this.  The HYIP business is full of surprises.  Perhaps Bitzz will be one of them.

I hope that this information is helpful.

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