It is very easy to fall in Bitcoin mining scams. Even savvy investors have fallen into them. In this post we will unveiled how Bitcoin mining scams occurred and what need to be done to spot and avoid them.
What is Bitcoin mining?
There is a need to get how Bitcoin works in order to understand Bitcoin mining scams. Bitcoin is different from regular money as we know it nowadays. The regular one is produced in form of notes (banknotes) and coins by a country’s government or a group of countries (like The European Union). Countries Central banks are the only authorized institutions to print them. Those notes are exchanged for products and services. The value of a country’s currency value could be manipulated by central government -Argentinians know what I mean-.
Bitcoin is different. It is a virtual currency that is not controlled by any institution. The beauty of Bitcoin is that it’s a decentralized system that gives the opportunity to anyone to get involved in its system and functionality.
Bitcoin transactions are recorded in a public ledger accessible to anyone in the world. It’s called the Blockchain. On the blockchain are recorded all transactions since day one. The process of adding transactions records on the blockchain is called Bitcoin mining.
Each bitcoin transaction is verified and confirmed by miners for a fee. At least five confirmations is the norm for a transaction to be accepted. Every transaction’s verification demands the scanning of the entire blockchain to avoid re-spending of coins. It therefore needs a high computational power to be fast and absorbs a lot of electrical energy.
Bitcoin mining involves also the introduction of new coins into the system by producing each time a proof work. The probability to get the right data is as low as getting a piece of gold mining. That work is also rewarded by some coins.
The difficulty in Bitcoin mining and the high computational power it requires give way to many Bitcoin mining scams.
Beware of the mining field you’re heading to. It may be a scam
Many bots are Bitcoin mining scams
Let be frank. That personal computer you’re using is too slow to mine bitcoins. There are dedicated computers that have the capacity to mine bitcoin. Those kinds of computers are also voracious in electrical power consumption. If you purchase one and operate it in your Berlin studio your electricity bill will be close to a restaurant’s. It’s probable you won’t get any bitcoin at the end of the month either.
When you are proposed a bot to install on your computer for mining you’re dealing with a scammer.
Those bots and software that proliferate online are nothing but Bitcoin mining scams. For effective mining one need a rig of specialized and powerful computers. The cost of electrical power in most western regions is not fit for such endeavor to succeed. No wonder the mining business has migrated to China. In southern America too it’s possible due to cheap hydro-electric power.
Don’t buy any software or bot for your personal computer in order to mine bitcoin. It won’t work.
A Bitcoin mining rig
Mining investment scams
These kinds of bitcoin mining scams are subtle and difficult to apprehend.
A guy comes online and announces that he is building a powerful set of bitcoin mining computer ASICs that will crash competition and get the lion’s share in rewards and fees. However he needs some funding to build the gadgets. Investments are welcome and will be rewarded with large profits when the operations start. The “new Steve wozniak” packages the message brilliantly with videos, banner ads and radio commercials. Many will not hesitate to invest in such a “promising venture”.
Months later, our new Woz fails to deliver. He refuses to answer emails and calls. He has actually moved to the Bahamas islands to enjoy the fruits of your labor.
Bitcoin mining is already overcrowded. There are big players investing millions of dollars in the sector. Cautiousness is required these days to avoid Bitcoin mining scams. Other avenues in the bitcoin ecosystem are more favorable. The next time someone approach you with a dubious Bitcoin mining deal, please run for your life.
