Cloud mining enables users to mine bitcoins or other cryptocurrencies without managing the hardware. This page is dedicated to the analysis of the risks related to this practice and for each one of those tisks I am going to give you a few hints that will teach you how to minimize them.
Note that this article is part of the series "Cloud mining: the ultimate guide", I recommend you to read the whole guide before investing. In fact, it is not reasonnable to spend any money on cloud mining unless you are well-informed about the risks and the potential benefits of your decision, otherwise you might just end up mismanaging your assets.
Risk #1 : it might be a scam
The vast majority of cloud mining services that you can find online are actually scams. They use a fraudulent investment operation called "Ponzi scheme", which consists of paying the old investors with the funds given by new investors. At some point this scheme stops working, this means that the service provid…
Bitconnect is an interesting concept - it is a platform where people can invest their cryptocurrencies and earn interest on investment. There is nothing wrong with this idea, it could work on paper. However, if you take a closer look at what is really happening in this particular case, you can see that there are big red flags everywhere.
First red flag - Ridiculous interest rate Bitconnect "reliable" interest rate is about 3-5% per week. Think about it for one second, Bitconnect can get you in one week what the most prestigious investment fund struggle to do in a year. Keep in mind that if something is too good to be true, it usually is. Here is what BitConnect promises you:
Second red flag - We do not know how it worksWhat is the technique used by BitConnect to get those ridiculous interest rates? Well, they say they are using bot trading. Fair enough, bot trading is far from a revolutionnary technique and it is often used in finance. However, bot trading has never been clos…
The story behind this piece of art is really interesting. The so called BearWhale hold about 2000 Bitcoins at the end of 2013. Selling most of them, he rode Bitcoin’s price all the way down to $350, losing over two-thirds of his wealth. Those epic transactions can be viewed here.
The irony is that"the last Bitcoin supper" was sold on Ebay for 2900 US dollars (see the auction here).