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8Aug 2018 - News

How To Detect A Cloud Mining Scam

 

With prospects in cryptocurrency well established, some investors are also looking at digital coins from a miner’s point of view. Many individuals and companies are employing cloud mining renters, as the profit potential remains. Although a bugbear of the community that mining can be monopolized by big players, it hasn’t stopped countless individual miners joining their ranks.

Cloud mining projects allow many users to skip the barrier to entry required in establishing a bank of mining rigs. These users find that employing cloud mining companies can be an easier route into digital mining.

 

That said, there are unfortunately many opportunist operations emerging within the cryptosphere that have nothing but their own profits in mind. Users that wish to avoid wasting time and money on scam offers should apply the five basic steps of due diligence that follow.

1. Look at popularity

Seasoned enthusiasts will know where to scrounge for snippets about a company online. Newcomers should do extensive Google searches, read comments on Reddit and GitHub, Facebook, Twitter and elsewhere. Cointelegraph and Coindesk, as well as other industry sites, are good places to visit when looking for a gauge on a company. Users can Google “Company X reviews” that generally reveals the prevailing market sentiment towards the cloud mining crew.

2. Social media

Apart from employing Facebook and Twitter and others for user comments, look at the cloud miner’s presence on these sites. Most scammers won’t make much of a splash at these venues.

 

Even if the outfit has a page, if it’s formulaic and poorly populated, warning bells should start ringing. If the page is made of standard, prefabricated content, it lacks any real value. Users should also investigate likes, company posts and photos to get some depth on a company.

3. Transparency counts

Any cloud miner faces a now-standard issue when entering the marketplace. Besides posting basic details of the offer, the company needs to be able to reassure users that they are, in fact, a real-world setup truly busy mining cryptocurrency. It’s a bit of a gray area, as many value their anonymity, as do their clients at times, but it’s also a fair ask.

While perhaps not a deal-breaker, it’s common practice to ask a cloud mining company for a snippet of proof that they are legitimate. Details on servers and setup should be validated with photos and company details, or a very fine reason why these are not available.

4. Avoid any company “guaranteeing” profits

Just as with legacy trading, any company that claims to never lose or that guarantees that users will profit is misinformed at best, and positively lying at worst. Although marketers pitch the profits as an understandable lure for users, there is a fine line between encouraging users to try their hand at thins, and guaranteeing great returns.

Profit in digital asset mining is a variable that no mining company can control, nor should make promises about. The legitimate mining pools have a different discourse, where everyone is frank about the nature of mining.

5. Check the mining pool’s public mining address

One of the best reassurances of a company’s legitimacy comes in the form of public bitcoin mining addresses. It is of course possible that a scammer will post fake addresses. Users should look within the pool domain for signed blocks. Better yet, a new user can ask the pool to sign a block as evidence, and the greater the investment, the more likely it will be a granted.

Following some basic diligence will help users avoid scam outfits in the cloud mining arena. Users should fully peruse a company’s offer, as clever wording at the outset can often mask small irregularities or even outright bogus claims further into the site copy.

As with digital exchanges, mining outfits need to hold legitimacy and security up above them in order to qualify as a potentially valid option. Any legitimate company will go to some lengths to onboard new users, and make an effort to demonstrate their bona fides.

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