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Cloud mining a scam or not?


UPDATE March 2018: Since we are in a bear market the conditions from November 2017 no longer apply. Since Bitcoin price is lower now than in December and the difficulty has increased so the returns are less now, however if you believe Bitcoin will this year surpass the 20K of December 2017 you can still invest. The returns (in USD) are smaller at the moment due to the lower price of BTC so keep that in mind.


Hashflare has a limited promotion currently that gets you a 30% discount is you use this link with this code HF18INET404


People hear about the great returns you can get with bitcoin and having a passive income mining coins is something that almost sounds too good to be true. It’s basically printing your own money so to speak.

But mining coins is a bit technical, your profit depends on how much you pay for electricity, the mining pool and your hardware. So to avoid all this hassle people are looking to buy into cloud mining. Basically you buy from a company that configures and sets up and maintains mining rigs for you at a set price per hashing rate. Of course this comes at a price and your return is lower than if you handled all the mining yourself.

One question I get a lot is but why would cloud mining companies sell to us if they could just mine for themselves? For sure they mine for themselves too but a company needs to pay taxes in fiat money, dollars or euros and cryptocurrency although you can exchange it for fiat money is highly volatile. Imagine the scenario where bitcoin collapses to half it’s current price, it has happened before and most likely will happen again. Now in this scenario, they invest in expensive hardware to get a negative return on investment. So in order to spread the risk they sell future earnings in crypto to you. This way they spread their risks over their clients and they can upgrade and expand their operation without being too affected by the volatility or without having to borrow money from the bank.

Cloud mining is risky as there are plenty of ponzi schemes doubling up as mining companies. Do not invest your money into just about any site that has the words cloud mining on it. I’m gonna refer in this article to genesis mining which is a reputable could mining company with a solid track record of over 2 years with real mining equipment in Iceland.

Most people that invest in cloud mining lose money and call it a scam. Basically they underestimate the increase in difficulty and the maintenance fees that eat away the profit making it almost impossible to break even.

So how do you make money with cloud mining? Is there a strategy to be succesful? YES THERE IS!

As mentioned there is the problem of increased difficulty over time. In order to offset that difficulty you need to reinvest your earnings to buy more hashing power. Of course if all you can invest is less than $200 don’t start it’s not worth it. If you go into mining go big. Invest at least 2K or more. This guarantees daily pay-outs that you can reinvest.

I’LL REPEAT: IF ALL YOU CAN INVEST IS less than $200 DON’T START IT’S NOT WORTH IT. (don’t comment it’s not working if that’s what you did)

Lets explain this in an example:

Update currently Genesis offers currently only a new plan (1/27/18) for ETH mining but this Monero example still stands as a method on how to calculate your potential profit.

2 Years Monero Mining contract of 5000 H/s using the cryptonight algorithm

On www.coinwarz.com we can calculate our return on investment. To do so we put our investment as hardware cost and put pool fees and power costs at zero since these are already included in the purchase price at Genesis.



At the current difficulty we are break-even before the end of the year. On a 2 years contract we more than double our investment. However difficulty is not constant but variable and usually goes up over time. So return will most likely be less. However with increase in difficulty we usually have increase in value of the coin and this offsets a lot of the losses due to difficulty changes.

So how do we prevent losing money? The secret is compound interest. As you can see our monthly earnings are $420 dollars this allows us to buy more hashing rate every month. This buys us about 500 H/s per month changing our total hashing rate to 5500 H/s. This ups our monthly earnings to $462.20 And effectively allows us to overcome the difficulty. If we keep on doing this every month we effectively are increasing our monthly return and we’re staying ahead of the difficulty changes while our coin gains in value over time.

The strategy is to keep compounding until we make over 1K month or more depending on your goal. After that reinvest 80% take out 20%. Every new investment runs for 2 years from the purchase date. This strategy allows you to create a steady monthly income that eventually becomes as high as your initial investment but keeps paying out every single month. You might have to switch coins or tweak strategy as time goes by but it’s perfectly possible to generate passive income.

If you found this strategy useful and you consider investing in mining crypto you could get a 3% discount (use code: TX8YQy in combination with this link) and copy my successful strategy.

I only recommend these Genesis and Hashflare because others have turned out to be scams and these 2 have been operating for 2 years+ without a problem. We also know Genesis has real mining equipment as we know from their facilities in Iceland (see video higher up).

https://www.genesis-mining.com/a/945777

If you rather invest into Hashflare instead of Genesis there is a promotion currently that gets you a 30% discount is you use this link with this code HF18BDAY30

“HashFlare 2.0: is coming soon!

Which plan to pick for most profitability? (Hashflare)


Note on 2018 -1-27:

Genesis currently has one plan available:

  • $1520 buys you 40 MH/s
  • 2 Years Ethereum Mining * (Mining Start 30.04.2018. – No refunds)
  • No maintenance fee!

That’s cheaper than Hashflare which costs 880 dollars + maintenance fee for 1 year for the same hashing rate!

At Hashflare that is currently 660 dollar but only for 1 year and it comes with maintenance fee.

https://www.genesis-mining.com/a/945777

Update 23 March 2018: 
There’s a new Hashflare promo if you use this link with this code: HF18BDAY30 you’ll get a nice 30% discount (for the first 10000 people!)

If you’re into trading crypto currency via bots you might also be interested in the following article (https://medium.com/@yeong.crypto/review-of-cryptohopper-351b0a2f2a8f)


The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

If you have no money to spend on mining try this:

https://www.genesis-mining.com/a/945777

How to buy Bitcoin?


A question I get a lot is how do I buy Bitcoin and how do I convert bitcoin back into fiat currency.

Some people are really convinced you need to mine it or that you can’t get it exchanged for dollars or euros. That is no longer the case, it’s actually fairly easy to buy and sell bitcoin.

An overview of the 3 different types of bitcoin brokers of course there are many more but these I have used myself so I can vouch for these.


COINBASE (link)

https://www.coinbase.com/join/59e88ec4eef34f0110cb52ac

Coinbase was founded in 2012 and is based in San Francisco has about 10 million users and traded 50 billion +. Coinbase, available to users in over 33 countries as of 2017, is the world’s largest Bitcoin broker. Customers can buy bitcoin with a connected bank account, SEPA transfer, Interac Online, Credit card and many more payment methods.

Coinbase offers its brokerage services in the United States, United Kingdom, Canada, Singapore.

Coinbase also supports the following European countries:

Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Finland, France, Greece, Hungary, Ireland, Italy, Latvia, Liechtenstein, Malta, Monaco, Netherlands, Norway, Poland, Portugal, Romania, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland.

PROS

  • High liquidity and buying limits
  • Easy way for new users to buy bitcoin
  • Instant buy available with credit card as backup
  • All orders above $100 get a one time gift of $10 worth in free bitcoin

CONS

  • Limited payment methods
  • May track how its users spend bitcoin ?

Changelly (link)

https://www.coinbase.com/join/59e88ec4eef34f0110cb52ac

Changelly is a Bitcoin but also an altcoin exchange. Users can shift between coins without depositing coins to the exchange.

PROS

  • Easy and convenient way to switch between altcoins
  • No personal information required to use, direct payment with credit card
  • 11 languages supported

CONS

  • /

BISQ (link)

https://www.coinbase.com/join/59e88ec4eef34f0110cb52ac

Bisq is completely decentralised exchange, in fact it offers an open-source desktop application that allows you to buy and sell bitcoins in exchange for national currencies, or alternative crypto currencies.

PROS

  • Instantly accessible — no need for registration or approval from a central authority.
  • Decentralized — there is no single point of failure. The system is peer-to-peer and trading can not be stopped or censored.
  • Safe — Bisq never holds your funds. Decentralized arbitration system and security deposits protect traders.
  • Private — no one except trading partners exchange personally identifying data. All personal data is stored locally.
  • Secure — end-to-end encrypted communication routed over Tor.
  • Open — every aspect of the project is transparent. The code is open source.
  • Easy — we take usability seriously.

CONS

  • Sometimes low volume

LocalBitcoins (link)

https://www.coinbase.com/join/59e88ec4eef34f0110cb52ac

For some users not living in a 1st world country it can be more difficult to obtain bitcoin. A solution might be LocalBitcoins it’s a global Bitcoin exchange that allows users to trade bitcoin similar to how people sell goods on eBay.

PROS

  • LocalBitcoins is one of the most private ways to purchase bitcoins
  • In some countries it is the only way to buy bitcoins
  • It allows you to buy bitcoins with many payment methods

CONS

  • There are many scams and you need to be careful
  • Fees can high when buying with cash as it offers a way to anonymously buy bitcoin sometimes even with money obtained through illegal channels.

DANGER!!! CRYPTO WALLETS, SOFTWARE BASED & ONLINE ARE BEING HACKED DAILY!


Recently a lot of famous “cryto” youtubers have been hacked, some of them used Exodus, a really well designed and easy to use wallet that supports many coins. However somehow malignant hackers have compromised lots of accounts lately.

Some background info on how crypto is stored

  • A “wallet” consists of ECDSA keypairs. A keypair is made up of a “public key” and a “private key” and both are used to encrypt or sign bits of data. The public key, as the name suggests, is public and known to everyone. If you encrypt data with this public key the holder of the private key alone is able to decrypt it. Anything signed with the private key can be verified with the public key as to originate from the true originator. All Bitcoin addresses are made up of such a keypair — the “address” you use to send or receive bitcoins on is the public half and the private half is in your wallet.dat file.
  • The “blockchain” is a database of transaction information that’s constantly growing and is sent out to the nodes in the Bitcoin network. When you engage in a transaction, that transaction is distributed to the network and if the transaction is valid, will be included in the next “block” . This blockchain data is what assigns your bitcoins to you. So your money is NOT stored on YOUR WALLET in bits and bites as some people assume.

So even in the advent your house burns down, your harddrive fails or your hardware wallet fails you can STILL access your bitcoins or other cryptocurrencies as they still exist on their respective blockchains. All that is needed is for you to hold the private key to unlock your wallet elsewhere.

So the main message here is to never ever give you private keys away! Never store any keys or 12 word phrase anywhere on your computer or the internet.

Also Exodus one of the most popular software wallets sends out a recovery email with a link. Store that link on an encrypted folder or drive not in your email! All they need to do is hack your email and boom, they’re halfway into your wallet.

What these hackers also do is run keyloggers they installed on computers via viruses (trojans, worms or fake software) on people’s computers and record everything they type or screenshot their screens in the background without them even being aware of it. That’s how they get to your password, now they only need the recovery email and they can empty your wallet.

Or you might have entered your private key somewhere on a website not really aware of the danger. At minimum you should print or even better write they keys and 12 words down on a piece of paper and store that in a fireproof safe!

Now most of the hacking happens online as it’s not even necessary to access a computer’s wallet to take the coins, remember the existence of your coins is a transaction that proves you’re the holder of those coins. So most coins lost are due to careless storage of private keys. People store it in their emails, on online notes, on their Dropbox or Google Drives.

Here is some advice you absolutely want to avoid. Just so you didn’t misunderstood:

DON’T FOLLOW THE ADVICE OF THE FOLLOW YOUTUBE VIDEO! JUST DON’T UNLESS IT’S AN EMERGENCY SITUATION.

Why is the above video bad information? Basically he tells his followers to avoid the high Exodus fees by using blockchain.info instead to send money around. Saving money is good but not when it compromises your security. To access your coins on there you need to provide them with your private key.

First of all you are trusting blockchain.info with your private key. Secondly all it takes is one rogue Chrome or Firefox extension that monitors that site and injects code to capture your private key.

Also if you store your crypto on Coinbase or any other exchange, don’t do it if you intend to keep it there for long term investment. Exchanges have been hacked before (Mt Gox) and some even take your money if they have any suspicion you violated their TOS.

Check which apps connect to your Facebook, Dropbox, Google accounts …etc. Minimise the amount of apps that get access to these accounts. Enable two-factor authentication on sites that offer it. This makes it 1 step harder for hackers to gain access to your data.

Google offers such a service & so does Microsoft, both have apps for your phones


For a more practical and safe solution use a hardware key.

Please trust me get a hardware wallet you don’t want to wake up and see all your hard earned money gone!!!!!!

The 2 most famous hardware wallets

NANO LEDGER – France (€58*)

Pincode Ledger Nano

https://www.ledgerwallet.com/r/84ec

Ledger Blue — France (out of stock)

A more sophisticated version of the nano.

Ledger Blue

TREZOR – Czech Republic (€89*)

Trezor

https://www.ledgerwallet.com/r/84ec

  • *+taxes may apply.
  • Also it’s best to buy directly from the manufacturers and not of eBay or some shady site that might sell them for a cheaper price. This way there is no chance a middleman can compromise the key before selling them to you.

Alternative ways to earn crypto coins.

In this post I’m going to detail a few ways how you can increase your amount of cryptocurrency without the need for knowledge of trading or mining.

  1. Buy Coins that pay dividends for holding the coin in a wallet, these are called Proof of Stake coins: Dash, NEO, OKCash are a few that pay dividends, depending on the Coin it returns between 1 to 10% a year.

(technically speaking not all the coins mentioned are proof of stake coins but they still pay a sort of dividend)

https://neotogas.com

You can claim NEO just by pressing the Claim … button

3. Put your money on a profit sharing exchange: like Coss.io. Advantage over cloud mining is that you get to keep your principal. 50% of the transaction fees are redistributed to holders of COSS Coins.

NOTE: Coss.io has promotions going when they add new ico tokens.

COSS.io is a Cryptocurrency exchange, with future goals to be a payment processor & USD Exchange.


4. Lend your money to entrepreneurs: via Bitbond and get a fixed return on investment

https://neotogas.com


5. Cloud mining, outsource the technicalities to a third party. You have to be careful here as many scams exist some of the more reliable cloud mining companies: Genesis Mining and Hashflare or GCC mining. In order to be profitable with cloud mining read my article on Cloud mining, it requires a minimum amount of investment and you need to be compounding profits to be profitable plus it also depends also on what you mine.

https://neotogas.com
https://neotogas.com
https://neotogas.com

6. Work for bitcoin

You could try to apply for a micro-task or a job that pays your salary in Bitcoin

7. Gamble for bitcoin

Although I don’t recommend gambling there are sites that accept bitcoin or other alt-coin and allow you to gamble with it

8. Invest in HYIPs, certainly the most risky as this is really scammer territory. The more “reliable” companies here (as far as you can call it that way) are UsiTech (several months). Others which I successfully tried so far are Podret (4 month so far).
I certainly don’t advise anyone to invest in those unless you can afford to lose your principal. Hexabot, Bitpetite, all took off with the money people entrusted them with, Bitconnect bailed out and left people with a worthless coin. It’s basically a gamble, you’re warned.

9. Faucets and Games, basically sites that pay you for your visit mainly supported by ads, payout is very low but it does pay you in Satoshis, a hundred millionth of a single bitcoin. Not really worth it imho. Unless you have plenty of time. That said they used to pay in bitcoins years ago sometimes even 1 bitcoin for a visit 😂. If only we had known.

10. Browser mining: Cryptotab has created a way to mine Monero using your browser which is then converted and paid out in BTC. Of course the amounts that you can collect this way are small, but buy refering others you can build it up so it becomes profitable.

11. bots, let the bot do the work, although to be fair most bots require some degree of knowledge of technical analysis, when setup well they can increase your amount of coins without much extra work. (https://medium.com/@yeong.crypto/review-of-cryptohopper-351b0a2f2a8f)

12. Promote exchanges that reward you for referring people. Binance for example gives you a cut of the transaction fees from your referrals!

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

This trading bot saved my ass!

Note: this bot is currently offline due to changes on Bittrex policy.

For a cheap alternative with free trial check:

https://medium.com/@yeong.crypto/cryptohopper-the-unique-affordable-tradingbot-c3836ab88192


I decided to try out this bot to trade for me! I was sceptical at first because I’m a natural control freak and it’s not easy to give up control to a “bot” especially not when my money is involved.

I stumbled upon some youtube channel and the guy on there was explaining he used a free bot and was genuinely impressed by the results. Since it was free I thought why not give it a try.

The bitcoin requirements for the bot to operate with are relatively high for someone starting out. It requires a minimum amount of 0.5 Bitcoin. At current prices that may be too much for some but it is necessary for this bot to function correctly.

Note: they’re now enforcing the 0.5 Bitcoin

This bot I used is a completely automated, web-based trading system that anyone can use. No download or installation necessary.

So how does it work?

Actually it can’t be easier. This bot does not hold your money, it’s not like investing into Bitconnect where you trust a third party with your investment. Of course you have to trust the exchange you’re trading on but if you’re trading manually now you’re already doing that.

Currently the bot only runs on Bittrex but other exchanges will be added. Another requirement is that you hold at least 500 RBY coin in your Bittrex account other than that it’s 100% free.The reason for this is that the bot was made by the creators of RBY coin and part of the deal is you buy RBY. The bot checks if you have that amount on your account. I guess that way their coin gets more volume and higher price on Bittrex. But if you decide to stop using the bot you just sell your RBY coin back to Bitcoin.

The bot, according to the developer, uses AI to learn about the coin-pairs you’re trading, not sure whether that is true but I do know it uses a simple strategy of buying on down moves and selling on up moves by placing two orders at the same time. Each time it places a buy order it also places a mirror sell order at the price +1% sometimes it cancels orders when the market goes up to sell it at a higher rate but mostly it just settles at 1%. When the market goes down the bot averages the price down until it can sell at a profit again when things go up. This last feature actually saved me yesterday.

I put a lot of money on a coin but too early before I had proper confirmation of trend (read: I was greedy) and when the trend didn’t go as I expected I lost over a thousand dollars in less than half an hour. Normally I would have set a stop loss but I was so confident (read: hubris) it would go up that I didn’t. In a case like this I usually cut my losses and move on. But this time I thought let the bot handle this and trade his way out of it and went to bed. Next morning low and behold the bot made hundreds of trades and averaged down, meanwhile the market recovered and it had sold half of my coins for a profit of 1% on each trade, the rest I could sell during the uptrend.

Now that you know how the bot operates it becomes clear why it needs a lot of bitcoin to operate with. If it only makes 1% trades and hasn’t got enough money to work with it’s not really worth it barely covers your trading fees and your returns are minuscule.

Here’s an example of the bot with less than 0.1 BTC 1/5 of the requirement.


As you can see most trades are even less than a dollar of profit. So unless you can invest enough it’s not worth it. So the 0.5 Bitcoin is really necessary for the optimal functioning of the bot.

You can select up to 5 coins to trade against Bitcoin, this is a limit imposed by Bittrex.


For each of the 5 coins you can choose Market Liquidity, Slow Exit, Slow Accumulate. Market liquidity will basically trade your coin constantly, Slow exit let’s you take profits and exit a coin, Slow Accumulate let’s you accumulate coins. The bot will do so whenever it’s best to buy or sell.
On the Market Liquidity page you can set how much importance the bot has to give to a particular coin in this case POWR 50% and LTC 10%, so you basically divide your 100% among your coins.


Now how does this bot access your money on Bittrex in a safe way? Do you give it the password to your Bittrex account? Hell no, never ever do that! Bittrex has an API that allows external apps to access its platform and you can set a public and secret key for the application as you can see you can set the key to only allow reading your portfolio and trade with limit, market trades and withdrawing money is disallowed.

When you create the keys the secret key is visible for a limited time. You need both keys for the bot.


This bot does what it promises it never settles a losing trade but on the downside the gains are too small if you can’t put 0.5 bitcoins on your Bittrex account for it to work with. Another downside is it only trades against bitcoin as it’s aim is to increase your amount of Bitcoin. That way it’s gains are largely impacted by bitcoin going up or down.

For more info check out this tutorial:

https://steemit.com/cryptocurrency/@stoner19/traderdaddy-com-tutorial-v2

Now what if you don’t have 0.5 Bitcoin to invest? You can still get a bot that works with smaller amounts of capital but most of these bots aren’t free. However they are far more configurable and can pull in a lot more profits as they can be configured and backtested (tested with market data from up to 32 weeks back in time).

It’s not the aim of this post to go into detail about those other commercial bots but here are the most popular bots listed in case you want to learn more about them.

The most popular commercial trading bots are:

1. Haasbot

https://steemit.com/cryptocurrency/@stoner19/traderdaddy-com-tutorial-v2

This is a very advanced bot that offers a lot of possibilities and configurability. It basically has 3 different bots. A classical trade bot that executes automated trades, an arbitrage bot used to profit off of the price difference between many different currency-pairs and an order bot that executes when certain market conditions unfold. The site also offers video tutorials to get you started

Price: 0.035 BTC for the beginners license

2. Gunbot

https://steemit.com/cryptocurrency/@stoner19/traderdaddy-com-tutorial-v2

Gunbot is another highly configurable bot that trades on multiple exchanges.

Price: 0.089 BTC for the starters pack

3. Leonardo

https://steemit.com/cryptocurrency/@stoner19/traderdaddy-com-tutorial-v2

The cheapest one of the lot, has less options and strategies but also offers a nice interface for manual trading on different exchanges some of which have horrible guis. So even if the bot might not cut it because it’s too simple, the software itself is worth it for the manual trading interface.

Price: $89

Conclusion

If you are short on cash try Leonardo, if you have more money to burn I’d say go for Haas as it’s the best value for the money. If you like configurability and a large community pick Gunbot. If you have 0.5 Bitcoin, don’t know much about technical analysis but want a first try at bots pick Traderdaddy.

Please note that running a bot does NOT mean you will automatically get high returns. A badly configured bot will lose you probably more money than you could do yourself, you still need to learn the fundamentals of technical analysis.

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.