What is bitcoin mining?
With more people using the internet for transactions and keeping records of their buying habits, cryptocurrency can become valuable. Bitcoin, Ethereum and other digital currencies are generated through complex cryptographic algorithms and transactions. Some companies have sprung up to solve the problem of verifying those transactions. These companies collect the transactions from their customers and place them in a database.
All that data is then sent to the owners, who can check the number of coins they’re owed, as well as the total amount of funds received. Once that’s taken care of, the coins can be spent in digital wallets or sold to exchange users.
Scammers, meanwhile, can grab the chance to mine and sell bitcoin on their own.
The dangers of bitcoin mining sites
The process of bitcoin mining involves users of computers running a script in a botnet in order to generate new coins, referred to as “mining”. It is not unusual for scammers to claim that they can automate the process and make bitcoin mining a profitable business.
Scammers often advertise cheap opportunities, so they can get an initial boost before operations really begin. The scammer might then try to recruit mining enthusiasts for their botnet by offering a monthly payout. After that, the scammer will start to steal the cryptocurrency – mining “business owners” generally prefer Bitcoin or Ethereum, but it’s also possible to mine Monero and Zcash.
Beware of scams offering generous “incentives” to sell the cryptocurrency you mine.
How to identify whether or not you are visiting a scam site
If you feel like you may have been duped by a fake site, here are a few telltale signs of a scam, according to the Better Business Bureau:
• Look for misspellings, typos, or sentences that are seemingly made up of random letters.
• Try to visit their site several times in rapid succession. It is easy to create a “spoof” site designed to look similar to the real thing.
• Try to find similarities in their logos.
• Watch out for spelling mistakes in the domain name.
• Think about how the company operates. Do they run their site through advertising, pay the moderators, or pay employees?
• Look into the company’s history, and consider how long they’ve been in business.
• Take special note of who owns the site.
While the word “scam” is often used to describe scam Bitcoin services, other types of scams exist. Most important to note, though, is that to avoid financial loss, it’s best to only invest money you can afford to lose. Investors shouldn’t risk their hard-earned money on something that’s too complicated. And especially at the beginning of the bubble, it’s important not to get caught up in the hype.