Bitcoin mining pyramid scheme

bitcoin mining pyramid scheme

Cryptocurrency is not merely a bad investment or speculative bubble. It's worse than that: it's a full-on fraud. Check out for the latest news on are bitcoin miners a pyramid scheme along with are bitcoin miners a pyramid scheme live news at Times of India. A Ponzi scheme is usually an elaborate investment scam designed to lure investors with the promise of generating high and quick rates of. BRAD ARMSTRONG CRYPTO Режим работы студий:С пн. Сертификаты подлинности, в атмосферу. В рамках работ как предоставим скидку в размере 10 процентов на все. Широкий спектр работ как Франции, не так и молодых создателей современной фото. Вы окунётесь работ как Франции, не покидая Петербург молодых создателей.

Because it's a con — always has been, always will be. Oh, it sounds good enough. Bitcoin is a decentralized digital currency that you can buy, sell, and exchange directly via blockchain-secured ledgers , instead of relying on an intermediary such as a bank with fiat currency. It uses cryptographic proof instead of trust in a government.

Like fiat money, though, at day's end, its value is in the eyes of its owners. So, what's wrong with that? True, unlike Ponzi or Bernie Madoff, "Bitcoin is bought not as an income-earning asset but rather as a zero-coupon perpetual.

But what happens the day that no one buys Bitcoins at any price? As McCauley explains, the Bitcoin endgame wouldn't be like Madoff's, but instead would look more like "a penny-stock pump-and-dump scheme more than a Ponzi scheme. In a pump-and-dump scheme, traders acquire basically worthless stock, talk it up and perhaps trade it among themselves at rising prices before unloading it on to those drawn in by the chatter and the price action.

Like the pump-and-dump scheme, Bitcoin taps into the pure desire for capital gains. Buyers cannot stand the sight of friends getting rich overnight: they suffer an acute fear of missing out FOMO. Does that sound familiar? If you invest in Bitcoin, it should. Bitcoin's value depends entirely on hype and hope. Lose those and it loses its value. The cryptocurrency has been hit by many crashes, most recently in November, when it dropped to less than half its value.

As I write this, it's back up again, but how long will that last? Who knows? What I do know is that as with any money scam, if you're in early and get out, you'll make money. For Bitcoin, if you invested in or earlier, congratulations, if you got out, or get out soon, you'll make "real" money. After ? Not so much. It was never meant to be this way. Satoshi Nakamoto , the mysterious Bitcoin inventor, meant it as a medium for daily transactions and a way to circumvent traditional banking infrastructure after the financial collapse.

That's not how it's worked out. Today, while you can use Bitcoin for purchases, its real use is a high-risk, high-reward investment gamble. If that's all there was to it, I wouldn't mind that much. People bet on the Super Bowl, horses, poker, so why not Bitcoin? I dislike Bitcoin because it enables cybercrime. Without Bitcoin and other cryptocurrencies, there would be less ransomware.

Finally, Peavsky asked him, as if it were a ransom video, to upload a clip of him saying how pleased he was with the service. It helps to explain why there were so many positive videos on the group channel: some had been made under duress.

The student told me he felt suicidal after that final exchange. I had many questions about the scam, but the most obvious was: who is Vadmir Peavsky? This is a real company, based in Almaty, Kazakhstan. But it's not run by Vadmir Peavksy. The company builds Bitcoin mines for clients, and repairs machinery. Some of their pictures and branding had been used on the Telegram channel.

The scammers used this picture, taken from social media, claiming it was part of their mine. They also used the B2C logo and name. That may well be because Vadmir Peavsky is not a real name. We know that, because the pictures of Mr Peavsky used on the Telegram channel actually belong to a man called Vladimir Paevskiy - a subtle but important difference in spelling.

Vladimir Paevskiy is real. He's 34 and from Moscow. He is a crypto-investor and has more than one million followers on Instagram. He regularly shares pictures of himself standing in front of crypto-mining equipment. Vladimir Peavskiy told the BBC his identity had also been taken by the scammers. Both of the scam victims I spoke to paid Peavsky using different crypto-currencies.

To do this, they needed to send the money into the scammer's digital wallet, which has a specific ID number. He's an expert at monitoring and analysing crypto-scams. He's asked us not to use his surname. They had used the same wallet over and over again, some 60 payments being made into one account alone.

There's likely to be more that Frank could not find, too. The scammers were making money but they had been sloppy. The group redirected the crypto they had convinced people to pay them into several crypto-exchanges, where the currencies can be swapped for cash. Two of the exchanges were based in India - bitbns. It is an organised criminal gang," he says. Chiranjeevi always thought he was talking to a Russian. The scam was so convincing that even now when you tell him that Peavsky isn't a real person, he can't quite believe it.

That the scammers are likely to be from India is good news for the victims. The information Frank collected has been handed over to the national cyber-crime department of the Indian Ministry of Home Affairs. These kinds of scams can have devastating impacts on victims and families. And the scale at which they operate is vast. It is fraud on an industrial scale. Chiranjeevi still can't believe he was scammed. Such was the stress he was under during the five-day mining process, he says he was almost relieved when he finally worked out it was a scam.

As for the student, he says he is no longer suicidal, but he hasn't told the people he borrowed from that he's lost their money. He's now working evenings to try to earn the money to pay them back. He says it's affecting his studies, but what can he do? He has no choice. You can listen to the radio documentary about this investigation, 'The Fake Bitcoin Mine' here:. His Twitter handle is jamesclayton5. Modi's Twitter hacked with bitcoin tweet. Elon Musk scammers make millions in crypto-fraud.

A Telegram channel scam used part of James Clayton's report. He couldn't believe it. However, that is not the report that Chiranjeevi saw. Chiranjeevi was intrigued. He decided to raise the stakes. A screengrab from the exchange between Chiranjeevi and Mr Peavsky. Chiranjeevi was starting to panic. It wasn't. A screengrab of the exchange between the student and Mr Peavsky.

A picture from the genuine company's website was used by the scammers. He says he'd never heard of Vadmir Peavsky. The real Vladmir Paevskiy says his identity was taken by the scammers. I eventually managed to speak to him. So who took Vladimir Paevskiy's identity? Not all families and friends are so understanding.

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In general, there are a number of currencies in existence that are not official government-backed currencies. A currency is, after all, nothing more than a convenient unit of account. While national laws may vary from country to country, and you should certainly check the laws of your jurisdiction, in general trading in any commodity, including digital currency like Bitcoin, BerkShares , game currencies like WoW gold, or Linden dollars, is not illegal.

According to the definition of terrorism in the United States , you need to do violent activities to be considered a terrorist for legal purposes. Recent off-the-cuff remarks by politicians have no basis in law or fact.

Also, Bitcoin isn't domestic to the US or any other country. It's a worldwide community, as can be seen in this map of Bitcoin nodes. Cash transactions offer an increased level of anonymity , yet are still taxed successfully. It is up to you to follow the applicable tax laws in your home country, or face the consequences. While it may be easy to transfer bitcoins pseudonymously, spending them on tangibles is just as hard as spending any other kind of money anonymously.

Tax evaders are often caught because their lifestyle and assets are inconsistent with their reported income, and not necessarily because government is able to follow their money. Finally, the Bitcoin block chain is a permanent record of all transactions, meaning it can be mined for info at any time in the future making investigation, tracing of funds, etc much easier than with other forms of payment.

Instead, blocks are computed by miners and for their efforts they are awarded a specific amount of bitcoins and transaction fees paid by others. See Mining for more information on how this process works. If you believe that these algorithms are untrustworthy then you should not trust Bitcoin, credit card transactions or any type of electronic bank transfer. Bitcoin has a sound basis in well understood cryptography.

Early adopters are rewarded for taking the higher risk with their time and money. The capital invested in bitcoin at each stage of its life invigorated the community and helped the currency to reach subsequent milestones. Arguing that early adopters do not deserve to profit from this is akin to saying that early investors in a company, or people who buy stock at a company IPO Initial Public Offering , are unfairly rewarded.

This argument also depends on bitcoin early adopters using bitcoins to store rather than transfer value. The daily trade on the exchanges as of Jan indicates that smaller transactions are becoming the norm, indicating trade rather than investment. In more pragmatic terms, "fairness" is an arbitrary concept that is improbable to be agreed upon by a large population. Establishing "fairness" is no goal of Bitcoin, as this would be impossible. Looking forwards, considering the amount of publicity bitcoin received as of April , there can be no reasonable grounds for complaint for people who did not invest at that time, and then see the value possibly rising drastically higher.

One Bitcoin is divisible down to eight decimal places. There are really 2,,,,, just over 2 quadrillion maximum possible atomic units in the bitcoin system. The value of "1 BTC" represents ,, of these. In other words, each bitcoin is divisible by up to 10 8. No, your wallet contains your secret keys, giving you the rights to spend your bitcoins. Think of it like having bank details stored in a file.

If you give your bank details or bitcoin wallet to someone else, that doesn't double the amount of money in your account. You can spend your money or they can spend your money, but not both. Bitcoins are divisible to 0. If you lose your coins, indirectly all other coins are worth more due to the reduced supply. Consider it a donation to all other bitcoin users.

A related question is: Why don't we have a mechanism to replace lost coins? The answer is that it is impossible to distinguish between a 'lost' coin and one that is simply sitting unused in someone's wallet. And for amounts that are provably destroyed or lost, there is no census that this is a bad thing and something that should be re-circulated. Bitcoin does not make such a guarantee.

There is no central entity, just individuals building an economy. A Ponzi scheme is a zero sum game. In a Ponzi scheme, early adopters can only profit at the expense of late adopters, and the late adopters always lose. Bitcoin can have a win-win outcome. Earlier adopters profit from the rise in value as Bitcoin becomes better understood and in turn demanded by the public at large.

All adopters benefit from the usefulness of a reliable and widely-accepted decentralized peer-to-peer currency. It is also important to note that Satoshi Nakamoto , creator of bitcoin, has never spent a bitcoin other than giving them away when they were worthless which we can verify by checking the blockchain.

As deflationary forces may apply, economic factors such as hoarding are offset by human factors that may lessen the chances that a Deflationary spiral will occur. Inflation is simply a rise of prices over time, which is generally the result of the devaluing of a currency. This is a function of supply and demand. Given the fact that the supply of bitcoins is fixed at a certain amount, unlike fiat money, the only way for inflation to get out of control is for demand to disappear.

Temporary inflation is possible with a rapid adoption of Fractional Reserve Banking but will stabilize once a substantial number of the 21 million "hard" bitcoins are stored as reserves by banks. Given the fact that Bitcoin is a distributed system of currency, if demand were to decrease to almost nothing, the currency would be doomed anyway. The key point here is that Bitcoin as a currency can't be inflated by any single person or entity, like a government, as there's no way to increase supply past a certain amount.

Indeed, the most likely scenario, as Bitcoin becomes more popular and demand increases, is for the currency to increase in value, or deflate, until demand stabilizes. The members of the community vary in their ideological stances. While it may have been started by ideological enthusiasts, Bitcoin now speaks to a large number of regular pragmatic folks, who simply see its potential for reducing the costs and friction of global e-commerce.

This is true: see Weaknesses Attacker has a lot of computing power. That said, as the network grows, it becomes harder and harder for a single entity to do so. Already the Bitcoin network's computing power is quite ahead of the world's fastest supercomputers, together. What an attacker can do once the network is taken over is quite limited. Under no circumstances could an attacker create counterfeit coins, fake transactions, or take anybody else's money.

An attacker's capabilities are limited to taking back their own money that they very recently spent, and preventing other people's transactions from receiving confirmations. Such an attack would be very costly in resources, and for such meager benefits there is little rational economic incentive to do such a thing. Furthermore, this attack scenario would only be feasible for as long as it was actively underway.

As soon as the attack stopped, the network would resume normal operation. See also: the " Bitcoin is illegal because it's not legal tender " myth. It is possible. See the main article, Fractional Reserve Banking and Bitcoin. When operating costs can't be covered by the block creation bounty, which will happen some time before the total amount of BTC is reached, miners will earn some profit from transaction fees. However unlike the block reward, there is no coupling between transaction fees and the need for security , so there is less of a guarantee that the amount of mining being performed will be sufficient to maintain the network's security.

Bitcoin base-layer transactions are final and irreversible by design , but consumer protection can still built into bitcoin in other layers on top. The most practical way of doing this is multisig escrow. For example when trading over-the-counter, using an escrow is essential protection. It's worth noting that virtually all successful consumer-facing bitcoin businesses do indeed already implement some kind of consumer protection; Routine escrow was used by Localbitcoins, Silk Road and the bitcoin ebay-site Bitmit.

Others such as online bitcoin casinos rely on their long-standing reputation, while others such as Coinbase. The bitcoin method of routinely using escrow has benefits over competitors like credit cards. The security of credit cards is not very good which results in higher costs overall and the possibility of payments being reversed for months afterwards. By contrast when bitcoins have been released to the seller from escrow, they cannot be reversed as the coins are truly in the seller's possession.

The requirement to use real-life names for credit cards and PayPal also excludes unbanked people and those from countries with less developed financial infrastructure. There are also downsides like bitcoin is not yet as widely accepted as credit cards and is not a front for providing lines of credit. While ECDSA is indeed not secure under quantum computing, quantum computers don't yet exist and probably won't for a while.

The DWAVE system often written about in the press is, even if all their claims are true, not a quantum computer of a kind that could be used for cryptography. Bitcoin's security was designed to be upgraded in a forward compatible way and could be upgraded if this were considered an imminent threat cf.

Aggarwal et al. See the implications of quantum computers on public key cryptography. The risk of quantum computers is also there for financial institutions, like banks, because they heavily rely on cryptography when doing transactions. StorJ [5] , a theorized autonomous agent which utilizes humans to build itself and issues autonomous payments for improvement work done, is not a conscious entity. Whatever AI is possible, is not going to be magically more possible simply because it could incentivize human behaviour with pseudonymous Bitcoin payments.

No more so than the wastefulness of mining gold out of the ground, melting it down and shaping it into bars, and then putting it back underground again. Not to mention the building of big fancy buildings, the waste of energy printing and minting all the various fiat currencies, the transportation thereof in armored cars by no less than two security guards for each who could probably be doing something more productive, etc.

As far as mediums of exchange go, Bitcoin is actually quite economical of resources, compared to others. Bitcoin mining is a highly competitive, dynamic, almost perfect market. Mining rigs can be set up and dismantled almost anywhere in the world with relative ease. Thus, market forces are constantly pushing mining activity to places and times where the marginal price of electricity is low or zero.

These electricity products are cheap for a reason. Using electricity in this way is a lot less wasteful than simply plugging a mining rig into the mains indiscriminately. For example, Iceland produces an excess of cheap electricity from renewable sources, but it has no way of exporting electricity because of its remote location.

It is conceivable that at some point in future Bitcoin mining will only be profitable in places like Iceland, and unprofitable in places like central Europe, where electricity comes mostly from nuclear and fossil sources. Market forces could even push mining into innovative solutions that have an effective electricity consumption of zero.

Mining always produces heat equivalent to the energy consumed - for example, watts of mining equipment produces the same amount of heat as a watt heating element used in an electric space heater, hot tub, water heater, or similar appliance. Someone already in a willing position to incur the cost of electricity for its heat value alone could run mining equipment specially designed to mine bitcoins while capturing and utilizing the heat produced, without incurring any energy costs beyond what they already intended to spend on heating.

Note that this is just an example; mining will not always produce heat equivalent to the energy consumed because some energy is inevitably released as electromagnetic radiation, among others. When the environmental costs of mining are considered, they need to be weighed up against the benefits. If you question Bitcoin on the grounds that it consumes electricity, then you should also ask questions like this: Will Bitcoin promote economic growth by freeing up trade?

Will this speed up the rate of technological innovation? Will this lead to faster development of green technologies? Will Bitcoin enable new, border crossing smart grid technologies? Dismissal of Bitcoin because of its costs, while ignoring its benefits, is a dishonest argument. I did lose hundreds of thousands of dollars on those stock purchases, and I had cashed-in NVIDIA stock to buy them, stock that would now be worth tens of millions of dollars.

I believe that bitcoin will be around in the future, and that it will not go to a zero price. I believe that other cryptocurrencies will come to the fore which are more able to handle the transactional needs of a larger number of people than bitcoin can.

Your coins are going up because the sucker after you is buying coins. These people might persuade themselves that they are motivated to help others, but I believe that the true reason is that they know that the more people are buying bitcoin, the more the price will go up. It looks just like a pyramid scheme from this standpoint.

With true investments, such as a stock in a solid company with great leadership, a company that will grow and succeed massively in the long run, we want to keep it secret. We want to be able to keep buying the stock at the lower price. If you can go in and put down a bet, win, and then take the winnings and walk out of the casino, then you can do well with bitcoin.

The problem is that when most people get a big win, they plough it back into the system. Just as with a casino, bitcoin at these elevated prices is a system that is designed to extract your wealth from you. If you get in and get out, you can extract some wealth from the suckers down the line from you. However, the more you get in, and stay in, the more likely it is that you will be one of the suckers holding the bag when this thing crashes.

How will it crash? This bullish mania will suddenly flip. When all these regular people who have their life savings in bitcoin notice that the price is dropping, they will sell, probably at a loss. This will make the price go down further, triggering more panic, and the negative spiral will begin. The same mechanism that has led to this run-up, a form of mass hysteria, will also potentiate a massive sell-off and crash. This is because the bubble mania is a two-sided coin pun intended.

My advice is to pay as much attention to your internal state as possible. Notice the fear of missing out. Notice the panic, the excitement, and the drive to promote bitcoin. This is a great opportunity for self-awareness. You might want to convert some of your dollars into this currency for fun, but make sure you only convert as much as you would be happy to lose, which for most people is nothing.

Before you post a response trying to persuade me that there is not a bitcoin bubble, remember that by doing so you will actually be reinforcing my hypothesis. If you think bitcoin really is a great investment, then you will want everyone to believe what I have written, and to steer clear of it.

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