FAQ

? Is cloud mining still profitable?

With the increased difficulty of Bitcoin mining, the electricity and maintenance fees can even surpass the profit margins. If the major crypto coins manage to maintain their upward spiral, it’s possible that mining them could be a sound investment once again. Until that happens, however, we recommend sticking with less popular and cheaper coins since they won’t require large initial investments into mining rigs or processing power. On the other hand, there’s always the risk of “marginal” coins never reaching the price levels of Bitcoin or Ethereum, so mining them could be quite the gamble sometimes. Bottom line, mining Bitcoin will most likely bring you some profit but don’t expect to get rich anytime soon. Altcoins have decent prices but much lower difficulties and “hardware requirements.”
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? What is the best Bitcoin mining hardware?

The best machines for Bitcoin mining are called application-specific integrated circuits (ASICs) and they have taken the market by storm. They perform mining actions at unprecedented speeds and consume less power than GPU or FPGA mining rigs. Here’s our list of the best Bitcoin mining hardware at this point:

  • AntMiner S9 – 13.5 Th/s; 0.098 W/Gh; 8.1 pounds; approx. earns 0.3603 BTC per month
  • AntMiner S7 – 4.73 Th/s; 0.25 W/Gh; 8.8 pounds; approx. earns 0.1645 BTC per month
  • Avalon6 – 3.5 Th/s; 0.29 W/Gh; 9.5 pounds; approx. earns 0.1232 BTC per month

The two most important things with mining hardware are their initial price and electricity efficiency. These two factors will determine your future room for profit.
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? What are the best cloud mining services?

Before going into cloud mining, you have to be aware of the fact that most of the companies in the field are scamming operations looking to capitalize on potentially inexperienced miners by adding them into their Ponzi schemes. They might even bring you some minor profits in the beginning, but that’ll just be the money they took from someone else. These “companies” don’t even own mining facilities or hardware required for the process. Keeping this in mind, we can recommend Hashing24 and Genesis Mining as legitimate cloud mining operations. Legitimacy, however, doesn’t remove the inherent risk of not making profits on your contract.
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? What is the best cryptocurrency for cloud mining?

This is a very difficult question to answer since the mining landscape is constantly changing and evolving, so the final answer can’t stay relevant for long. If you’re looking to avoid mining Bitcoin, Ethereum or Litecoin, our recommendations for 2017 include Monero, Golem, Waves, Zcash, and Digital Note. Some of these can still be mined with powerful CPUs, so they might be a perfect starting point for inexperienced miners.
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? How to identify a cloud mining scam/Ponzi scheme?

The more effort scammers put into constructing their schemes, the harder it becomes to identify them as such. You must always bear in mind that 99% of all cloud mining companies are scams of some sort, so we advise extreme caution when approaching the subject.

Scam companies will usually have unrealistic profit margins, low prices, and unlimited processing power to rent. They’ll never disclose the addresses of their mining facilities nor any people working for them. Furthermore, we can all pretty much recognize stock photos at this point, so if you see a website filled with photoshopped mining rigs and stock images of appropriate facilities, you should know you’re dealing with some kind of scheme.

The domain names of scam websites will always have hidden registrations listing fake directors, usually with foreign residency. Even if you ask them, they’ll be hesitant to show you their mining equipment since they don’t own any.

You can also check popular forums for known scamming operations and learn from the mistakes made by other miners.
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? What are the best cryptocurrency exchanges?

Unlike cloud mining services, there is a healthy number of trusted cryptocurrency exchanges out there. You can choose to trade for other crypto or traditional currencies like Euro or US dollars. If you’d like to trade on a higher level and gain access to the top-tier trading tools, you’ll have to create an account and verify your identity. Any crypto exchange that offers a ton of fancy tools for frequent traders without requesting identity verification is a potential scam.

With that in mind, we can recommend exchanges like Kraken, Poloniex, Coinbase, Cex.io, Shape Shift, LocalBitcoins, Bitrexx, Bitfinex, and Cryptopia.
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? How to spot a non-liquid/fractional exchange?

The fractional reserve system is usually used in banking and some crypto exchanges. It basically means that the exchange doesn’t have enough funds to cover all the deposits and make them available for withdrawal. The purpose of this system is to allow them to invest those funds and expand their economy. The best way to avoid dealing with fractional exchanges is to inspect their public proof of reserves. Of course, not all exchanges have one, but Kraken, OKCoin, and BitFinex do.
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? What are the best desktop/mobile/offline hardware wallets?

There is a number of factors to consider when it comes to crypto wallets. The full list goes as follows:

  • Cost – Is the wallet in question free and what are its drawbacks?
  • Security – What’s the company’s track record when it comes to security excellence?
  • User-friendliness – How many altcoins can the wallet actually store? Is the UI intuitive and comprehensive?
  • Mobility – Is the wallet easily accessible?
  • Convenience – Can you make snap purchases when the market demands it?

With these factors in mind, we can recommend Trezor (hot wallet), Nano Ledger S (hardware wallet), Jaxx (software wallet), MyEtherWallet (paper wallet), Coinbase (hot wallet), Electum (software wallet), and KeepKey (hardware wallet).
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? What personal/transactional information do crypto exchanges collect?

Some crypto exchanges will allow you to remain completely anonymous. Others will require some form of identity verification and they represent the majority in the world of crypto trading. The usual verification process can take up to a few days, but it’s a necessary precaution to prevent money laundering and other scams.
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? What are the best automated trading bots?

Automated trading bots monitor the crypto market 24/7 for you, allowing you a wider presence when it comes to making timely trading decisions. They’re mostly developed for Bitcoin, so you might have problems finding a good one for other cryptocurrencies. The bots we can recommend include Haasbot, Zenbot, Tradewave, Gekko, and CryptoTrader. There is a lot of them out there, but these are our personal favorites.
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? Are cryptocurrency trading bots profitable?

Trading bots are viewed as “magical trading software” only by inexperienced traders. In reality, they can help you a lot, but only if you already know a lot about the crypto trading ecosystem. Trading bots follow their predetermined algorithms, so they won’t act on emotions, which is a great benefit in the trading arena. You’ll also need ample knowledge to set up your bot properly, which brings us back to our initial observation.

Bottom line, trading bots can offer you a dose of flexibility and monitor trends when you can’t. On the other hand, you should perceive them as tools intended to help you, not make all the trading decisions for you. If you adhere to these rules, trading bots will definitely help you turn a profit.
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? How to spot a trading bot scam?

There is a number of factors you can check if you’re in doubt about the legitimacy of a certain trading bot:

  • The team – You should make sure that the programmers behind the bot are real people with extensive histories of projects in their respective fields and not some personalities made up around stock photos.
  • No risk involved – If the developers claim that their bot comes without any risk whatsoever, you can suspect underhanded intentions right there. The entire crypto-trading field is based on risk and reward and the automated bot has to follow this principle as well.
  • Guaranteed profit – No self-respecting company will ever guarantee you profit on the crypto-trading market since even the best trading software in the world will absorb some loses from time to time. If a certain bot comes with this tag, just ignore it.
  • Domain registration – Scam companies usually register their domains weeks before launching their trading bot. This is easily inspected on one of the popular sites providing domain information.

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? How to know what are the best ICOs to invest in?

Here’s our list of things that make ICOs a worthy investment:

  • Team credibility – Is the team behind the ICO public or anonymous? Do they have a proven track record in the field? Have they linked their LinkedIn profiles?
  • The project – Does the initial vision funded by the ICO offer something new and revolutionary or simply copies an already existing idea? The market is ripe with ICOs trying to clone something that already exists, making them a poor investing choice.
  • Bonuses for early investors – Early investor bonuses also tell us a lot about the attitude of the developers toward the project. This should incentivize people to invest early and receive bonus tokens once a certain funding cap has been reached.
  • Escrows/refunds – It’s always smart to check the reputation of the escrow handler for the crowdfund. Also, solid projects implement a condition where the contributors receive a full refund if a certain funding level is not achieved.
  • ANN thread – Always make sure to check out the ANN thread on BitcoinTalk.org to hear what more experienced individuals have to say about a certain ICO project.

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? How to recognize an ICO scam?

Here are some essential factors to keep in mind when testing ICOs for possible scams:

  • Team – Scams will keep their teams anonymous or create a list of made-up characters with stock photos.
  • Goals – Scam ICOs will set unrealistic and often impossible goals that sound too good to be true because they are.
  • Whitepaper – A true whitepaper should be concise, clear, professionally written, and to the point. Scam projects will offer fuzzy whitepapers with a veritable salad of tech buzzwords that don’t amount to anything in reality.
  • Escrow – Scams will usually have no escrow or it will be compromised at best.
  • Code – ICOs that don’t make at least code snippets available to the public are most likely a scam.
  • Product – Low-tier scams will not even bother with offering any products to the participants. High-tier, on the other hand, may feature a fully functional product, which makes this area particularly challenging, so you’ll have to observe additional factors to identify whether it is a scam.
  • Rushing – Scam ICOs will rush you to make payments, legitimate projects have no reason of doing this.

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? Are ICOs destroying Ethereum?

Many ICO projects have and will fail, wasting precious resources. ICOs definitely have the potential to burst the Ethereum bubble, but nobody can definitively tell when or if this is going to happen.
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? What are the best trading signal services?

Factoring in things like service quality, reliability, and pricing, we can recommend Coindata.io, CryptoPing, Cryptowatch, TurtleBC, Resonova, and Altcoin Trader.
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? Is cryptocurrency trading taxable?

Yes, cryptocurrency is viewed as property by the law, so the user’s gains and losses are taxed at the applicable capital gains rate.
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? What is the best cryptocurrency tax software?

We would recommend Coin Tracking as one of the best tax products on the market.
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? What are the best mining rig rentals?

MiningRigRentals would be our recommendation in this area.
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