Why cloud mining is a zero sum game

[Puppet]

I would say that any evaluation of a potential scam should use some kind of subjective criteria as a scammer could simply look at your criteria and work around it

If by "working around" you mean they verifiably prove their identity and verifiably prove ownership of the hashrate they are selling etc, then great!

Here is the thing; setting up a scam that conforms to one or two of my criteria is easy enough, but setting one up that conforms to all or nearly all of them is very difficult. Its probably not impossible, just very difficult. And what scammer would go the very difficult (and expensive) route when a transparent copy/paste scam that conforms to virtually none of my criteria works so well?

[Koontas]

It's only zero sum if you're not "mining" the right cloud.

[picolo]

It's only zero sum if you're not "mining" the right cloud.

I am convinced a lot of miners have ROI in BTC since January 2014, I don't know what portion of all miners, probably a minority but more than 5%.
Among serious big miners, it is probably an even bigger percentage.

You would have ROI in BTC buying up hash rate on a lot of cloudmining websites that were online in January 2014 and are still online today. Some of them were new and unknown like cloudminr.

[wunkbone]

I would say that any evaluation of a potential scam should use some kind of subjective criteria as a scammer could simply look at your criteria and work around it

If by "working around" you mean they verifiably prove their identity and verifiably prove ownership of the hashrate they are selling etc, then great!

Here is the thing; setting up a scam that conforms to one or two of my criteria is easy enough, but setting one up that conforms to all or nearly all of them is very difficult. Its probably not impossible, just very difficult. And what scammer would go the very difficult (and expensive) route when a transparent copy/paste scam that conforms to virtually none of my criteria works so well?

Well the thing about "verifiability" proving something is that not everyone agrees on what exactly would meet this standard.

I would say that it is generally not possible to prove beyond most naysayer's doubts that any cloud company has the physical hardware. Pictures can be faked, the same with invoices, and allowing people to physically see the equipment poses a security risk.

The answer to proving that a company owns actual equipment is to show them the mining address. The issue here is that even this can be faked. A company could rent mining capacity for a period of weeks or months when the term of a mining contract is years. Another way to fake a mining address would be to claim they are mining at a pool (like many smaller cloud mining companies probably are - when they are actually operating in a legal way) that doubles as an exchange (cex.io). The company could launder proceeds from their contract sales either through a mixer or through a large exchange like bitstamp, then deposit the proceeds into cex (the sales proceeds would not go directly to cex in order to make it difficult to draw the connection). Now the company is able to send payments to their customers from an address that can be easily traced to mining proceeds.

While I agree that as of today it does not make sense for a cloud ponzi to do much more then their cookie cutter approach, I think that the market will get "smarter" and people will watch out for these kinds of red flags

[picolo]

I would say that any evaluation of a potential scam should use some kind of subjective criteria as a scammer could simply look at your criteria and work around it

If by "working around" you mean they verifiably prove their identity and verifiably prove ownership of the hashrate they are selling etc, then great!

Here is the thing; setting up a scam that conforms to one or two of my criteria is easy enough, but setting one up that conforms to all or nearly all of them is very difficult. Its probably not impossible, just very difficult. And what scammer would go the very difficult (and expensive) route when a transparent copy/paste scam that conforms to virtually none of my criteria works so well?

Well the thing about "verifiability" proving something is that not everyone agrees on what exactly would meet this standard.

I would say that it is generally not possible to prove beyond most naysayer's doubts that any cloud company has the physical hardware. Pictures can be faked, the same with invoices, and allowing people to physically see the equipment poses a security risk.

The answer to proving that a company owns actual equipment is to show them the mining address. The issue here is that even this can be faked. A company could rent mining capacity for a period of weeks or months when the term of a mining contract is years. Another way to fake a mining address would be to claim they are mining at a pool (like many smaller cloud mining companies probably are - when they are actually operating in a legal way) that doubles as an exchange (cex.io). The company could launder proceeds from their contract sales either through a mixer or through a large exchange like bitstamp, then deposit the proceeds into cex (the sales proceeds would not go directly to cex in order to make it difficult to draw the connection). Now the company is able to send payments to their customers from an address that can be easily traced to mining proceeds.

While I agree that as of today it does not make sense for a cloud ponzi to do much more then their cookie cutter approach, I think that the market will get "smarter" and people will watch out for these kinds of red flags

Right now people react like it is a Gold Rush and they want a piece of the action at any cost. The market will get more professional as times goes.

[darkangel11]

Right now people react like it is a Gold Rush and they want a piece of the action at any cost. The market will get more professional as times goes.

It reminds me of the recent Chinese Bitcoin rush.

[picolo]

Right now people react like it is a Gold Rush and they want a piece of the action at any cost. The market will get more professional as times goes.

It reminds me of the recent Chinese Bitcoin rush.

People will panic buy again when it looks like Bitcoin can become a large mean of payment in the near future.
5000$ will be reached very fast.

[Berthorl]

Right now people react like it is a Gold Rush and they want a piece of the action at any cost. The market will get more professional as times goes.

It reminds me of the recent Chinese Bitcoin rush.

People will panic buy again when it looks like Bitcoin can become a large mean of payment in the near future.
5000$ will be reached very fast.

You think so? I dont know.. prices were dropped back down to the same a year ago no?

it would move faster, if BFL, and other shit shows did the right thing of conducting proper real business though.. so i dont know.

[picolo]

Right now people react like it is a Gold Rush and they want a piece of the action at any cost. The market will get more professional as times goes.

It reminds me of the recent Chinese Bitcoin rush.

People will panic buy again when it looks like Bitcoin can become a large mean of payment in the near future.
5000$ will be reached very fast.

You think so? I dont know.. prices were dropped back down to the same a year ago no?

it would move faster, if BFL, and other shit shows did the right thing of conducting proper real business though.. so i dont know.

I think so. Prices were 100$ a coin just over a year ago and the halving next year will help get a bull market. 2014 has been complicated with problems in china, a correction from the market rally of November/December 2013 and maybe regulation problems and the FBI coins.

I don't know the future but I am optimistic for Bitcoin in 2015.

[Berthorl]

Right now people react like it is a Gold Rush and they want a piece of the action at any cost. The market will get more professional as times goes.

It reminds me of the recent Chinese Bitcoin rush.

People will panic buy again when it looks like Bitcoin can become a large mean of payment in the near future.
5000$ will be reached very fast.

You think so? I dont know.. prices were dropped back down to the same a year ago no?

it would move faster, if BFL, and other shit shows did the right thing of conducting proper real business though.. so i dont know.

I think so. Prices were 100$ a coin just over a year ago and the halving next year will help get a bull market. 2014 has been complicated with problems in china, a correction from the market rally of November/December 2013 and maybe regulation problems and the FBI coins.

I don't know the future but I am optimistic for Bitcoin in 2015.

The sad part is, most of my friends heard about bitcoin. But the whole bitcoin scam hype just took a overwhelming turn for most and I cant even explain the proper stories to all of them.

ESP BFL crap, when of my friends wanted to consider jumping in etc. But yeah, I`m hoping for a price jump only cause history only proven to go up regardless of all the bad times lol.

[picolo]

Right now people react like it is a Gold Rush and they want a piece of the action at any cost. The market will get more professional as times goes.

It reminds me of the recent Chinese Bitcoin rush.

People will panic buy again when it looks like Bitcoin can become a large mean of payment in the near future.
5000$ will be reached very fast.

You think so? I dont know.. prices were dropped back down to the same a year ago no?

it would move faster, if BFL, and other shit shows did the right thing of conducting proper real business though.. so i dont know.

I think so. Prices were 100$ a coin just over a year ago and the halving next year will help get a bull market. 2014 has been complicated with problems in china, a correction from the market rally of November/December 2013 and maybe regulation problems and the FBI coins.

I don't know the future but I am optimistic for Bitcoin in 2015.

The sad part is, most of my friends heard about bitcoin. But the whole bitcoin scam hype just took a overwhelming turn for most and I cant even explain the proper stories to all of them.

ESP BFL crap, when of my friends wanted to consider jumping in etc. But yeah, I`m hoping for a price jump only cause history only proven to go up regardless of all the bad times lol.

If they know about Bitcoin it is already a good start, it will be seen as a powerful way to transfer money or store your wealth by most of them after Bitcoin has showed it is a great innovation.

[Puppet]

Well the thing about "verifiability" proving something is that not everyone agrees on what exactly would meet this standard.

I would say that it is generally not possible to prove beyond most naysayer's doubts that any cloud company has the physical hardware. Pictures can be faked, the same with invoices, and allowing people to physically see the equipment poses a security risk.

The answer to proving that a company owns actual equipment is to show them the mining address. The issue here is that even this can be faked. A company could rent mining capacity for a period of weeks or months when the term of a mining contract is years. Another way to fake a mining address would be to claim they are mining at a pool (like many smaller cloud mining companies probably are - when they are actually operating in a legal way) that doubles as an exchange (cex.io). The company could launder proceeds from their contract sales either through a mixer or through a large exchange like bitstamp, then deposit the proceeds into cex (the sales proceeds would not go directly to cex in order to make it difficult to draw the connection). Now the company is able to send payments to their customers from an address that can be easily traced to mining proceeds. 

I agree, thats why I said its not impossible, just a whole lot more difficult and expensive. But in order to score full marks on my criteria, you also need an asic vendor to vouch for you and there should be no doubt about the identity of the people behind the company. Not many scammers like to expose themselves to prosecution.

While I agree that as of today it does not make sense for a cloud ponzi to do much more then their cookie cutter approach, I think that the market will get "smarter" and people will watch out for these kinds of red flags

I wouldnt hold my breath. I lost count of the number of ponzi's Ive seen come and go over the past years, and if anything, they are getting more transparent (as in, more obvious to be a ponzi), not less.