A Case Study: Staying Safe in the Bitcoin Wild West
Back a few weeks ago, I made a post on my blog announcing that I would be demoing and reviewing a set of new mining ASICs designed for SHA256 and Scrypt by an as-yet-unheard-of company called Turing Stations that suddenly popped onto the scene. I was skeptical at the time, as one should be with mining companies, given their rich history of failing to hold up to their promises. Turing Stations did a decent job assuaging my fears. Their machines promised great performance – but not TOO much past their competitors to be unbelievable. They were priced well, but not TOO well – expensive, but apparently of good quality. They promised shipment times of up to 3 weeks – nothing fantastic, but reasonable.
They wanted me, among other sites and reviewers, to demo their products to get their brand and their name out there to consumers, and they were also offering up an affiliate program that paid out quite nice dividends. I was skeptical, but I like to give all new players in the Bitcoin space the benefit of the doubt. There are plenty of bad actors, and we need to weed them out, but we also need to encourage new entities and entrepreneurship. I hoped the miners they promised would be shipped out on time and would arrive and operate well, and that I’d be able to endorse their company. That turned out not to be the case, unfortunately. Since then, I’ve written a fairly long post on my blog detailing how I was stalled, including a full dump of my email conversation with Turing Stations, and some investigation into the nature of the company. Feel free to check it out if you’re interested.
And that brings us to today’s topic: How can you make sure you stay safe out there in the Bitcoin Wild West? By following some simple rules.
1. If it sounds too good to be true, it probably is.
This is an ancient saying, but it still holds just as true today. Con artists and scammers of all kinds follow the same basic principle – make the sucker think they’re getting a good deal, a deal they’d be a fool to pass up. Turing Stations got me pretty good – and they likely also got a number of actual customers. How should we both have known?
First, their products. Compared to other products on the market Turing Stations promises were MOSTLY reasonable – with one exception: power consumption. Their hashing speed to dollar price was great, but not unbelievable; the same with most other specs – but their power consumption was actually the best part. They were cheap enough to run that they would be profitable machines much, much longer than the competition. This should’ve been enough to arouse the suspicions of a diligent viewer – and it did make me question them, though perhaps not as thoroughly as I ought to have.
Second, their offer to me. I (like many of us) like to think I’m somebody, but in reality I’m pretty much nobody – I run a smallish blog on Bitcoin and I review exchanges, but I’m definitely not driving thousands of views daily. They were offering to turn over ~$10,000 worth of hardware to me for about two weeks, and give me the profits from it, as well as provide me with a very nice affiliate program. Greed blinds many of us, but I was blinded instead by pride – by the belief that they could profit enough from my endorsement and the buzz I could generate to make this worthwhile on their end, and that thus, it was not too good to be true. After all, there’s a real shortage of independent reviewers with reputations in the Bitcoin space – perhaps supply and demand simply dictated this action on their part. And perhaps greed helped to distract me, as well.
2. If you’re considering interacting with a Bitcoin company in an insecure way, then you should Google them ahead of time and see what people are saying.
I tried to do this at the time, but was unsuccessful – Turing Stations had only just popped onto the internet, and no one was talking about them yet. Now, though, that’s not the case:
– People on BitcoinTalk conclude they’re likely to be a scam. They say they take credit cards, but no one has succeeded (*cough* chargebacks *cough*).
– Same thing on LitecoinTalk, except the LTCTers further realize that the BTC escrow option they offer is also run by the same company apparently–RED ALERT: SCAM.
– HashTalk.org has a thread with a guy who (like me) was offered to demo the miners. Users view: 100% scam.
3. When in doubt, exercise maximum caution.
This rule I was able to follow, thankfully – my initial post made it clear that I was interested in their products and excited to be reviewing them, but I explicitly did not endorse their company or products, and would not do so until I had them in hand. Hopefully my readers and other potential buyers followed this third rule, as it is easily the most important one.
There is no deal good enough to make it worth getting involved in anything you’re not relatively certain is legitimate. There will always be other good opportunities out there, so if you find one that looks too good; one that just doesn’t have enough information backing it up, wait until you know more. Or just forget about it and wait for another option to appear – there are always more investments available.
Thanks for reading. Good luck out there in the Wild West.