Mobile games allowing players to mine for bitcoins may be a sham'
Riding the wave of interest in cryptocurrency mining are mobile games claiming to allow players to mine for bitcoins.
These games, hosted on messaging app Telegram and publicised online, promise money to players via bitcoin mining done for free using their smartphones.
But experts warn that these games might be a scam.
Bitcoin mining is done by creating new bitcoins through computing or processing work in the system, said Associate Professor Robert Kimmel, head of the Department of Finance at the National University of Singapore Business School.
"Bitcoin miners get a financial incentive, sort of like payment for a transaction at the bank, and this encourages people to keep the blockchain and database up to date," he said, casting doubts that a smartphone has adequate processing power to mine for bitcoins.
A blockchain is a decentralised and distributed digital ledger that records cryptocurrency transactions across networks.
Mr Billy Chiam, 37, who owns a company that sells cryptocurrency mining rigs, said from the look of such games, there does not appear to be any bitcoin mining taking place.
"For one thing, there is no indication of the hash rate. Also, to mine bitcoin, you would typically need to invest thousands to build a GPU (graphics processing unit) rig because mining takes a great deal of processing power," said Mr Chiam.
COMPUTER SYSTEM
A mining rig is a computer system used for mining cryptocurrencies and usually has multiple GPUs. The hash rate is the speed at which mining takes place.
Advertisements promoting mobile games that claim to facilitate bitcoin mining have been popping up online. There have been at least three such games seen on local forums.
Players start out with a number of points to purchase elements in the game and these accumulate over time. When enough points are accumulated, players can buy more elements or cash out for bitcoins.
While joining the game does not require payment, some players said they were unable to cash out their bitcoins unless they made an investment in it.
A reason these games are gaining popularity on local and international forums might be that players can earn points in the game through referrals, said experts.
Engineer Mohamad Noh Ahmad Shah, 28, who has played a "referral" game, stopped after he realised that he could cash out his bitcoins only if he invested more bitcoins into it.
"I played the game for one to two months. It is like multi-level marketing because you have to refer people to get more money, so I stopped and uninstalled it."
Experts The Straits Times spoke to warned about the lure of "easy money" that these games promise.
Co-founder of interest group Singapore Bitcoin Club, Mr Caleb Yap, 44, said he has heard of some of these games that turn out to be Ponzi schemes.
He added that there might not even be real bitcoins involved.
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