Cryptocurrency Mining – Can You Make Money?

Cryptocurrency Mining – Profitable?

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make money with cryptocurrencyI recently wrote an article about ways that you can make money with cryptocurrency.  That article covered investing, along with a few other clever ways to make money with cryptocurrency that didn’t necessarily involve buying it.

One method of making money with cryptocurrency that I specifically did not mention in that article is cryptocurrency mining, and people who are familiar with cryptocurrency mining might have noticed that omission.  Over the years, a lot of people have discovered that cryptocurrency mining is a way to earn Bitcoin and other altcoins without directly investing, and under the right circumstances, it can be both profitable and relatively “hands off.”

Under other circumstances (most, as it happens), cryptocurrency mining is likely not going to be profitable.  Is cryptocurrency mining worthwhile?  Can you make money with it?  What is cryptocurrency mining, exactly?

Cryptocurrency Mining Overview

All transactions involving cryptocurrency take place on a distributed database called a blockchain. By design, no one person or company controls this database; it’s shared among a number of computers called nodes.  When a transaction takes place, these nodes need to verify that the transaction is valid and they also need to verify that the transaction only took place once.  This eliminates the possibility of double spending and the possibility that someone might try to cancel a transaction.

cryptocurrency mining

No, not that kind of mining

The original design of Bitcoin created a system that rewarded the computers that participate in this validation system.  All of the nodes participating in validation also participate in adding to the blockchain, and a series of math problems determines which computer gets credit for creating the next block in the chain.  When that block is created, the computer that solved the problem that created the block is rewarded in Bitcoin.

Initially, that reward was 50 Bitcoin, but the reward halves every four years or so.  The current reward is 12.5 Bitcoin.  Still, with a single Bitcoin currently worth some $9000, a reward of 12.5 Bitcoin is a lot of money, and because of this, thousands of computers participate in this process, which is known as cryptocurrency mining.

Initially, one could “mine” Bitcoin this way by installing some software on any available computer.  There was a time, back in 2010 or so, when an individual could potentially earn 100 Bitcoin per day using a regular desktop PC as a Bitcoin node.

People quickly discovered that they were more likely to earn cryptocurrency mining rewards if they had hardware that was specifically designed to mine Bitcoin, and that led to the creation of what is known as an ASIC.  That stands for “Application-Specific Integrated Circuit.”

For the layman, that basically means cryptocurrency mining with a small computer that is designed to do one thing only, and in this case, it means that one thing is mining Bitcoin.  A number of companies were soon producing Bitcoin ASIC machines that were capable of performing far more calculations per second than any desktop computer ever could, and people who bought those machines, which sold for several thousand dollars each, were soon earning all of the cryptocurrency mining rewards.

This led to the creation of “cryptocurrency mining pools.”  A mining pool is a group of people who have decided to use their computers to collectively mine a particular coin.  Should any computer in the pool earn a reward, the reward is shared among all of the members of the cryptocurrency mining pool in accordance with the amount of work they have contributed.

With more computers mining Bitcoin every day, you increase your chances of earning anything at all by participating in a cryptocurrency mining pool.

Cryptocurrency Mining Hardware

asic cryptocurrency miner

ASIC Cryptocurrency Miner

Over time, it became apparent to many people in the cryptocurrency community that not only were the ASIC machines dominating Bitcoin mining and reaping most of the rewards, but it also became apparent that the companies that make those machines were earning most of the money in addition to profiting from the sale of the ASIC miners.

The Bitcoin mining software was written in such a way that it rewarded raw computing power.  Creators of newer cryptocurrencies have tried to avoid this situation by using algorithms that didn’t rely so much on processing power as they do on system memory.  This made it difficult to create an ASIC to mine such coins as Ethereum or Monero.

Instead, individuals were once again able to participate in the cryptocurrency mining process using their own computers.  Interestingly enough, the cryptocurrency mining software for these coins doesn’t rely on the computer’s central processing unit (CPU) as much as it does on the graphics processing unit (GPU).  That’s right – it’s the computer graphics card that’s doing all the work.

Of course, if a computer doing cryptocurrency mining with one GPU can earn a little bit of Ethereum, then one with two GPUs should be able to earn more, right?  That’s true, and there are now people mining altcoins with computers that have anywhere from 2-16 graphics cards in them!

This has rendered the market for high end graphics cards rather volatile, with high performance cards selling for twice their suggested list price on the free market as people building cryptocurrency mining rigs have shown that they’re willing to pay far more money for a cutting-edge graphics card than are the gamers for whom the cards were initially designed.

GPU Cryptocurrency Mining Rig

GPU Cryptocurrency Mining Rig

What this means is that if you want to earn money with cryptocurrency mining, you either need to buy one or more ASICs to mine Bitcoin and similar coins, or you’ll need to build a high-powered computer with one or more expensive ($500-$1000 each) graphics cards.

There are advantages and disadvantages to each, but ASICs do have one serious drawback – they’re only good for one thing.  Over time, the amount of computing power required to mine any given cryptocoin increases, which means that over time, an ASIC eventually becomes useless as newer and faster models come to market.  When that happens, you simply throw it away as it cannot be used for anything else.

If you’ve built a cryptocurrency mining computer with multiple GPUs and you find that they’re not performing well anymore, you can disassemble the computer and sell the cards on eBay, as they will still have value to gamers.

Regardless of the method you choose – GPU mining or ASIC cryptocurrency mining, you’re going to be spending several thousand of dollars on your mining rig.

If you want an ASIC miner, it’s easy to get started.  The largest manufacturer of ASIC cryptocurrency mining equipment is a company called Bitmain, and they can sell one to you for a few hundred to a couple of thousand dollars.  They’re easy to install and are largely plug and play.  You just need electricity and an Internet connection.

If you’re interested in going the GPU route, you’ll either have to build your own (there are instructions available on the Web) or you can buy a pre-built GPU mining rig from sites such as eBay.

cryptocurrency mining frameBuilding a cryptocurrency mining rig is quite a bit more trouble than simply buying an ASIC and plugging it in.  If you’re going to be doing cryptocurrency mining with a computer that has one or two GPUs in it, it’s fairly easy – just buy a computer (or build one) that has at least two slots for a video card.  Put the cards in, install Windows, install your mining software (downloadable from many sources.)

The software tends to be a bit buggy and is not well documented, so you’ll likely have to find a forum where other miners can help you configure it.

If you’re going to build a GPU cryptocurrency mining rig with more than two graphics cards, things get a bit complicated rather quickly.  While there are motherboards that support a dozen or more graphics cards, you will find that there isn’t a computer case that supports that many cards.  For that, you’ll have to build a computer around a custom cryptocurrency mining rig frame. This will have an “open air” design that allows the cards to get adequate cooling.

You’ll find that this also requires GPU extension cables, as there’s no way to cram all the cards together in the small space provided by the card slots or ports.

You’ll find that you end up with a large, not-all-that-attractive jumbo computer.  You may have to do a bit of tweaking in Windows in order to get more than 3-4 cards to work together and you’ll likely have to do some tweaking with the cryptocurrency mining software, as well.

Still, there are thousands of people who are making money with cryptocurrency mining this way, though the business is not as profitable as it used to be.

Cryptocurrency Mining Power Consumption

When you’re engaging in cryptocurrency mining, you’re going to be running one or more machines 24 hours a day and that requires power.  An ASIC is a relatively low powered machine compared to a computer with 8 graphics cards, but either type of cryptocurrency mining equipment is likely to cost you a few dollars per day in electricity costs, and that adds up over a month’s time.

Depending on where you live, a single cryptocurrency mining rig could use between $100-$200 of electricity per month.

How Much Can You Earn?

GPU

Graphics card, or a GPU

There’s no simple answer to how much you can earn in cryptocurrency mining.  Potential cryptocurrency mining earnings are determined by taking into account the cost of your mining equipment, the cost of your electricity, and what coin you are mining.  Bitcoin mining is now almost exclusively dominated by large companies, and individuals are going to have better luck mining altcoins.

Sometimes, you’ll find that on one day, a particular coin might be worth mining, but a dramatic drop in that coin’s value could make it unprofitable the next day.  If you’re using GPU cryptocurrency mining equipment, you can easily change the kind of coin that you’re mining so that you’re always mining the one that’s the most profitable.

There are cryptocurrency mining pools and mining software that will allow you to easily switch from one coin to another as profitability changes.  A site called What to Mine has a calculator that lets you see at any given time what coin is the most potentially profitable one for you, though the calculator isn’t well documented and can take a while to figure out.

Most rigs mining altcoins will be able to earn between $2-$20 per day before taking electricity costs into consideration.  To earn $20 per day, you’ll likely need a computer with 6-8 graphics cards that cost $1000 each, meaning that it could take more than a year to earn back your initial investment.

That assumes, of course, that the amount of computing power required to mine any given coin doesn’t dramatically increase during that time.  If it does, you’ll have to replace your graphics cards with newer (and more expensive) ones, though you can sell your old cards on eBay and recoup some of your money.

On the other hand, if you’re able to depreciate the cost of your hardware over time on your taxes and you live in a place where you can buy inexpensive electricity, you might be able to show a net profit through cryptocurrency mining.

Most people will likely decide that cryptocurrency mining is not worth their while.

Cryptocurrency Mining Summary

While people do earn money with cryptocurrency mining, it’s not nearly as easy or as profitable as it used to be.  There’s a lot of competition for mining rewards, and the mining hardware is expensive.  If you’re building a mining rig for GPU mining, you’ll have to be computer-savvy and know how to build a PC with multiple graphics cards.  You’ll also have to accept the fact that you will have very high electrical bills.

Most people will only be able to earn $5-$10 per day and will likely decide that it’s not worthwhile to spend $3000-$8000 for mining equipment in order to earn such a small sum.  On the other hand, you do get paid directly in cryptocurrency and many miners are accepting low profits or even losses in the short term in hopes that the cryptocurrency that they are mining will increase in value over time.

In that case, choosing the right coin to mine could pay off in the long run.  For most people, however, investing in cryptocurrency directly is likely a better option than cryptocurrency mining.

Ledger Nano S - The secure hardware wallet

Keepkey Hardware Wallet Review – Simple and Secure

Keepkey Review

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Site: www.keepkey.com

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keepkey wallet reviewWhen you have cash, you can protect it by leaving in a bank or storing it in a safe or a vault.  That’s not the case with cryptocurrency, such as Bitcoin.  Since cryptocurrency isn’t a physical item, you can’t store it in a safe or a bank.  The only thing that protects your investment is the protection of your private keys, the strings of alphanumeric characters that give you access to your money.

A great solution to protecting your private keys is a hardware wallet, such as Keepkey.  Since cryptocurrency requires you to transact on the Internet, hackers, malware and viruses can make it possible for criminals to steal your private keys and thus, steal your money.

A Keepkey hardware wallet can protect you by storing your private keys securely and keeping them away from hackers even if your computer is compromised.

Click here to visit the Keepkey Website (new window)

Read on for the full Keepkey review.

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Trezor Hardware Wallet Review – Affordable Security

Trezor Hardware Wallet Review

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Site: www.trezor.io

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trezor hardware wallet reviewCryptocurrency is still in its infancy, and it’s not yet as easy to use as regular money.  You have to keep track of your public keys and your private keys and if your private keys fall into the wrong hands, someone can easily steal your money.

There are many ways to secure your private keys, but right now, the best solution is a hardware wallet.  These are devices that keep anyone from being able to access your private keys while you’re sending or receiving Bitcoin or other cryptocurrency.

The Trezor hardware wallet is a popular option and an affordable one, as well.

Click here to visit the official Trezor Website (new window)

Read on for the full Trezor wallet review

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Ledger Nano S Wallet Review – Affordable and Secure

Ledger Nano S Wallet Review

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ledger nano s walletCryptocurrency is still in its infancy, and right now, users have a problem.  It’s relatively difficult to store/handle/transact with Bitcoin or other cryptocurrency, but it’s relatively easy for hackers to steal your coins, which can be worth quite a lot of money.

There are people who literally own millions of dollars worth of cryptocurrency, and the only thing that allows them to keep their wealth secure is their ability to keep a long string of alphanumeric characters a secret.

The Ledger Nano S hardware wallet was designed to help with that, as those strings, known as private keys, have to be used in order to transact in any way, and those transactions usually take place over the Internet.  How can you keep your keys secure when you still need to use them?

You use a hardware wallet, and the Ledger Nano S is one of the most affordable and secure hardware wallets on the market.  You can use it to keep track of your assets while still ensuring that they’re safe from hackers.

Click here to visit the Ledger Nano S Website (new window)

Read on for the full Ledger Nano S review.

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Make Money With Cryptocurrency – Three Ways to Do It

Make Money With Cryptocurrency

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make money with cryptocurrencyI’ve written a bit about cryptocurrency and how the technology behind it is likely to have a tremendous impact on our society in the next few years.  I’ve also mentioned that while the term “cryptocurrency” is often used to describe the 1500+ different types of coins and tokens that are currently available, they’re not all intended to be used as money.

They can be used as money, however, and it’s possible to make money with cryptocurrency in a number of different ways.  Not only that, but you don’t necessarily have to have a lot of money to get started if you want to make money with cryptocurrency.  That’s good, because right now, Bitcoin is selling for more than $8000 each, and obviously, buying a lot of those would be beyond the ability of most people who are trying to make money online.

In this post, I’ll describe three ways to make money with cryptocurrency.  You may wish to try one or all of them.

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Cryptocurrency Wallet – Storing Your Coins Safely

Cryptocurrency Wallet

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cryptocurrency walletIn a previous post, I discussed how to buy cryptocurrency, but I only casually mentioned what you do with it once you’ve purchased it.

When you have anything of value, you must find a place to store it.  That might be a vault, or a safe deposit box at the bank, or your purse, or the wallet that you keep in your back pocket when you’re out and about.

It’s no different when you purchase cryptocurrency, at least in theory, and for storing your Bitcoin, Litecoin or whatever-coin, you’ll first need to acquire a cryptocurrency wallet in which to store it.  A cryptocurrency wallet is quite a bit different from the piece of leather that you may carry around with you, and in this post, I’ll discuss the different types of wallets so you can choose the best cryptocurrency wallet for your needs.

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Buying Cryptocurrency – Where Do You Get It?

Buying Cryptocurrency

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buying cryptocurrencyI mentioned in a previous post that cryptocurrency is not only a new trend in business, but it can be a great way to make money.  There are several ways to make money with Bitcoin or any other crpytocurrency, but before you can make money with it, you first have to learn about buying cryptocurrency.

These days, buying cryptocurrency is about the only way to acquire it; the days when Bitcoin and Litecoin were so inexpensive that people gave them away are long gone.  Today, both of them, and some 1500 other cryptocurrencies, are now heavily traded commodities, and they’re going to cost you some fiat money; that is, cash.

In this post I’ll describe the basic process for buying cryptocurrency.  In later posts, I’ll review some cryptocurrency exchanges on an individual basis and I’ll also outline some ways that you can make money with cryptocurrency aside from simply buying it and hanging on to it for a while.

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Cryptocurrency – Actual Online Money and More

Cryptocurrency and Making Money Online

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cryptocurrencyThis site has long been about how to make money online, and at this point, several years after putting the site online, I realized that I hadn’t yet mentioned cryptocurrency except as it related to crypto-related products, most of which are scams.

Cryptocurrency is now entering the mainstream, and while you may have heard about it, you may not be overly familiar with it or know what it does or how it does it.  Since cryptocurrency should be included in any site about how to make money online, as you can make money with it, I’ve decided to add a section on crypto to this site in hopes that it will help.

Cryptocurrency Overview

The term “cryptocurrency” is made up of two parts – “crypto,” which implies that the data involved is encrypted, or secured against thieves or other bad actors, and “currency,” which refers to money.  In short, cryptocurrency means encrypted money, or “digital money,” as people often call it.

It can be that, as in Bitcoin, the first and best-known of crypto currencies.  But it can be much more than that, and the software that drives this new technology, called a “blockchain,” is actually useful for many things besides the transfer of wealth from one party to another.

While there are, at this writing, some 1500+ different crypto coins, the one most people are familiar with is Bitcoin, which was first proposed in 2008 in a paper written by a mysterious person who called himself Satoshi Nakamoto.  Nakamoto’s paper described a new digital currency, but also pointed out some of the problems with traditional money, or “fiat” currency, as it’s known.

This is money that is issued by governments, and while most people just assume that a dollar or a euro or a pound or a yen has value that won’t change or go away, there are some potential issues that Nakamoto sought to address via the creation of Bitcoin.

The problem with fiat currency, as Nakamoto saw it, is that you had to put your trust in third parties, such as the government, or a bank, or a credit card company, or a payment agent such as PayPal.  Anyone one of these third parties could, at their discretion, take your money or change its value in some way.

Nakamoto’s system of Bitcoin offered what he regarded as advantages over fiat currency:

  • A trustless system.  No third party is involved; all cryptocurrency transactions are monitored by a voluntary system of redundant computers distributed throughout the world.  They share a distributed database called a “blockchain.”  Any transaction must be acknowledged by consensus of the group, and coins can be sent from one party to another without the consent or help of any single third party.Participants in this consensus-producing system are called “miners,” and they are rewarded periodically by receiving a small number of the coins for whose transactions they are confirming.
  • Immutable – Transactions on your credit card can be disputed or even reversed.  If you sell something on eBay and the buyer pays by PayPal and they’re unhappy and complain about it, PayPal can take the money out of your account without your permission to repay the customer.With blockchain technology, this isn’t possible.  Cryptocurrency transactions can’t be changed or reversed, and money cannot be spent twice, hidden, or altered.  Once a transaction takes place, it exists on the blockchain forever.
  • Decentralized system – Banks and governments can affect the value of money by printing more of it, or destroying it.  They can raise or lower interest rates, which can make money harder or easier to obtain.  Cryptocurrency avoids all of this.
  • Privacy – If you write a check to someone or pay someone by PayPal, these transactions are recorded by third parties.  With cryptocurrency, it’s possible to send money to someone without anyone knowing who sent it or who received it.Most cryptocurrencies (though not all) are created with the intention of causing only a specific amount of them to exist.  They’re immune to inflation.   For Bitcoin, for example, only 21 million of them will ever exist.  That makes them an increasing rarity over time, and that has added value.  Where they once sold for a fraction of a cent each, a single Bitcoin now sells for close to $10,000.

Cryptocurrency Uses

bitcoinWhile Bitcoin was originally created to be used as a currency, not all products that are called “cryptocurrency” were necessarily created with the intention of being used as money.  While all of them can, more or less, be used as a store of value that can be exchanged between interested parties, some are actually utilitarian – they have a functional use aside from being used as currency.

Siacoin, for example, was created to help create a network of distributed cloud storage computers.  Anyone with extra drive space can participate, and the blockchain is used to keep track of whose data is stored where and to ensure that the data is both secure and redundant.  Those who share their drive space are compensated in Siacoin.

WePower is a green energy token, and users can use the WePower token to purchase green energy at a better price than those purchasing with fiat currency.

Coffeecoin was created as a universal mechanism for those in the coffee trade to buy and sell coffee beans on a large scale basis.

There are many different industries that are likely to benefit from cryptocurrency and blockchain technology.

While all of these coins make use of blockchain software, they do not necessarily have unique blockchain software.  The second major cryptocurrency, Ethereum, was created for the express purpose of allowing people to use the blockchain for the creation of contracts between two parties, known as “smart contracts,” and to use the blockchain as a mechanism for allowing other types of software to run.

While people use the term “coins” to refer to units of a particular cryptocurrency, the term “token” is used to refer to units of a currency that run on a shared blockchain.  There are hundreds of cryptocurrencies that use the Ethereum blockchain, for example, and all of these are referred to as ERC-20 tokens.   “ERC-20” refers to a common set of rules that any token running on the Ethereum blockchain must follow.

Buying and Selling Cryptocurrency

blockchainBuying and selling of cryptocurrency is done through the use of currency exchanges and keys.  Each individual who wishes to trade cryptocurrency needs to have two identifiers – a public key and a private key.  Each is a long string of alphanumeric characters that applies to one type of blockchain.  A key for Bitcoin is only good for Bitcoin trades, for example.

A key for Ethererum, on the other hand, can be used to trade any token that is built on the Ethereum blockchain.  The public key is used to send and receive the coins or tokens.  If you wanted to receive Bitcoin, you’d give your public Bitcoin key to the party who needs to send it to you.  You use the private key to access the money.

Unlike traditional fiat currency, you never actually possess cryptocurrency; it always exists on the blockchain.  They private key for a particular cryptocurrency is what gives you the right to “hold” it or trade it or sell it.  That’s why you should always protect your private keys and never share them with anyone.  If someone obtains your private key for any cryptocurrency, they can steal it all!

Most of the trading of cryptocurrency is done on a currency exchange.  There are two types of cryptocurrency exchanges – those that allow you to buy cryptocurrency with “fiat’ money, such as dollars or euros, and crypto-to-crypto exchanges, which allow you to trade one type of cryptocurrency for another.

Fiat exchanges are few in number, and once you invest your money, you’ll likely have to buy  one of three different cryptocurrency coins – Bitcoin, Ethereum, or Litecoin.  Most fiat exhanges only handle those three; some only handle Bitcoin.

The crypto-to-crypto exchanges often handle hundreds of different cryptocurrencies, but you cannot acquire them with fiat currency.  You must trade Bitcoin, Ethereum, or Litecoin for them.

For most traders, that means that you’ll need to have accounts at multiple exchanges in order to turn dollars into Siacoin, for example.

Storing Your Cryptocurrency

For fiat money, you’d store it in a bank or a safe deposit box, or a wallet.  For cryptocurrency, you also store it in a wallet, but these wallets are mostly software devices that keep track of your keys for you.  There are also hardware wallets that keep your keys secure so that they cannot be obtained by hackers.

Wallets are a complicated topic that warrant their own article.

Making Money With Cryptocurrency

At the end of the day, this site is about making money, and I wouldn’t be writing about cryptocurrency if it wasn’t possible to make money with it.  There are numerous ways to make money with crypto, both directly and indirectly.

I’ll be writing more about this in the future, as making money online is what this site is about, and cryptocurrency is a useful tool for anyone who is interested in making money.

SEO Content Machine Review – Autopilot Blog Content?

SEO Content Machine Review

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Site: www.seocontentmachine.com

Price $27/month

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seo content machine reviewOne of the harder things about running one or more Websites is creating content for them.  You need content for your visitors to see something, but you also need content so the search engines will know what your site is about.  Writing content is a lot of work; I own some 50 Websites and I do a lot of writing.

SEO Content Machine says they can help with that, as their software creates quality content automatically. Not only that, but it can find content, create it, add photos and links, and upload it to your blog or Website automatically.

That sounded interesting, so I thought I’d take a look and see if the software is all they say it is.  Is SEO Content Machine a scam, or can it help?

Click here to visit the SEO Content Machine Website (new window)

Read on for the full SEO Content Machine review.

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Digital Altitude Shut Down by FTC

Digital Altitude All Gone?

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digital altitude ftc shutdownA while back, I wrote a review of a product called Digital Altitude.  Later, I ended up writing several different reviews of Digital Altitude.  I didn’t set out to do that, but it turns out that there are a few products out there, such as this one, and this one, that present themselves as something unique, but a bit of digging shows that they were really just fronts for Digital Altitude.

All of those products are likely out of business now, as this week, the Federal Trade Commission asked a U.S. Federal court to “temporarily” shut down Digital Altitude and the various companies associated with it.  It seems that the course, which promised people that they could earn six figures in income in only 90 days, was not entirely honest about that.

Read on to learn more about the shutdown of Digital Altitude.

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