Cryptocurrency is a great way to send and receive money, it’s fast, it’s inexpensive to send it across borders, and it’s also much more fair to merchants thanks to the fact that people can not create fraudulent chargebacks. In fact, nobody can confiscate or reclaim your money for any reason, and it’s one of the most beautiful things about storing your wealth in cryptocurrency. However, that also gives us a certain level of responsibility when it comes to using it. Those who are new to the world of cryptocurrency should take some serious precautions in order to avoid their funds being stolen because there is likely no way to reclaim them after the fact like you would with a bank account. It’s a trade-off in protection and freedom, but if you learn to protect yourself, then you don’t need the bank or the government to do it for you.
Be very careful about what sites you visit
This is especially true if you use a web wallet such as My Ether Wallet, but the possibility for your funds to be stolen can happen with any machine that is online. Either through the “merchant” directly, or even through someone else, it’s possible that your wallet details could be stolen through phishing. This is when someone who is pretending to be a legitimate website tricks you into giving out your private information.
If using a web wallet, always make sure that you are on the actual site and not a copycat. Check for subtle differences in the domain name, such as a character or a misspelling. It’s also important that you never give anyone your private key, no matter what they say it is for. This will allow them to steal your coins.
Check for feedback or reviews
If you’re considering making a purchase from a merchant, you must be extra careful when it comes to cryptocurrency. Once they have your money, it’s likely you will never be able to get it back. It’s important to know who you’re dealing with. While there is some degree of anonymity often associated with cryptocurrency transactions, a legitimate business will still often have their information listed. Look for a business address, phone number, the name of the owner, ect. If everything seems a little shadowy, then it might be a red flag.
If the provider is not well known, then it would be best to check for any feedback about them or to even ask if anyone has dealt with them in a forum such as Reddit or Bitcointalk. Usually, a quick Google search will turn up any information, good or bad.
If you really want to make a purchase here, but you still aren’t sure, then commit to only spending a small amount first. Make a tiny purchase of around $10 to see how your transaction goes. If everything goes smoothly, then you can slowly up the amount you want to spend as your trust for the merchant grows.
Utilize and escrow whenever possible
Some crypto friendly websites such as eBay clone Bitify offer an escrow service. They are a peer to peer marketplace, and that means that if you want to trade with someone on their platform, but you don’t really trust them, then Bitify will help to orchestrate the trade. The buyer places their money into the escrow, and the seller sends the item. After the item arrives, the buyer then releases the escrow to the seller.
If a problem arises, and your item has not been delivered, or it is significantly different than what you were expecting, then a third party will step in to settle the dispute. They will examine evidence from both sides such as photos or tracking numbers to decide who was in the wrong, and then if you are found to have been correct, your money will be returned.
If you don’t want to trade on Bitify, then there are plenty of other third-party escrows around as well. You can try asking on Reddit or Bitcointalk if you need a suggestion for one.
In closing, when trading online it’s important to protect yourself. You don’t always know who is on the other side of a trade, and in cryptocurrency, you need to guard your wallets with your life sometimes. One small mistake can lead to a huge loss that can never be recovered.