New to Bitcoin? Here are a few good practices and things to watch out for:
As a company that strongly believes in the long term potential of Bitcoin, we’re always eager to introduce it to someone new — many others in the industry do as well. Bitcoin is becoming increasingly accessible and user friendly, even for the less technically savvy. But there are some pitfalls that first time Bitcoin users are susceptible to. The good news is that these pitfalls are avoidable. So, we would like to address to “first time Bitcoin user” and suggest a few good practices. (If you have some of your own please feel free to add in the comments!)
Start slow, never buy more than you can afford to lose
There are a couple reasons for this. First, Bitcoin is fundamentally different than what you’re likely used to when it comes to sending, receiving, and storing something of value. Its better to walk before you run — start small and get comfortable with how Bitcoin works.
The price fluctuates, so if it were to drop you would not want to be in a tough position because you purchased more than you could afford to lose.
Download a reputable mobile wallet
Bitcoin wallets are free to download and use on both iOS and Android devices — for some recommendations see this article. Before you receive any money using your mobile wallet, back it up! By creating a backup (twelve random words that you should write down and store somewhere safe) you ensure that you can recover your wallet if you lose your device, drop it in the ocean, etc. Your mobile wallet will work seamlessly at any of our locations when you purchase bitcoins. More importantly, you and only you have access to those bitcoins once you complete the purchase.
Avoid sending bitcoin purchases directly to an individual or 3rd party platform
If you send bitcoins directly to someone or some platform, then you don’t directly control your bitcoins. If you’ve never used the 3rd party platform where you’re sending bitcoins — you’re really rolling the dice.
Granted, 3rd party platforms are often necessary as a vehicle to trade or conduct e-commerce transactions but that doesn’t mean you should immediately send all your funds there.
Rather, you should send a little and make sure you’re comfortable with the 3rd party platform, while retaining the majority of your bitcoins on your own mobile wallet. Last note on this — once a transaction is finalized and the bitcoins are sent to the address you provide, there is nothing we can do to reverse the transaction.
Do your research. If it sounds too good to be true it probably is…
This relates to the previous point, to not send funds directly to an individual or 3rd party. Due the nature of irreversible transactions, Bitcoin has become a tool for scam artists. So before you conduct that irreversible transaction-be aware of some common scams using Bitcoin are:
- High-Yield Investment Programs
- Bitcoin Mining Scams — most notably “Cloud Mining”
- Scam Bitcoin Wallets — software or web services that steal users’ funds
- Scam Bitcoin Exchanges — platforms that appeal to potential users with lower rates, or new features like credit card processing. Often leads to theft of personal financial information
Check out this Investopedia article for a more comprehensive list and explanation of the common Bitcoin Scams to avoid.
We wanted to close this article by bringing attention to scam has been occurring on eBay Motors, a branch of eBay where users auction their vehicles, many of the listings are legitimate but some are not. eBay Motors scammers reach out to bidders in a somewhat convincing email that impersonates eBay Motors support, describing how the individual who posted the listing only accepts Bitcoin for payment.
Immediately there are several red flags, beyond the grammatical errors that would seem unlikely in a support email from a company such as eBay. First and foremost, eBay does not offer Bitcoin as a form of payment on any of its platforms. Secondly, if you take a look at the sender’s email address, it clearly is not from eBay.
On top of all this, the price seems too good to be true. Nevertheless, some have fallen victim to this scam and sent bitcoins directly to the “seller” not knowing they would never receive their purchased vehicle, or be reimbursed by the “seller” or eBay.
This scam has come up a number of times now — in some instances we’re able to catch it before the customer transacts. Unfortunately, sometimes we cannot as the customer does not reach out to us until after the fact. When a customer buys bitcoins from us, we assume they have control of the wallet address they provide. While there are many legitimate companies pushing the Bitcoin industry towards legitimacy, nefarious actors scamming new users out of their bitcoins deter growth. For this reason we find it imperative to share best practices in hopes that new and existing Bitcoin users can protect their funds and avoid scams that are detrimental to the growth and adoption of Bitcoin.
Have any additional tips or best practices for new users? Feel free to add in the comment section!
