Bitcoin has been the next big thing in the world of finance for the last several years. However, with more active users comes a greater potential for scams to occur. In this article, we want to share some basic advice to ensure your safety when making online purchases including the use of a bitcoin escrow service.
Have A Safe Storage Method
Long before you issue any payments with bitcoin, you will need a place to store it. Consumers can hold in a digital wallet that will also act as your digital bank account to store, pay and receive money. Many free crypto wallets currently exist and are compatible with both desktop and mobile devices. To ensure you gain access to a wallet that will be of most use to you, it is important to carefully review the security features and associated customer reviews.
There are three types of wallets you can choose from, including a mobile, desktop, and hardware wallet. Consider the benefits and drawbacks of each listed below:
Great for on-the-go use and efficient for face-to-face transactions when the seller is nearby. Consumers must be aware that if the wallet’s device is misplaced or damaged, their funds may be irretrievable.
Gives users complete control over their funds and may offer hardware wallet support. It is not available on the go and may be susceptible to malware attacks if the software isn’t updated.
The most secure for long-term cryptocurrency storage, making it ideal for storing large amounts of digital currency. Typically more difficult to use, especially when transferring funds.
To make a purchase, users should stick to hot wallets (mobile or desktop) since they allow users to quickly access and transfer their funds. Cold wallets such as hardware and paper wallets are typically more suited for long-term storage.
Use A Secure Platform To Purchase Digital Currencies
After selecting your wallet, you will need to purchase some coins to go in it. Coins are most often purchased through a cryptocurrency exchange to ensure you get the best possible price for bitcoin. Depending on the exchange, you may use a credit card or bank account to wire fiat currency. As a step in the purchasing process, it is important to carefully research the available exchanges to understand how trustworthy and reliable they are. Your research may include researching the founder on LinkedIn, reading third-party reviews on trusted websites, and locating their security policy, asking questions like, “do they leverage two-factor authentication (2FA)?” Some exchanges will require personal details to verify your account. While this eliminates the anonymity of digital currency, it also adds security since companies can track down and ban fraudulent parties.
Once you have made your selection, you can provide the exchange with your bitcoin wallet address, fund your account and wait a few minutes until your transaction is complete.
Find A Platform That Accepts Bitcoin
As you would with any other online storefront, it is also important to exercise caution with who you buy from. Several big-box retailers have made options for bitcoin payments available to customers. However, for other offerings from cryptocurrency marketplaces or private sellers, a certain level of caution will be necessary to ensure the products you are buying are legitimate. On websites this due diligence might consider:
- Background research of the company
- Presence of a trusted payment processor
- Information on returns including (but not limited to)
- How long the delivery will take
- Where the seller is shipping the product from
- If a return policy exists at all
- For luxury items, consumers should do some additional research on the product, including how to identify if the item is counterfeit
Some other security features a trusted website will have include:
- A padlock symbol next to the website address
- The presence of “HTTPS” before the URL
- A green address bar (this one is optional and is not a make or break criterion)
- For an independent seller, this might include using a bitcoin escrow service to help facilitate the transaction.
When it comes time to purchase, users will simply need to copy their bitcoin address and paste it into the proper field in their own wallet. The payment page will the high amount required for payment, so users can type in the amount and hit send.
Since these transactions will require the internet, it is important to verify that your connection is also secure. For consumers, this warning is a reminder not to use public wi-fi found in shopping malls or restaurants since they are more likely to be a hacker’s target. Therefore any information sent may be accessible by fraudulent parties. To guarantee your safety, using mobile data is often a safer alternative.