How to be safe when using Bitcoin to buy an item? That’s what this article is about. If you’re about to use Bitcoin, or any other Cryptocurrency to buy an item, keep reading. The next few minutes may save you a lot of money.
Fortunately, Cryptocurrency isn’t “anonymous” as most people perceive it to be. It’s just more private but is fully traceable on the blockchain, at least Bitcoin and most other coins are.
We’ll be using this transparency to ensure you get a smooth deal and no party suffers a loss.
Table of Contents
Authenticate the seller
The biggest safety threat when buying anything online, with or without Bitcoin, is a seller’s reputation.
If you’re buying an item from Microsoft, Tesla (yes, they accept Crypto) or other such sellers, there’s no risk whatsoever.
However, when purchasing from lesser known third-parties or independent individuals, seller authentication becomes massively important.
If possible, try to find buyers on third-party sites that let the sellers maintain a “profile”. This would let you check their previous sales, reviews, ratings, no. of unsuccessful orders etc.
Use a third-party P2P mediator/escrow
This applies when using Bitcoin to buy items from individuals. Always use a P2P mediator. Never deal with people off of social networks and forums. It’s best to use a P2P mediator/escrow. This ensures no party can simply run away without fulfilling their end of the bargain.
The escrow basically holds your funds till you manually release them, or the other party proves their fulfilment of the deal from their end.
Yes, most escrow services aren’t free. But I believe losing a very small fraction of your payment is better than losing all of it, isn’t it?
Triple check wallet addresses (and network)
I know you’ll check the address before depositing funds, but will you check thrice? You should! In most cases, what you’d do is check the first and last characters. Well, while pretty good, it’s not enough.
You must check the entire address, one by one, for each letter.
Once you’ve verified that the address is correct, double verify the transaction network from the seller.
Yes, simply having the correct address will not work. If you send your funds using a different network, you may incur higher fees or and lose your funds altogether.
Do not use your primary wallet
Let’s say you’ve got all your funds in wallet X. It’s the worst idea to send funds to the seller directly from this wallet. You’re literally telling them where all your money is.
It’s best to send this to some other wallet before sending it to the seller. Of course, it’s still traceable to your original wallet but it still makes it more private then simply sending from your primary wallet directly.
You may even use Bitcoin to buy a gift card for popular merchants and then send the gift card to the seller if they accept it. This would let you use Bitcoin, without having to send any direct traceable transaction to the seller.
Triple check (again, yes) all involved URLs
For the transaction, you’ll of course be using URLs at various stages. This may start with you accessing your primary funds, sending funds to a secondary wallet, or just contacting the seller.
For starters, never use URLs sent by sellers in direct messages. Always enter URLs manually. It’s best if you can even avoid Google or other search engines.
Then, whatever website you land on, make sure the URL is 100% correct. Replacing similar characters (Facebook to Faceb00k) is a very common phishing attempt you must look out for.
Enhance wallet security
I hope you aren’t using an exchange to hold your funds to begin with. If you are, please shift to a wallet. Only keep the trading amount on an exchange.
As for the wallet:
- Enable 2-FA: Make sure your wallet requires an OTP via e-mail/SMS or some authentication app for login.
- Increase password complexity: Whatever your password is, make it harder. Be sure to not use anything that you use for any other platform. Of course, make it longer, use alphanumeric characters and other symbols.
- Multi-signature wallets: It’s best to use multisig wallets. Yes they’re slightly more complex but add a ton of security to your wallet.
- Mnemonic key: Make sure your recovery /mnemonic key is kept safe and backed up right. This is your only lifesaver in case something goes wrong.
- Do not use public WiFi: in the simplest words, these are the easiest to hack into. Avoid. Period.
Final words- how to be safe when using Bitcoin to buy online?
I hope you’ve got some idea as far as Bitcoin safety goes, haven’t you? Well, there are a few other tips you can pay attention to.
For starters, always verify the price of Bitcoin just before your payment. It may have changed since you last checked and you may be over or under paying.
Secondly, you may even clean/tumble your Bitcoins before sending if you wish to eradicate any and all links to you.
While other ways exist, I’m sure following the ones discussed above will keep you pretty secure.
