Cryptocurrency scams have worried many about whether or not they should even have bitcoin to begin with. That said, with anything financially related, there will be some risk. Those who conduct frequent transactions in a bitcoin marketplace are careful to use a well-respected and reputable platform to purchase and store their cryptocurrency.
When done so correctly, using bitcoin as an investment or payment method is a reliable means to conduct transactions. Therefore, making a purchase with bitcoin using an online platform is safe if consumers follow the same principles for determining a trustworthy platform as they would any other online payment platform.
Bitcoin is fundamentally secure
Fraudulent charges are less of a concern with bitcoin. Every time a credit card is used, your information is sent to multiple touchpoints, including the acquiring bank, card service, merchant, and issuer, before any funds are removed from your account. Each touchpoint provides an additional opportunity for a company to obtain your personal information.
Bitcoin operates with anonymity, protecting personal information by only sharing a user’s public address on the public blockchain. Since bitcoin wallets aren’t linked to a user’s personal data or identity, there is less risk that your information can be stolen. However, users may still need to provide some personal details on the exchange they are using.
Considering this factor, making online purchases with bitcoin are often seen as more secure than traditional payment methods.
Determining a safe online platform
While bitcoin is fundamentally safe for online purchases, it is important to stick to trustworthy services when making purchases. When consumers fall victim to fraud when using their credit cards, laws and regulations in the area may offer some protection. In comparison, bitcoin is not backed by government agencies, so once a payment is made, your money is gone. Therefore, any mistakes or transactions made with a fraudulent seller are dependent on the seller’s goodwill to return your funds. Bitcoin will detect typos so money can’t be sent to an invalid address by mistake, but this won’t protect consumers from a fraudulent seller who is using a real address.
To determine if a certain platform is safe, users can follow similar practices like they would any other online store, including:
- Locating a business phone number and address. Legitimate sellers will typically provide this information in the header or footer of the website. Users can look up this information online to determine if the location is accurate or if the phone number provided is in service.
- Look for an SSL certificate. An SSL certificate is indicated by an icon of a locked padlock in the URL bar on your web browser. Another indicator is if the website begins with “https://”
- Avoid details that are too good to be true. As a quick rule of thumb for eCommerce safety, if an offer seems too good to be true, it probably is.
These are just some of the visual cues that consumers are encouraged to look for when shopping online. However, not all websites will provide this information, especially niche cryptocurrency marketplaces or niche items. In this case, looking for personal reviews from other users can be a great way to stay safe when using bitcoin. Often a lot of information can be gleaned through a quick Quora search or reviewing a Reddit thread.
If little information is available, sticking to retailers that are well-known can be the best way to safely buy online with cryptocurrency. Alternatively, a store might use a bitcoin payment processing service like Flexa or BitPay. In these cases, users may research the processing service for added peace of mind.
Although some due diligence is required on the part of consumers right now, additional services to protect businesses and consumers will likely be implemented in the future as bitcoin continues to become more mainstream.