Bitcoin has gained a lot of legitimacy in recent years as more consumers, investors, retailers, and even governments have begun to see how useful this popular non-centralized cryptocurrency can be. That doesn’t mean investors or consumers who want to buy bitcoin are completely in the clear, though. There are still tons of scammers out there, so it’s important for those buying bitcoin for the first time to educate themselves. Read on to find out about the safest ways to buy bitcoin online to avoid scammers, frauds, and other issues.
Set Up a Bitcoin Wallet
The first step any buyer will need to take to start purchasing bitcoin safely online is to set up a bitcoin wallet. When they sign up for xCoins.io, new users are automatically assigned an online wallet that they can use to buy, sell, trade, or hold bitcoin.
Consider Cold Storage for Large Holdings
Security-conscious buyers and investors who plan to purchase and hold large quantities of bitcoin often set up offline wallets, also referred to as bitcoin cold storage or hardware wallets. Since offline wallets are not accessible via the Internet, there’s no chance of hackers gaining access to investors’ funds. The largest risk associated with using offline wallets is that of misplacing or forgetting access keys or tokens. Buyers who plan to hold on to some bitcoin but spend or trade the rest will still need to maintain online wallets, even if they prefer to keep the bulk of their assets in cold storage.
Choose a Reputable Exchange
There are two main types of bitcoin platforms: traditional exchanges and peer-to-peer secured lending platforms. Both options are safe and secure as long as buyers choose a reputable platform that uses authentication, encryption, and other industry-standard security protocols. It’s easy to tell if a platform uses encryption. Just check the URL. It should start with https instead of http. The extra letter indicates that the website has a valid SSL certificate.
When they work with reputable exchanges, users will generally be required to provide a photo ID and a tax identification number to ensure that they do not break any money laundering laws, so expect to provide basic identifying information upon signing up.
There are four main contenders in the United States when it comes to well-established bitcoin exchanges: bitFlyer, Bittrex, Gemini, and itBit. For international buyers, the four best-established options are Bitstamp, Coinbase, Coinmama, and Kraken. Just keep in mind that these exchanges offer varying degrees of security, so buyers should perform their due diligence before setting up wallets and starting to trade cryptocurrencies.
The xCoins.io Difference
Both traditional exchanges and peer-to-peer secured lending platforms usually allow users to purchase bitcoin online using credit cards, debit cards, bank transfers, and other forms of payment. The primary difference here is that traditional exchanges have to account for the fact that while bitcoin transactions are irreversible, like cash transactions, other forms of payment can be reversed.
To avoid chargebacks, most exchanges have security measures in place like forcing buyers to wait for days after making their payments to get their bitcoins, setting low trading limits, or even refusing to accept credit card payments altogether. Peer-to-peer secured lending platforms like xCoins.io have come up with a better solution. They use secure lending to give bitcoin as a loan, which avoids the need for a waiting period. Borrowers can simply pay the security deposit and fees, then get their bitcoin immediately.
The easiest way to avoid scams is to stick to reputable, well-established lending platforms and exchanges. Be extremely wary of unsolicited emails regarding bitcoin trading platforms or opportunities. That goes for prices that are well below market values, offers of free giveaways, and solicitations for help with the promise of interest or guaranteed returns.
Don’t Get Phished
Some scammers set up fake bitcoin platforms, sometimes referred to as phishing websites, in an attempt to get access to buyers’ personal or financial information or steal the bitcoin they already have held in legitimate wallets. Fake exchange websites often look very similar to legitimate sites, so those who receive unsolicited emails with links to online platforms may want to double-check the sites’ authenticity by getting in touch with the company via a trusted phone number, email address, or social media profile. As a general rule, it’s better not to even open unsolicited emails, especially if the headline mentions offers that sound too good to be true such as free bitcoin giveaways or the potential for guaranteed returns.
Never Use Public Networks
No matter how secure a bitcoin exchange or lending platform is, it won’t make up for user error on buyers’ ends. The most important thing to remember is that buyers should never purchase bitcoin over public networks. Use only a private network and make sure the computer is outfitted with adequate security software to prevent hackers from accessing sensitive financial information during the transaction.
Be On the Lookout for Fraud
It’s not uncommon for fraudsters to impersonate friends or family members of a target in an attempt to gain his or her trust. They’re good at what they do, so it can be hard for the average buyer to identify fraudulent social media or email accounts. If buyers receive unsolicited emails with offers to sell bitcoin at low prices, they should always be wary, even if the emails seem to be coming from a trusted friend. Use another medium of communication such as a phone or even an in-person visit to confirm the seller’s identity, especially if he or she has never expressed an interest in bitcoin investing in the past.
Avoid User Errors
No matter how secure a lending platform or exchange is, buyers still need to take responsibility for the security of their bitcoin wallets. That means following best practices for cybersecurity and performing due diligence about how to ensure safety during bitcoin transactions. Here are a few expert tips that should help:
Don’t Share Wallet Keys
There is no reason a seller should need a buyer’s private wallet key to transfer funds, so don’t be tricked into sharing it. Instead, share the wallet address, or public key. This key is the equivalent of a bank account number, which is what sellers will need to transfer cryptocurrency. Giving out a private wallet key is like giving out the PIN to a bank account.
Create Secure Passwords
It’s surprising how many Internet users validate the security of the websites they use but don’t take the time to consider how their own actions could compromise their online security. When creating accounts with new exchanges or platforms, buyers should always come up with unique passwords. They should be longer than eight characters and should contain numbers, special characters, and both upper and lowercase letters. Some exchanges require users to create long, secure passwords, while others leave it up to the user.
Install Google Authenticator
Even if the platform uses encryption and has built-in authentication procedures, it never hurts to be cautious. If buyers haven’t already done so, they can download Google Authenticator for Gmail then turn on 2-factor authentication for their emails and cryptocurrency exchange accounts. It’s easy to do, takes next to no time, and will add an extra layer of security.
Use Separate Email Accounts and Phone Numbers
Those who are still concerned about online security should consider creating new, completely private email accounts and phone numbers for use exclusively with cryptocurrency exchanges. Using a separate phone number and email address makes it more difficult for cybercriminals to identify potential targets and protects against sophisticated hackers who might otherwise be able to use personal identifying information to get access to buyers’ primary phones and email accounts.
Just bought a ton of bitcoin and feeling excited about it? Resist the temptation to boast about those new assets. It’s not just a social faux pas. If the information gets out that someone has a ton of bitcoin in his or her online wallet, it will attract the kind of attention that the buyer doesn’t want.
Why Stick to Online Transactions?
Some bitcoin ATMs and individual sellers allow buyers to use cash to purchase bitcoins in person. This is best avoided, especially if it requires meeting an individual seller to complete the transaction. It’s never safe to meet a stranger, even in a public place, to exchange cash for bitcoins, especially given how easy it is to buy or borrow them online. Chances are, the person has ill intentions, so even if it sounds like a great deal, it’s not worth it for buyers to risk their personal safety.
The Bottom Line
First-time buyers looking for a safe and secure platform that doesn’t require multi-day waiting periods or jumping through tons of hoops should check out xCoins.io. It’s one of the most respected peer-to-peer secure lending platforms available for bitcoin transactions. Although xCoins takes user security very seriously, buyers still need to take precautions. There’s no way for even the best exchange to prevent user errors like falling for scams and frauds, creating easy to guess passwords, or signing on via unsecured networks.