We all know that Bitcoin has already been accepted as payment method by many various online businesses. It’s not controlled by any financial authority, it’s unregulated, and anonymous- all perfect characteristics for an industry that is currently being subjected to all sorts of strict guidelines and legalities.
But it’s these very same characteristics that make Bitcoin payments relatively volatile. Online businesses accepting Bitcoins pop out one after another- and vanish just as instantly, taking with them thousands of dollars worth of their customers’ bitcoins with them. Though, of course, there are many trusted and reliable Bitcoin businesses.
Take these steps to learn how to avoid scams in the wild world of the Bitcoin market:
Do your own investigation regarding the business origins. Too much anonymity is a bad thing- especially if it’s on the side of the bitcoin business owners. If there is no record of the owners or the companies who manage it, or the records are fraudulent, then it’s a red flag. So do your own investigation. Do a WhoIs lookup (www.whois.com) and check the field for Registrant Name. If it’s “Whois Agent” “Whois Protection” or any other vague name, then there’s a chance that that particular establishment is using a Whois Protection Service to mask its owner. Anonymity is not bad per se, but you need to know exactly who you’re giving your money to. This kind of deep and untraceable anonymity is a red flag.
Determine how long the establishment has been in operation. As a rule of thumb, purchase with caution from Bitcoin businesses that are less than a year old. These may be still unreliable. Though they might have a few good reviews here and there, remember that these might just came from the persons who are running the sites themselves. Some people even estimate that almost 90% of all new Bitcoin businesses fold within twelve months. You can check out the website’s creation date on its Whois record.
Be wary and vigilant of the reviews and talks that you can see on Bitcoin communities and forums. Usually these places are where business owners first go to when they promote their sites, and where they can interact with their (potential) customers. A popular example of a Bitcoin community is Bitcointalk, an online forum of sorts where anything Bitcoin-related is discussed. Like what we said, it’s easy for anyone to create an account on a forum like this one and start singing praises for a for a random Bitcoin business. So take everything with a grain of salt. The great thing about Bitcoin talk is that the community there actively investigates each Bitcoin business that posts on the site, so it’s not at all that bad.
Before making a purchase, try contacting the website first to make a general inquiry and see if they’ll respond. If they don’t get back to you, then there’s a huge chance that they won’t answer your questions too should you ever have a legitimate problem.