5 Golden Rules to Follow When Buying Bitcoins

Follow these 5 golden to avoid fraud when buying Bitcoins.

Rule #1 – Check the credibility of your Bitcoin seller.

When buying from an individual validate their reputation by reviewing their trader profile if one is available. Ask for a Facebook, LinkedIn or any other social network profile in order to to ascertain there’s an actual person behind the screen. As a rule of thumb never buy Bitcoins from someone who you cannot account for their credibility.

If you’re buying at an exchange, check for the exchange name and the word “reviews”. Looking for reviews about exchanges and even individuals in the Bitcointalk forum can also provide valuable insights.

Rule #2 – Document everything

Since Bitcoin is somewhat untraceable like cash, in case of fraud it will be hard to prove specific allegations. Make sure you document your communication with the seller in a way that will be easy to present if needed later on.

Rule #3 – Wait for 1 confirmation before handing over the money

For small to medium transaction it’s recommended to wait for at least 1 confirmation before submitting your payment. For larger transactions, wait at least 6 confirmations.

Rule #4 – Use escrow when needed

When conducting large transactions with individuals use a Bitcoin escrow service to hold on to your funds until you receive the required amount of confirmations. This way your money will be in the custody of a trusted 3rd party until you receive the Bitcoins.

Rule #5 – NEVER leave your money at an exchange

If you’re buying Bitcoins at an exchange make sure to move your Bitcoin to your own private Bitcoin wallet the moment you get them. NEVER leave Bitcoins inside an exchange, this can result in the lose of your Bitcoins due to theft or fraud.