Bitcoin hit a new high Wednesday, topping $20,000, and is continuing to rise. Maybe today is the day that you finally are ready to take the plunge and buy your first few satoshis. Before you do, here are a few suggestions to avoid falling victim to some of the bitcoin scammers and hucksters who will try to take advantage of people who are still new to the wild world of cryptocurrencies.
Do your research
The first step in the journey is to set up a wallet to store your bitcoin safely. There are plenty of bitcoin wallets on the App Store and Google Play. Just be sure to read the reviews and research the wallets before you decide on one. You want to be confident you are depositing your newly acquired bitcoin funds into a legitimate wallet that will actually keep your crypto safe and not stolen from you.
Read more: How to Store Your Bitcoins
You’ll also need to decide on an exchange where you will be able to buy your first bitcoin. There are plenty of exchanges out there and come with varying degrees of security. Most will require some form of identity verification before you can set up an account, so be prepared.
When it comes to wallets and exchanges, be sure the site you visit is reputable before you send any money. A slick website is not necessarily the sign of a legitimate business. Similarly, just because a wallet app is listed in an app store, that doesn’t guarantee it’s safe. Even if they are legitimate, the cryptocurrency world has seen exchanges and wallets hacked time and time again.
Read more: How Can I Buy Bitcoin?
Check out how long an exchange or wallet company has been around. Look for reviews and feedback, review sites such as Reddit and read through a company’s social media history. Do a news search for whatever company you’re researching because most reliable exchanges and brokers have likely been covered by prominent media outlets.
Protect your bitcoin keys
Bitcoin isn’t like your bank. There is no helpline you can call, no fraud department that might help you sort out a transaction and no way to block a “suspicious transaction.” The ethos of bitcoin is that it exists beyond the traditional financial system and gives ultimate control to the user.
Read more: How FinCEN Became a Honeypot for Sensitive Personal Data
On the one hand, this means you aren’t paying overdraft fees or having the government gain access to your personal data through your financial transactions. On the other hand, there is no centralized authority who is going to step in and save you if you share your keys and have your bitcoin stolen. In some ways, it’s the ultimate test of personal responsibility.
If you’re just entering the space, it’s worth embracing one of the core ideas of bitcoin – “not your keys, not your coins.”
A wallet generates two types of keys: a private key and a public key. The public key is used to create public addresses. These are the addresses that you will share with others to receive bitcoin.