Dangers when buying cryptocurrencies

The crypto market once again reaches all-time highs; the crypto community audience is growing by leaps and bounds, which means that along with experienced specialists, less savvy users appear. We will tell you about what dangers can exist and how to minimize the risks. 

Where to keep crypto?

First, you should consider where and how to keep the cryptocurrency you purchase. Cryptocurrency allows you to choose between two options: in the first case, you receive an analog of a simple bank account (this is called a custodial wallet), and in the second case, you are the sole owner of your tokens (professionals call these noncustodial wallets). 

It can’t be said which approach is better; they both have advantages and disadvantages. The first one is connected with trust risks to third parties. However, they allow you to save time and money on commissions and, most importantly, give you the possibility to “socially restore” access to your wallet. If you lose access to your wallet, you can request to reset it or restore access by confirming your identity. 

The second method is similar to keeping cash—you do not have to rely on exchanges, but if you lose the wallet, nobody will return the money, even if you describe what it looked like.

Where to buy crypto?

After choosing the storage option, you must determine a safe way to purchase assets. Regardless of the form of the wallet, the principles for selecting the seller of cryptocurrency will be similar. 

The main dangers here are fraudsters and phishing. Due to the novelty of working with cryptocurrency and many users’ lack of experience, the crypto industry is peppered with scammers of all sorts.

To protect yourself, follow a simple plan.

1. Double-check the correctness of the site address in the address bar and the presence of the SLL-certificate symbol next to it (gray or green lock to the left of the address). It is not sufficient to say with complete confidence about the resource’s trustworthiness, however, without this symbol, in 99.9% of cases your data will be compromised.
   
2. Check large directories for the site you found. Getting listed in such analyzing services does not guarantee complete safety, however, and the site’s absence from the lists should warn you against transactions with it.

• For checking crypto exchanges, the sites CoinMarketCap.com or CoinGecko.com are handy. Use the site search to check for the presence of the exchange in their list, or manually check against the list in the “Exchanges” section.

• To check exchangers (exchange services), you will need BestChange.com. In the section “Exchangers”, there is a list of services, diligently checked by the directory, with reviews about their work. Besides that, BestChange allows you to compare the rates of cryptocurrency purchases and purchases in real-time mode. You may find more profitable options.

3. If you are on the website for the first time, make sure to verify its history and reputation. 

• Copy the address directly from the address bar and use any WHOIS service. Such sites allow you to check the age of the domain and sometimes even information about the owner. For international sites, you can use the service whois.com.

• Check the website on large review aggregators. Such platforms often collect negative feedback, which is why you can mistakenly form an impression that the exchange or exchanger is untrustworthy. Here, the main thing is not the number of reviews but the quality of solving the user’s problem. Everyone can make mistakes, but the manner and speed of the exchanger’s solving the issues can be seen here.

The most popular and relevant review aggregators for this sphere are trustpilot.com and mywot.com. However, specifically for exchangers, the most extensive review base is kept in the directory BestChange.com, make sure to check the site in question against it.

4. Do not visit sites from advertising in the results given by search engines. If you need to find the website by its name, use directories or scroll down to the organic results. Advertising should be marked by an additional icon or the word “Ad” in the text and can be shown over the search results. 

Fraudsters have learned to masterfully search for loopholes in the safety of advertising accounts, and they scam users by phishing copies of the website. Be wary of any links in ads; this is true not only for cryptocurrency.

What are the pitfalls?

All ways of purchasing and selling cryptocurrency can be divided into three large categories: big crypto services, exchanges, and p2p market.

The first ones are crypto exchanges and payment systems that allow buying cryptocurrency directly with a bank card via the Internet, exactly like concert tickets. This is the easiest way, but at the same time, the most dangerous one. Although legally cryptocurrencies are not forbidden, information about purchasing bitcoin on a bank slip can raise questions from the bank security service.

P2P services became an alternative to direct funds transfer to exchanges. These platforms are usually connected to exchanges, which allow users to leave ads about purchasing and selling cryptocurrency. People find each other and exchange assets, with the exchange acting as a mediator: the buyer sends fiat to the seller’s card, and the latter sends cryptocurrency to the buyer’s exchange account.

This method is already not bad for purchasing, but it creates significant risks when selling. This is because exchanges do not check in any way the origin of the fiat sent to you. On the opposite side, there can be a fraudster or a drug dealer who will send you stolen or criminal funds. But problems can arise even when buying if the accepting party will cause suspicion of your bank. For example, if the seller receives a lot of transactions, their amount for a day or month will be too large.

That is why there is a third player on the market: exchangers. Considering risk and profitability, they stand in the middle of the first two options. To draw a parallel, it is like a large professional participant of p2p who has grown to the scales of creating a whole organization with its own team and lots of security mechanisms.

Oftentimes, it is the exchangers that are used for the input of cryptocurrency to crypto exchanges to buy in consequence some rare tokens or to actively participate in trading. Also, the withdrawal of cryptocurrency through exchangers is considered to be safer than transactions from p2p platforms.

Despite the fact the rates of exchangers may lose out to the p2p segment, other than that they are more straightforward and safer. But even here, directories like BestChange.com can help find the most profitable rates. In any case, it is the question of priorities — saving percent portion or higher risks of accounts blocking.