Every day amateur bitcoin sellers post on one of the bitcoin forums about how they were trying to sell bitcoin and got scammed. These amateur sellers are commonly known as “windowlickers“. They lose their money, their bitcoin and still consider themselves smart enough to make money with bitcoin. The fact is most sellers lose more money than they make.
Here is the list of the most common mistakes amateurs make.
- Selling bitcoin they can’t afford to lose. People often come into the forums talking about how they were scammed and now cannot pay bills. If you can’t afford to pay bills you shouldn’t be trading bitcoins. Even the best traders get scammed so plan to lose money.
- Charging to little. Those profits are what keep you in business when prices fluctuate or you get scammed. Lower your prices to undercut your competition and you are cutting your own throat.
- Accepting PayPal as a payment method. Yes, some people accept PayPal but they have a ton of experience and know tricks you don’t. If you accept Paypal you will get scammed, you will lose money and Paypal will come after you. Paypal can even take the money back out of your bank account and send you to collections/ruin your credit
- Thinking PayPal friends and family is not reversible. Yes, it is reversible. If you search the trading forums you will find many windowlickers that have been scammed trying that. Then when you get scammed Paypal will look into your account. Paypal is smart enough to know that you don’t have hundreds of friends and family around the country sending you thousands of dollars. Your account will be frozen and you won’t be able to withdraw any money for 3-6 months. For the record EVERY form of Paypal payments are reversible.
- Believing that anything you can say will help you win a Paypal dispute. Paypal doesn’t care what windowlickers say. The guarantee the buyers will be safe, not the sellers (it is in the Paypal terms that they don’t protect people selling bitcoin or other “digital goods and intagible items”) If the windowlickers were smart enough to win their dispute they wouldn’t have been accepting Paypal in the first place.
- Taking Venmo/Skrill/Neteller. These suffer the same chargeback issues as Paypal but at a MUCH higher rate because they are even more infested with scammers than Paypal is.
- Believing a website/forum can help and/or protect them. Websites like LocalBitcoins and Paxful do what they can but they are understaffed and their primary concern is making money, not settling disputes or answering support tickets. The forums are full of other people just as clueless as you that have no power over the website. Understand you are on your own and expect 2-5 business days for a reply from support. Be prepared that the replies you get may not actually help you.
- Believing reload cards like gift cards or reload cards are safe. They can be reversed and scammers do it all the time. Paypal MyCash cards and Amazon are the worst. There are also a lot of scams that will get your accounts shut down after the card has been loaded, you banned and a mark on your credit. Any money stored in the account will be locked and you will never see it again.
- Trying to get cash off of reloadable or prepaid cards. Reloadable and prepaid cards are made to put cash on and then spend like a credit card. The way the card companies see it is that only idiots and money launderers try to put cash in and then take cash back out. This is one of the more common mistakes of an amateur and often causes accounts to be banned.
- Releasing bitcoins without cash/payment being fully in your possession. Remember, most consumer based payment methods can be reversed.
- Selling out of escrow. Hopefully you don’t really need an explanation why this is stupid.
- Giving out personal information like bank account numbers or their phone number. There are tons of scams that use these. The professional sellers that do give this information out have safety features on their accounts to protect them.
- Believing cash deposits are safe – There are a number of scams that target bank accounts. These often end up with the police investigating the owner of the account and the bank’s banning the owner from their system (regardless of who is at fault).
- Accepting credit cards. These are the easiest scammed of all because credit cards automatically default for the owner of the card and its up to the retailer/seller to prove that the purchase was one the card company approves of.
- Believing that if a seller requires a photo ID they will be protected. Photo IDs that will fool police are easily bought online. Even if it is a real ID, most services do not care when they find out that the transaction involved bitcoin and will chargeback against the seller.
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11 thoughts on “Most common mistakes of amatuer Bitcoin sellers”
I just came across your very interesting blog!
One very basic question, as you seem like one knowing what are you doing: You are trading on sites like LocalBitcoins.com, Paxful, BitWallet (Still? How do you trust a site with a .cc domain? https://www.reddit.com/r/Bitcoin/comments/3tsi5m/recently_scammed_by_bitwalletcc_what_now/)… So, the basic question is, casual buyers, sellers, need any form of FinCEN registration? Maybe you are registered, but 99% of users are acting illegally, or how does it work? I read somewhere the exact ruling, and it is VERY confusing. Yes, you said it also differs from state to state, but most users trade with other users out of state anyways. Me personally, I’m not even from the US, but I have found the US market the only lucrative one worthy of entering. I might, might, find it fun and interesting to get through my way and find the honest people among scammers. This business is all about that, right?
This article is from Paxful itself: https://medium.com/@paxful/i-m-3-108-closer-to-paying-off-my-college-debt-by-selling-bitcoin-bf3aadc60f08
How do you think? Is it honest, or more like a misleading marketing ploy from their part? OK, maybe you don’t want to say anything controversial of your business partner.
Your only ad at Paxful now is, you are selling bitcoins for Amazon Gift Cards at a nice, 50% premium. On the other hand, and this is where it gets interesting is, I don’t see any of your ads stating you are selling those same Gift Cards as well, maybe you live off from them, buying even your groceries on Amazon? Could be, why not?
OK, if I’m just a casual seller figured out how to open a Coinbase account, as you wrote above, what are safe ways for me to buy said Amazon Gift Cards for a discount, if I don’t want the hassle, possible FinCEN registration for Paxful, filtering through scammers, maybe I can buy some directly from you?
That is a lot of questions so forgive me if I miss any.
First of all a .cc domain is no different than a .com domain when it comes to trust. All the good .com domains are taken so alternates will become more and more common. Every user should way the possibilities of every website and how much risk they are willing to take.
As far as registering with Fincen and other legalities, I am not a lawyer or financial adviser so I do not post advice on that. Merely point out that their are legal regulations people should make themselves aware of.
I think the article you linked to glossed over a lot of the hard parts of selling bitcoin (those mentioned in this post and more). As more and more amateurs enter the market, the profit margins will be lower and lower.
My Amazon ad is because I need to buy toner for my printer soon and a few other office supplies.
Instructing someone how to trade safely and answering all their questions takes a fair amount of time. If you are interested in our consulting service check it out under the “About Us” tab.
I want to start selling btc, one due to latest research I did, buyers mostly buy through iTunes gift card,.. I have done several searches on uses of iTunes gift card, its only used for songs purchases,apple store apps, iBooks and lots of digital materials.. A seller like me, who is going to start with accepting of either iTunes gift card or amazon gift card as mode of payment to paid to me by buyers who wants to buy bitcoin from me.. How can I get out real money or buy electronics or some other sellable home use stuff from those gifts card after I redeem.. I need a straight comment
If you would like training on how to be a professional bitcoin trader check out this page
dont do it bro. thats what they want u to do then they swipe it from under u.
staff is involved with these thefts going on. its too hard for someone to do on an https// site with 2fa.
I used PayPal and all was going good for awhile until they limited my account and asked for more info on the payments. Since they were for bitcoins, I am afraid if I tell them, they will shut it down completely.
[comment edited to remove illegal content]
Your comment was edited because you had mentioned something that could be considered fraud. We are a legal business and cannot allow any suggestions of illegal activities on our website.
that’s happened with me. paypal limited my account and finally closed my paypal account with balance in it. i have to wait 180days to cash my balance
I want to ask how will I contact my offer becouse thy put their numbers there but those numbers does not work or exist?
I don’t understand what you are asking. People should stick with professional and reputable traders that do have working phone number like ours 844-Bank-BTC
[Comment removed because it was another Liviacoins scam comment]