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The use of cryptocurrencies to make transactions online has grown in popularity over the past few years, but one has begun to dominate the market – bitcoin. As of December 2019, there were over 18 million BTC in circulation; the number changes every 10 minutes. Bitcoin is a form of digital currency, created and held electronically, which means it is not overseen or backed by a national government. As convenient as it may be to use Bitcoin to quickly book a hotel or purchase furniture online, using virtual currencies comes with risks. Since there is no regulatory agency, the value of Bitcoin can fall just as quickly as it can rise depending on demand. Payments made with virtual currencies are not only irreversible, they also do not have the same legal protections as most traditional payment methods, such as the ones you have when using a credit card. The Federal Trade Commission has found that some online merchants that accept Bitcoin as payment do not deliver the product on time or they provide refunds with store credit rather than currency. That is why it is important to always know the seller and their policies before making a purchase.
Best practice: If you choose to use or invest in Bitcoin, use extreme caution. Be sure to do your homework first, to understand the rules and risks of Bitcoin transactions.
The FTC offers the following tips when considering making a transaction with Bitcoin:
- “Check out the seller’s reputation. Make sure you know where the seller is located and how to contact someone if there are problems.
- If you pay with bitcoins, the only way to get a refund is through the seller or payment processor, so it’s important to choose companies you trust.
- How much will your refund be? The value of a bitcoin changes constantly so the seller should tell you before you buy what exchange rate will be used for refunds.
- Read the seller’s privacy policy to find out what other information might be collected and shared. If the seller uses a payment processor, check its privacy policy, too.”
Source: Bitcoin.com and Federal Trade Commission
For more tips, visit the FTC's article on what to know about cryptocurrency.
If you have a problem with a bitcoin-related product or service, file a complaint with the FTC. To report a scam, go to the BBB Scam Tracker. To find trustworthy businesses, go to BBB.org.