Potential risks when trading cryptocurrency

Like with any other type of investment, there are risks that are involved with trading bitcoin on Paxful.

It should always be in your best interest to protect your investment and part of protecting it includes familiarizing yourself with all the risks that come with it. If you familiarize yourself with all these risks, you put yourself in a better position of making a good profit on Paxful.

Risks when buying bitcoin on Paxful

If you are new, some of the dishonest users may use that to their advantage. Here are a few ways they can attempt to get at you:

Vendors asking you to cancel the trade after you have paid

A common tactic used by scammers includes them asking you to cancel the trade after you have paid. If you’re using a gift card and you upload all your gift card details, then you put yourself at the risk of giving them those details for free. They will then rip the value off of that card and if you cancel it, the bitcoin will be released from escrow and go back to the vendor.

If a vendor ever asks you to cancel after you’ve paid, refuse to do so. Click “Mark as Paid” and open a dispute. The moderators will then investigate the trade and award the coins to whoever is in the right. Be ready to provide additional proof just in case the moderators need more. If you don’t click “Mark as Paid”, the trade will expire and the coins will go from escrow back to the vendor. Another tip for preventing yourself from having your card ripped is making sure that the vendor is present before uploading any documents and making any payments.

Note that brokering of gift cards is against Paxful Terms of Service and is strictly prohibited. Make sure that you buy gift cards from the shop and you are the original owner of the gift cards. If you received a card as a gift, you must be able to reach the gifter at any time and ask for the receipt and additional information if it is needed. 

Trading off escrow

Many scammers will try to get you to trade outside of Paxful’s escrow. They will ask for your contact details and try to get in touch. If you trade off escrow, there’s no way to protect you. After you’ve made a payment, there are no guarantees that the seller will send you the bitcoin. Paxful’s escrow system is there to protect both the buyer and the seller.

Risks when selling bitcoin on Paxful

Just like buying bitcoin, there are also a few risks that you have to look out for when it comes to selling bitcoin on Paxful. Familiarizing yourself with these risks will help you optimize the offers you create.

Reversible payment methods

It’s important to know that some payment methods on Paxful are reversible (such as PayPal or credit cards). One common tactic that scammers use is to do trades with these payment methods and then later ask for a chargeback. For example, they would tell their credit card company that it was not them who made the transaction. In the instance of PayPal, they would say that they did not receive the goods. PayPal normally sides with the buyer first but you can submit your evidence and hope that they refund your money.

So what do you do when you get a chargeback? The first step is to go to your vendor dashboard and click view past trades. Click the trade wherein you got the chargeback and you should be able to see the trade page. Scroll down and under your instructions, you should be able to see the receipt of the trade.

Gift cards that have already been redeemed

This is another common method that scammers use. Buyers would add gift card details and images that may have already been used. 

It’s important that you NEVER release the bitcoin before you check the gift card balance. Make sure to redeem it and have it in your account before you release the bitcoin. Try not to wait too long as buyer may try to sell the card to another vendor at the same time. Usually, scammers will try to hurry you up by saying that they’re in a hurry and ask you to release the bitcoin already. Remember not to fall for that and make sure to ONLY release the bitcoin when you’re sure you have the gift card balance.

Using a fake ID or a stolen credit card

Credit card companies usually cover their users from fraud. In the case of a stolen card, they will always refund and chargeback the transactions. This is why it’s important to check the users’ identity and ask for a selfie to see if the two match. Beware of blurry images where the face and names might not be visible. If a user truly wants to buy bitcoin, they should be able to provide a decent enough photo. Although some might refuse to give ID as it is sensitive information, it’s up to you what you accept for the trade but keep in mind that the more evidence you have, the more leverage you will have against the scammer.

The user is “very busy”

The user is “very busy” is usually a red flag when you’re trading on Paxful. As mentioned earlier, some users might rush you into releasing the bitcoin quickly, telling you that the payment has already been made or that they are doing currently in the process of doing it. What happens is that the buyer gets the bitcoin, sends them quickly into a different wallet (outside of Paxful), and doesn’t even bother to make a payment. Be EXTRA cautious of users that say they are really busy. It may not always be the case that the user is a scammer, but keep your guard up at all times. Both parties buyer and seller must carefully follow trade instructions and finish the trade when all conditions that they agreed on were met.

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