Bitcoin has brought a lot of strong benefits to the financial world, giving a trustless, decentralized manner for transacting among one another. It gives the ability to instantly send funds to anyone, anywhere in the world, regardless of their location or what time it is. But with this great power also comes one of the most important aspects you must be aware of: it is irreversible.
Refunds Are Voluntary
First of all, when you transact with a business, it is a good idea to learn what others think of them first. If you run into an issue with their goods, getting a refund isn’t as simple as going to a third party and filing a complaint. Instead, refunds are completely voluntary – if one is requested from a merchant, it is up to them whether or not they agree and send it. Along with this, they can choose how to calculate the refund (based on the fiat value or the actual BTC that was sent). This is largely due to the fact that Bitcoin does not have an actual refund system. What they would have to do is send a separate transaction back with the refunded amount.
Scams Are Abundant
Because Bitcoin is both irreversible and mostly anonymous, the number of scammers is rampant. Mix this with the lack of regulation in most areas on cryptocurrencies, and it just exacerbates the issue. Due diligence needs to be done on anyone and everyone before sending bitcoins, and always be watchful. The best way to explain it is through a scenario. If you wouldn’t give a stranger on the street money to do whatever it is that was agreed to when you give them cash, it’s probably a good idea to think twice before doing it with someone online. And if there is a deal that just seems too good to be true, it probably is. Massive discounts for using Bitcoin, for example, are questionable, because at the end of the day, it is still a form of money and is treated as such.
Protect and Secure Your Wallet(s)
Just like you would protect the wallet you carry around, a Bitcoin wallet should also be kept close. Secure any wallets with strong passwords and only use them when necessary. Do not have the passwords where anyone else can find them, and ensure they are not “dictionary” ones (meaning so basic that people can run through random words and find them). If it is easy for someone to gain access, they can send the unlocked coins to any of their own wallets, and from that point, they can be hard, if not impossible, to trace back to the thief.
Another side of this is to understand that if you do not hold the private key for your coins, you are not actually in control of them – the private key is the ownership token. This is especially important when holding funds on an exchange or other Web-based wallet. Only keep what you can afford to lose in these wallets, because you can’t recover the coins if the company with control shuts down.
Bitcoin is Digital Cash
At the end of the day, Bitcoin is not more dangerous than the cash you may have on you. When keeping both safe and secure, Bitcoin offers a lot more flexibility for use, while still keeping you in full control over your own funds – rather than having a third party holding them. There are unscrupulous people out there that will attempt to take the coins, but this also happens with all other forms of money. Just treat Bitcoin like it’s cash and you should be fine!