What should I know about buying bitcoins before I actually do?
December 9, 2020 2:24 PM Subscribe
My long time sports-betting website recently stopped accepting deposits made by credit card, and now only accepts bitcoin. I've never dealt with or bought bitcoins before, and could use some advice about how (un)safe i should feel about doing so for the first time. Thanks
For a typically-Reddit take on Bitcoin and other cryptocurrencies, have a peruse of the Buttcoin subreddit.
posted by heatherlogan at 3:28 PM on December 9, 2020 [1 favorite]
posted by heatherlogan at 3:28 PM on December 9, 2020 [1 favorite]
There is quite a bit of history of these bitcoin sites getting hacked, also.
posted by number9dream at 3:28 PM on December 9, 2020
posted by number9dream at 3:28 PM on December 9, 2020
> Services like Coinbase allow users to buy, sell, and send cryptocurrencies as safely as possible. They work pretty much like bank accounts.
Coinbase hasn't exit-scammed. Yet. But this is an evergreen risk in cryptocurrency exchanges with banking functions - your coins are completely safe as long as the guy running your bank hasn't realized he can make himself moderately wealthy by faking a hack attempt from the outside, stealing your coins, and bolting.
https://www.zdnet.com/article/2020s-worst-cryptocurrency-breaches-thefts-and-exit-scams/
Consider maintaining a cash "float" in a cryptocurrency account, keeping only enough that it won't hurt when you lose it.
And move the rest out into a paper cryptocurrency "wallet", or as real money.
posted by sebastienbailard at 3:38 PM on December 9, 2020
Coinbase hasn't exit-scammed. Yet. But this is an evergreen risk in cryptocurrency exchanges with banking functions - your coins are completely safe as long as the guy running your bank hasn't realized he can make himself moderately wealthy by faking a hack attempt from the outside, stealing your coins, and bolting.
https://www.zdnet.com/article/2020s-worst-cryptocurrency-breaches-thefts-and-exit-scams/
Consider maintaining a cash "float" in a cryptocurrency account, keeping only enough that it won't hurt when you lose it.
And move the rest out into a paper cryptocurrency "wallet", or as real money.
posted by sebastienbailard at 3:38 PM on December 9, 2020
Beyond that, I would skim /r/Buttcoin deeply enough to understand the lifecycles of exchange exit scams and of ICO pump-and-dumps. Literally assemble a glossary of the jargon there and build up a list of the ways you can get scammed and/or hacked.
Because you're going to be pressed to "invest" in speculative assets which are framed as "investments" when it's really just people trying to cheerlead innocents into holding a bag while they cut and run. And then, while licking your wounds, you'll find that you've lost coins to a malicious exchange/wallet/etc.
posted by sebastienbailard at 3:47 PM on December 9, 2020
Because you're going to be pressed to "invest" in speculative assets which are framed as "investments" when it's really just people trying to cheerlead innocents into holding a bag while they cut and run. And then, while licking your wounds, you'll find that you've lost coins to a malicious exchange/wallet/etc.
posted by sebastienbailard at 3:47 PM on December 9, 2020
What you most likely want to do is use CoinBase essentially as a transactional middle-man, transferring real currency into and out of it for each deposit. That will minimize your exposure to both BitCoin volatility and cryptocurrency scams. If you're already comfortable letting money sit in your account at the sports betting site, keep doing that rather than keeping a balance in CoinBase. Otherwise, this is basically just adding another hoop to jump through for each bet you make (and additional transaction fees, of course).
posted by mr_roboto at 3:56 PM on December 9, 2020 [1 favorite]
posted by mr_roboto at 3:56 PM on December 9, 2020 [1 favorite]
If you're using bitcoins as a way to transfer your (let's call it) "wealth" to the betting website, i.e. holding the bitcoin only briefly yourself, it's probably minimally risky, but overall the profile for holding bitcoin as a store of wealth is high-risk, because wallets get hacked and bitcoin value is volatile. I guess if you enjoy betting that might make it more fun? Is holding bitcons safe? No.
posted by anadem at 3:57 PM on December 9, 2020 [1 favorite]
posted by anadem at 3:57 PM on December 9, 2020 [1 favorite]
Sites that exclusively take Bitcoin are effectively broadcasting their inability to obtain a legitimate bank account, let alone a merchant account with a payment processor. I'm sure there are exceptions for extreme political or economic views, but few people would choose to use Bitcoin. The friction in almost every respect is dramatically higher when compared with conventional electronic payment systems. I understand that there are Bitcoin "ATMs" that you can deposit cash and get a "wallet" with the equivalent amount in Bitcoin. It's quite volatile, but the mechanics of doing that are relatively low risk as long as you do it on a transaction-by-transaction basis. The Bitcoin exchanges try to give the appearance of banks, but they are essentially unregulated and the risks of leaving any significant value in one are much higher than even a notorious non-bank payment processor like PayPal.
posted by wnissen at 5:25 PM on December 9, 2020 [6 favorites]
posted by wnissen at 5:25 PM on December 9, 2020 [6 favorites]
Yeah, what wnissen says. If they don't accept credit card payments, they're either doing something illegal or are on a very shaky financial foundation. Either of those suggest you could lose your money
posted by scruss at 5:36 PM on December 9, 2020 [5 favorites]
posted by scruss at 5:36 PM on December 9, 2020 [5 favorites]
Bookies of questionable legality use questionably legal and notoriously unstable dog coins, news at 11.
Seriously I don't know how to answer a question looking to do largely illegal sports gambling using volatile and intentionally unregulated, unsecured newfangled currencies.
Imagine I asked you how to use best use pogs to gamble on the outcome of hopscotch matches... there is no such thing as safe money spent in such a system, and, with kindness, I think part of you knows that.
posted by SaltySalticid at 6:53 PM on December 9, 2020 [1 favorite]
Seriously I don't know how to answer a question looking to do largely illegal sports gambling using volatile and intentionally unregulated, unsecured newfangled currencies.
Imagine I asked you how to use best use pogs to gamble on the outcome of hopscotch matches... there is no such thing as safe money spent in such a system, and, with kindness, I think part of you knows that.
posted by SaltySalticid at 6:53 PM on December 9, 2020 [1 favorite]
All you actually need to set up your own wallet is something like Electrum running on your phone. (Preferably a fully updated one you don't have any third party apps installed on, but that's not really necessary for small amounts of money since you can't lose more than you put in)
With that, you can generate an address you can use at a Bitcoin ATM to send coin you have purchased for cash and then send on to your betting site.
I would not suggest holding any significant amount in any wallet held by a third party, or even in an Electrum wallet if you don't already know how to keep it secure.
posted by wierdo at 4:45 AM on December 10, 2020
With that, you can generate an address you can use at a Bitcoin ATM to send coin you have purchased for cash and then send on to your betting site.
I would not suggest holding any significant amount in any wallet held by a third party, or even in an Electrum wallet if you don't already know how to keep it secure.
posted by wierdo at 4:45 AM on December 10, 2020
Think of a Bitcoin wallet as being like a numbered bank account at a Swiss bank. It's not tied directly to your name, but the account number is identifiable. Every Bitcoin transaction is public record and people can and do analyze them for patterns.
So anyone in the world will be able to see transactions going into wallets associated with the gambling website, including that they come from your wallet. Now, this wallet is not publicly tied to your name, but Coinbase does know who you are and which wallets are yours, so if they have a problem with where you're sending the money, they might close your account.
I don't know the relevant laws but if you're in a jurisdiction where online gambling could get you in trouble or cause a bank to close your account, watch out for this.
posted by vogon_poet at 10:00 AM on December 10, 2020
So anyone in the world will be able to see transactions going into wallets associated with the gambling website, including that they come from your wallet. Now, this wallet is not publicly tied to your name, but Coinbase does know who you are and which wallets are yours, so if they have a problem with where you're sending the money, they might close your account.
I don't know the relevant laws but if you're in a jurisdiction where online gambling could get you in trouble or cause a bank to close your account, watch out for this.
posted by vogon_poet at 10:00 AM on December 10, 2020
I've done this. My process was deposit real money on Coinbase, buy bitcoin, send the bitcoin to an address specified by the book, they get confirmation of the deposit within an hour and credit me in USD roughly equivalent to what I spent (roughly because btc fluctuates in value), and then I gamble.
Cashing out was the same process in reverse. I request a cashout, provide my Coinbase wallet address, they send it over, then I sell it to USD.
posted by whisk(e)y neat at 2:30 PM on December 10, 2020
Cashing out was the same process in reverse. I request a cashout, provide my Coinbase wallet address, they send it over, then I sell it to USD.
posted by whisk(e)y neat at 2:30 PM on December 10, 2020
> Coinbase hasn't exit-scammed. Yet. But this is an evergreen risk in cryptocurrency exchanges with banking functions - your coins are completely safe as long as the guy running your bank hasn't realized he can make himself moderately wealthy by faking a hack attempt from the outside, stealing your coins, and bolting.
Coinbase is about to IPO, so to exit-scam, they'll have to go the way of Enron.
posted by oneboiledfrog at 9:02 PM on December 18, 2020
Coinbase is about to IPO, so to exit-scam, they'll have to go the way of Enron.
posted by oneboiledfrog at 9:02 PM on December 18, 2020
This thread is closed to new comments.
Buying/selling/sending Bitcoin without one of these services is possible, but you have to configure and manage your own 'wallet', which is similar in difficulty to setting up your own website, except if you mess up you might send all your money into the ether.
Your biggest risk is that by using Bitcoin (via Coinbase or otherwise) is that you're effectively going 'off the grid'. If anything you purchase doesn't pan out, you're pretty much out of luck. There's nobody to complain to. Also keep in mind that Bitcoin is super volatile, so if you keep any around its value could change pretty drastically, for better or worse.
There are also a host of ethical concerns, like the amount of electricity it takes to operate the Bitcoin network, that might be worth looking into.
posted by TurnKey at 3:09 PM on December 9, 2020 [2 favorites]