A while ago, I got scammed when trying to sell some bitcoin. The scammer got away with 7.5 bitcoin, which was about 320 USD at the time.
For whatever reason, rather than selling my bitcoin on one of the large exchanges, I decided I wanted to try out selling my bitcoin “over the counter” over IRC (internet chat). Freenode (a large IRC network) has a #bitcoin-otc channel where people get together to buy and sell bitcoins in this fashion.
After announcing what I wanted to sell and my price, a user contacted me via private message. He provided me with a link to his ratings (http://bitcoin-otc.com has a catalog of people with ratings and reviews so traders can mitigate the counter party risk inherent in trading over the counter) and they were stellar.
Now, before going any further with trades, you are supposed to use a bot inside the chat channel called “gribble” that can verify that people are who they claim they are. I had some trouble using the bot so I was left with the choice of aborting the deal or going through with it anyway. I thought to myself that surely whoever this guy is his ratings wouldn’t be that good if some scammer had access to the password of his registered nickname, so I decided to go through with the deal anyway.
I gave out my account number and bank details so that traditional currency could be put into my traditional bank account and then transferred the bitcoin. I got a reply saying “sending payment now”, and then, nothing. The person had left the chat. I then realized that at the very end of the nick there was a ` which was barely visible due to the color settings in my IRC client. Whoever that was wasn’t really the person behind the nick with the stellar ratings and reviews, but just a scammer who had “hijacked” the nick by putting a ` at the end, looking for easy pickings from uncatious over the counter n00bs like me.
Now, clearly the blame lies *completely* with me here. I was rushing to close the deal because bitcoin had recently been appreciating wildly and I was convinced it was a bubble bound to pop any minute. My greed and stress enabled me to overlook the fact that I was unsuccessful in verifying the nick before making the trade and probably contributed to me not noticing the ` at the end of the nick. Actually, even if I had been successful using the gribble bot, chances are the person behind the hijacked nick had actually registered that so that any verification attempt had come out as successful for the hijacked nick.
Fortunately, the bitcoin had been acquired on a whim years ago when they were worth next to nothing, so in a way it could be said that not much value was lost, and I still had plenty more coin left. But that doesn’t mean that loosing them didn’t hurt. I was furious with myself for a few days but then got over it, and looking back at it now I can but laugh at my n00bness. I hope whoever scammed me at least uses the coin to contribute to something useful in the bitcoin economy.
This should go without saying, but just in case: this post is by no means a critique of over the counter trading in general or over the counter trading through freenode’s #bitcoin-otc channel in particular. Again, the blame lies completely with me for not being more careful. Bitcoin could use more over the counter trading to compensate for the large volume of trades being done at the big exchanges. Just be careful not to fall prey to easy scams like I did and try not to trade when greed and stress are clouding your judgment. If something feels odd or out of place, cancel the trade rather than go through with it and risk being scammed.
Spending bitcoin can be a bit of a challenge. Despite ever increasing adoption, it is currently nowhere near being universally accepted.
Enter bitspend.net, a service that enables spending bitcoin to buy pretty much anything from pretty much anywhere. Basically, you tell them what you want to buy, they buy it for you using traditional means (like credit card etc), and you send them payment in bitcoin, including a fee of a few USD on top. (fee depends on order value)
On March 3 2013, bitspend announced their service on reddit. The thread quickly climbed to the top of the /r/Bitcoin sub and remained there for quite a while. The service was highly lauded, and was so overwhelmed with orders that orders had to be halted in order to get in place systems and procedures that could better cope with the massive unanticipated volume, but we managed to get an order through. We sent an order for a Nexus 7 tab off amazon. The product has a price tag above the initial bitspend 100 USD limit in place at the time, but we were hoping they would make an exception.
The reply was swift and friendly, initially informing us that the order was being processed, and then asking whether we wanted to add a 2-year warranty. After having sorted that out came the fun part: international shipping (address outside of the US) and payment. Turns out amazon, like many other vendors, do not like shipping to addresses in a different country from the one the credit card used for the payment was issued in. After some back and forth trying to figure out from where to get the product, eventually we realized that using ebay would allow bitspend to pay with paypal and then have the seller ship internationally. Despite the issues with amazon and some other vendors not having anything to do with bitspend, they offered to waive the bitspend fee as compensation for the trouble.
After confirming that the ebay option was possible, we received an invoice with a bitcoin address. After paying the bitcoin (again, no bitspend fee included) we received another confirmation email, and then it was just a matter of a few days to wait for the package to arrive.
We are very pleased and impressed with bitspend and their service, and we thoroughly recommend them. We made sure to send them a substantial tip which more than made up for them waiving their fee. Hopefully whatever problems they had with handling the overwhelming order volume is being sorted out so that more people can try them out.
In coming posts, we plan to review other means for spending bitcoin outside of the bitcoin nominated economy, such as e.g. btcinstant.com, bitcoinrunner.com and paybit.co so be sure to come back and check that out.
The authors of this review are not affiliated with bitspend or any of their competitors.
FYI for reddit users: bitspend also have a subreddit of their own at http://www.reddit.com/r/bitspend