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.