Cryptocurrency Wallets Not So Safe After All

Buying anything second-hand always comes with a certain leap of faith. You trust the seller is legitimate and that you’re getting what you paid for. Well, when it comes to cryptocurrency wallets–maybe not so much. Digital wallets purchased through third parties are proving an enormous risk for those looking to safely and securely keep their Bitcoin and other cryptocurrencies safe.

Cryptocurrency has been a newly popular means of finance with Bitcoin leading the way. In just this past year, the Bitcoin economy rocketed to a value of 10 times its original worth. That’s a hefty profit.

Digital wallets are used to store cryptocurrencies. They can be purchased directly from the manufacturer and prove secure. However, they are also more expensive and take longer to obtain than buying from a third party. Buying a wallet for digital currency from sites like Ebay and unaffiliated vendors leads to a potential false sense of security and stolen currency. Tracking the offenders is nearly impossible to do–once it’s gone, it’s gone.

One scam that hit an unsuspecting Bitcoin investor involved Ebay and his Bitcoin treasure. He bought the wallet from a third-party, got it home, loaded up his Bitcoin, and the next thing he knew, it was gone. Turns out, the seller had provided the security PIN for the wallet. Normally, the digital wallets generate the PIN so that it is unknown to anyone but the buyer. In this case, the wallet came with a “scratch off” paper, which had the PIN on it. That, as it turns out was how this fortune of $36,000 was easily lifted by the seller.

Another lesson that can be learned is to reset the wallet once it’s received and then create a new seed for it. That action would have prevented this poor guy’s misfortune.

The Bitcoin industry has been plagued by theft since its inception in 2010. It includes the loss of millions of dollars though fly-by-night exchanges and even a Ponzi scheme. Some third-party wallet vendors are always finding new ways to con trusting users. It’s a recurring theme of the digital era–nothing in cyberspace is 100% safe.