How not to be fooled when you buy Bitcoin or sell goods in exchange for Bitcoin
Lately, I have noticed more and more Bitcoin sale-purchase announcements on Facebook groups dedicated to cryptocurrencies. What I want in this article is to sound the alarm on potential scams that may occur, especially if buyers are inexperienced and beginners in crypto.
BigSpender - possible vulnerability to Bitcoin
Recently, a company dedicated to crypto security (ZenGo) discovered a possible vulnerability to Bitcoin, which they named BigSpender. This is closely related to a Bitcoin feature implemented by Bitcoin Core developers, called RBF (Replace-by-Fee).
RBF practically allows someone who made a transaction to be able to send - until the first confirmation of the transaction by the Bitcoin network - the same funds, but to a different address and with a high commission. This can cancel the initial transaction. Why with a high commission? Because miners give priority to transactions that have high commissions (eg send $ 1000 with $ 100 commission, as long as you could normally send the amount with a maximum of $ 1 commission).
How does it work?
Now let's take a concrete example. We assume that X puts an ad on a group, in which he says that he sells 1 Bitcoin in Amsterdam, in exchange of cash, face to face. Y replies that he would be interested in buying. X and Y meet, X transfers the Bitcoin, receives the cash and then leaves. 2-3 minutes later he sends that 1 Bitcoin back to his own address, with a high fee. In this way X practically cancels the transaction to Y.
What Y needs to understand is that he/she never has to pay until he/she sees at least 3 network confirmations (ideally 6 confirmations). That means a waiting time of 30-60 minutes, then he can hand over the cash to X.
The same is also true for those who sell high value goods and accept Bitcoin as a mean of payment, only this time sellers need to be more careful and apply the above tips.
In the hope that this ‘alarm signal’ was useful to you, good luck with your transactions!
