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Apple co-founder Steve Wozniak told the Economic Times’ Global Business Summit that he had seven Bitcoin stolen from him through credit card fraud. The 67-year-old recounted the incident to a packed room at the event in New Delhi on Saturday 24 February.
Bitcoin’s Purity Appealed to Wozniak
Wozniak told the summit that he had originally bought Bitcoin as an experiment. He didn’t see it as an investment. He was drawn to the cryptocurrency because of the freedom from manipulation it promised:
“Bitcoins to me was a currency that was not manipulated by the governments. It is mathematical, it is pure, it can’t be altered.”
He decided to buy BTC when the price was around $700. He began to look into where he could use the currency:
“I had them so that I could someday travel and not use credit cards, wallets or cash. I could do it all on Bitcoin. I studied which hotels and facilities accepted Bitcoin… it’s still very difficult to do so. I also tried to buy things online and trade Bitcoin online.”
However, after making his initial purchase, he determined that he was spending far too much time looking at the price. The impulse to constantly check his gains stressed him and he determined he would cut his experiment short by selling his BTC. He arranged the sale with an unknown party online. He told the summit:
“The blockchain identifies who has bitcoins… that doesn’t mean there can’t be fraud though. I had seven bitcoins stolen from me through fraud. Somebody bought them from me online through a credit card and they cancelled the credit card payment. It was that easy! And it was from a stolen credit card number so you can never get it back.”
Wozniak’s story highlights the dangers of selling Bitcoin using certain methods. Peer-to-peer trades that involve credit cards or eWallet-like services such as PayPal and Neteller can be charged back to the original sender. They, therefore, represent a high-risk category of payment methods for the purposes of selling cryptocurrency. As such, peer-to-peer trades are much safer when handled with cash or direct bank transfer.
However, cash-settled trades present their own problems. There have been numerous cases of trades being arranged in person that turned out to be hold-ups. A recent example in Taiwan involved the robbery of over US$170,000 worth of BTC. A gang had arranged an online trade with the victim. The two parties met and the seller was assaulted and forced to transfer Bitcoin from his phone to a wallet under the attackers’ control.
Generally speaking, it’s much safer to make a sale of cryptocurrency using an established and trusted service than it is to arrange a trade through a peer-to-peer platform. Despite services like LocalBitcoins offering an escrow function when making a sale, a credit card or eWallet payment can be charged back after the Bitcoin is released from the escrow. Since the buyer is probably using a fraudulent card or account, it’s then impossible to get either the Bitcoin or fiat money owed back.