The hidden perks of being honest
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Identifying Scammers

Scammers can be clever, but never very wise.

The best scam I've encountered was described in my last newsletter.  In that one, I got scammed because the victim came after me instead of the real scammer.  How can we ensure that the person we're talking to is actually the person we would go after if we get cheated?  As I wrote last time, you should have your own method.  Perhaps one of bitcoin's great lessons is that it's a good idea to make sure the person to whom you're talking is the person he or she claims to be.

I like to start out with the assumption that my trading partner is a scammer, but I might be able to persuade him to be honest.  If I were too blunt about this, most of my customers would probably be offended and abandon our trade.  But sometimes my assumption is correct, and keeping it in mind protects me.  The trick is to be nice but also protect yourself.  One of the foolish mistakes that scammer's sometimes make is to pressure their marks into trusting them.  "Wouldn't a scammer say that?" is a useful line to use if you feel any such pressure.  Of course, you run the risk of teaching the scammer how to scam more effectively.  Perhaps "Well, 'trust but verify' is my motto," is a better approach.

Ideally, you will request information from your trading partner that will provide you (or your hired guns, if it comes to that, or the police, which some people still think will help) with the ability to hunt him down.  Once you have this info, if you can be sure that your trading partner knows you have it, then you can proceed with relative safety.  It's important that the other person know you can hunt him down because some scammers are just dumb but may succeed in scamming you anyway, and then you will struggle with the decision: is the hunt worth it?  If you can avoid dishonesty in the first place, everybody wins.  If we corner scammers into making enough honest trades, they may discover how much better it is to feel clean.

My ads request that you send me a text.  This way, I have a phone number that I can recognize.  One of the contacts in my phone is "Scammer," and has several numbers.  I treat these people with respect and try to provide them with a way to prove their honesty.  Now let me warn you of something.  Someone can send you a picture of a Driver's license that doesn't belong to them.  My ISP got taken by that one (they thought he was me) and gave him access to my nameservers.  LBC's two-factor authentication saved me, and I fixed things up with my ISP.  The scammer has since apologized, but I don't know if he has found his way back to innocence.

The long con is really the best scam, and the only recourse you have is the ability and practicality of hunting down the perpetrator after the fact.  Sometimes, a really fantastic psychopath comes along who can fool you into becoming his best friend, but then he will take you for everything he can when he sees a chance.  If you handle it right, the chance never comes up, or perhaps your friendship is worth more to him than your wealth, and that might end up making life better for both of you.  As serial killer Dexter Morgan suggested, a psychopath with a code can be a positive force for humanity.

Dave's Q&A

Someone asked me about micropayments:
I want to make numerous .0001BTC transactions. One can come up with numerous reasons why a business would like to make 1000 6-cent transactions. I have discovered that in order to make one such transaction that I will be charged .0001BTC or at Coinbase- .0002BTC.  a 6 to 12 cent fee on a 6cent transaction is not what I would call minimal. Such a fee would be referred to as usurious by many. Is there a way of avoiding this fee or making it smaller by a power of 10 or two? If such fees are unavoidable then Bitcoin has a major weakness when it comes to enabling micropayments.
 - Adam
Hi Adam,
First, in one transaction, you can send bitcoin to several different addresses.  In the standard ("Satoshi") client, you just add extra outputs.  If my math is good, you could send six cents to about 20 people for the six-cent fee on that one transaction, or to 140 people for the $0.30 which I think would be pretty standard for a single payment any other way.

In any case, who would appreciate six cents?  I'd let it accrue for a while first.

Copyright © 2014 dscotese on LocalBitcoins, All rights reserved.

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