Our user operations team has recently noticed a trend on social media in which scammers are using watch-only address balances to deceive users about the true balance of a wallet. We would like to discuss how you can avoid such scams and clear the air on watch-only addresses.
Why watch-only spending is impossible without a private key
Imported watch-only address balances are currently included in the total wallet balance, but a user must already have the private key to spend that balance.
The following scams attempt to deceive users by suggesting that watch-only address balances are proof that the funds shown are available to spend. To be clear, this is not the case.
Scam #1: Blockchain wallets for sale
In one version of this scam, scammers will post in groups and pages on social media about selling Blockchain wallets holding a considerable balance. Screenshots of the wallet dashboard displaying the balance are often shared as proof of the available balances. However, this balance is associated with a watch-only address that the scammer has imported into the wallet. After purchasing the wallet, the buyer logs in only to discover they’re unable to spend those funds without a private key.
Scam #2: Earn mining profits
A second version of this scam claims a wallet has been specially configured for mining or investment purposes. To activate the mining process, the user must provide their email address and are told to make a deposit into a wallet provided by the scammer. The scammer sends funds to an imported watch-only address, which makes it seem as though deposited funds are multiplying. Again, because these funds cannot be spent without the private key, this balance is still useless to the user.
Summing things up
Importing a watch-only address allows a user to conveniently monitor that address’ transaction activity and balance. It will not allow the user to spend any bitcoin associated with that address or provide access to the private key.
How to avoid a watch-only scam
- Know that there are no special wallets configured to automatically generate profits
- Avoid transacting with anyone making a grandiose or “too good to be true” offer
- Always create your own wallet — NEVER use any wallet someone else created or had access to (even if you changed the wallet’s password)
- To safely receive, always generate a new address by clicking on Request and never via a watch-only address
Why use a watch-only address if I can’t spend from it?
This is not to say that a watch-only address serves no purpose. Any bitcoin address can be imported as watch-only so a user can keep track of and monitor transaction activity right from the wallet dashboard. This makes for a convenient alternative to individually monitoring each address of interest in a block explorer. For some users, these are addresses they hold the private keys to in a separate wallet, or they may also be addresses they simply have an interest in monitoring. Imported balances that are identified as watch-only can be viewed by going to Settings -> Addresses and scrolling down to Imported Addresses.
That said, watch-only scams are increasing in popularity on social media, and we encourage you to exercise caution when engaging with offers that seem too good to be true.
Source: Blockchain Blog