Everybody wants your crypto
There are many different ways one can “lose” their crypto and we don’t always know how it can happen or how to avoid the same thing happening to us. In this piece we will learn from the mistakes of others, how to avoid them (it’s easier than you think) and understand the most secure ways to store your cryptocurrencies with best cryptocurrency hardware wallets.
Losing money is normal, how many times have we dropped a $5 bill, misplaced our credit cards, or been pickpocketed? Have you ever forgotten your wallet somewhere only to return to find it stolen (unless you live in Japan). Sometimes money disappears into the hands of another person without us noticing (identify theft anyone?). There are many ways to lose money, and cryptocurrencies are not immune from the same mistakes or theft.
While cryptocurrencies liberate us from the need of banks, they also place a great deal of responsibility on the owner themselves. Below are the seven most common ways people can lose, misplace or have their crypto stolen.
Hackers get access to your wallet
It seems difficult to believe that a hacker can access your wallet, however it happens more often than you think. Having your wallet on a device (PC, Mobile phone), other than a hardware wallet, connected to the internet is risky. If your computer has malware a simple print screen of this key can be enough to leave you crypto-less. Granted wallet security is improving, but hackers are nothing if not creative.
How to avoid it: Have a proper antivirus installed and updated (‘duh). If that seems to simple, store your crypto on a paper or hardware wallet.
Cryptocurrency exchanges can and will be hacked
Anyone who has any interest in cryptocurrencies will surely remember the MT GOX hacking scandal. Which to this very day continues to haunt us. Not only was the company not properly insured but it’s web security was frightfully lacking. The exchange was declared bankrupt and all those who had placed their crypto on the exchange were sh*t outta luck. While it seems some people will have some of their lost crypto returned, it has been a long and arduous process.
How to avoid it: Exchanges are centralized, meaning there is only one entity to hack (Equifax, Yahoo, etc, etc) thus making them big targets. To prevent this from happening to you, do not trust any exchange to store your cryptocurrencies! After you buy cryptocurrency, store it on a hardware wallet. Use different passwords for each exchange, activate two factor authentication (2FA) on every account.
Losing your paperwallet
This may seem superflous to the crypto-initiated, but we humans constantly lose important papers, documents, keys, etc. Why not a single ply of paper? I can’t count the number of times I have misplaced my birth certificate or social security card.
How to avoid it: This may seem trivial but make sure you place it in a secure location and in a file or folder so your paper wallet doesn’t get damaged or misplaced. Also: Never talk about your paper wallet. We cannot stress that enough.
You lose or erase your USB memory
USB drives may be easy to lose or misplace, or heaven forbid delete! Maybe you lent your USB drive to a friend, or someone in your house mistakenly picked up your device and took it to school? Sillier things have happened, believe us.
How to avoid it: Make backup copies, label them, store them seperately and safely. Another solution is a hardware wallet, although it is also recommended that you make a backup.
You forgot the PIN code of your hardware wallet
If you decide to make the investment in a hardware wallet know that if you forget your PIN you can find yourself in a sticky situation. It can happen to anyone. In fact I can’t count the many times I’ve forgotten my debit card card pin in the worst possible moments. And that PIN is only 4 numbers!
How to avoid it: Burn your PIN into your subconsious (figure that out yourself). Keep your recovery seed phrase in a safe place. This seed is a random phrase that creates the private key for hardware wallets and can be used to recover your private keys if you forget your PIN.
Prince of Nigeria – Send me ETH, and I’ll send you back more!
It’s amazing how gullible we human beings can be when it comes to the thought of easy money. No scam is as famous as the Nigerian Prince, soliciting you (of all people) and in return the Prince will reimburse them several times over. In today’s modern world the scam takes place on twitter with accounts that are almost identical to the real ones soliciting crypto.
How to avoid it: This should go without saying but FFS do not send your crypto to an anonomys person on twitter (or anywhere on the intenet for that matter). Don’t do it. Ever.
There have been cases of kidnappings, robberies, threats of exposing infedelity, you name it. People want your bitcoin and they have no shame blackmailing you for it. Even the virus Wanancry demanded Bitcoin as payment if the user wanted access of their PC back..
How to avoid it: To start avoid discussing your financial situation. The fewer people know about it the better. Don’t go on twitter claiming you just hit a 10x, or walk through the streets loudly proclaiming you are the Crypto Oracle of Phili (You know you’ve done it before, be honest!). Secondly: Alert the authorities. Blackmail is illegal and even if you’ve done something you are ashamed of coming clean and catching the blackmailer helps to deter future attempts.
To hedge your risks many people will divide their cryptocurrencies into a mix of HW and online wallets. So you can leave the vast majority in one device and offer the thieves the seed of the other device with the smaller amount. Sounds silly but hey: Better safe than sorry.
There is an underlying theme of this post: Humans are fallable. And many times we are the ones that unwittingly make a thiefs life easier. There are host of ways people get creative to steal your crypto so always be alert, stay informed of new developments, and NEVER NEVER NEVER share your private key with anyone. Not even your mother.
This is far from a complete list, if you know of other ways people lose their crypto tell us in the comments.