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10 Ways To Lose Your Money On The Blockchain With Crypto

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LEARN HOW TO TRADE, BITCOIN, EOS, ETHEREUM, LIGHTBLOCKS MEDIA

People lose their crypto assets everyday due to various reasons. The blockchain is a digital, decentralized financial ledger technology that exists on a network, distributed and underpinned by cryptography and having some form of consensus mechanism.

Like every thing that involves finance though, one can lose their assets if not careful. As at the time of writing, the total crypto market volume over the last 24 hours, according to coinmarketcap ,is $96.60B(from $100.18B of yesterday), which makes a 13.71% decrease.

The most popular way that one can lose their asset is by forgetting their private keys or losing their passphrase but there are more ways of losing one’s assets and we’ll be highlighting them in this article:

  • Sending Coins To A Contract Address.

A contract address could easily be mistaken for a wallet address because they look similar. Unfortunately, coins that are sent to a contract address disappear forever. It happened to me recently, I kept hoping that somehow the blockchain would reverse my transaction. Guess what? It never came back….lol.

  • Sending Coins Through A Wrong network.

This is a common occurrence for newbies. You can lose your money if you trade crypto with the wrong network. I remember when I started in the crypto space. I was supposed to transfer ETH to someone unknown to me, they sent me a BEP-20 network wallet address but I sent it through the ERC-20 network. Somebody say “Bye,bye money“…lol.

  • Using Exchange Addresses For Airdrops.

Many newbies don’t know this but you’re never going to get any airdrop if you submit exchanges’ addresses for an airdrop. When you’re participating in an airdrop, try to use a wallet address e.g. Trustwallet, Algorand wallet, etc.

Cryptocurrency airdrops are often done by a new cryptocurrency firm. They sometimes are not yet listed on an exchange and cannot send their tokens to you through the exchange’s address.

  • Connecting Your Main Wallet To
    Insecure Decentralized Applications.

There’s a lot of fraudulent activities on the blockchain space, one of the major insecurity problems is Hacking… Connecting your main wallet to a DApps you don’t trust is like saying “Hello stranger, I don’t know you but could you hold my credit card for me, the password is 1234, I’ll be right back”.

Have different wallets for different activities you’d like to do, that way, there’s a lower probability that you’ll lose your money. For example, your airdrop wallet should differ from your savings/staking wallet.

  • Buying Cryptocurrencies When Their Prices Are Very High.

Never FOMO!!! No matter how green the candle is, it will come back to red. Investing in Cryptocurrencies when they are up 100%, 300%, 1000%, etc is a bad idea. Learn to wait till the market is red. Imagine buying a coin at 300% and it dips all the way down to -25%, that’s a lot of money lost right there.

  • Not Saving Your Private Keys.

People tend to confuse private keys with public keys. I used to, too, until I lost my phone, got a new one, imported my old wallet with my recovery phrase and couldn’t find any of my funds. My heart knew no bounds as I cried!!! Lol. Learn to save your private keys.

  • Sharing Your Private Keys/Recovery Phrase With Strangers

Usually people don’t do this deliberately but due to the eagerness of people to earn quick money through crypto, they sometimes fall victim to scammers. Never send anyone your recovery phrase or private keys. They’d have total control of your wallet and there’s nothing you can do about it.

  • Not Securing Your Wallet With A Password.

Imagine carrying an unzipped bag stashed full with dollars, there’s every tendency that you’d get robbed, mugged or worst still, kidnapped. In the same way, your digital wallet should never be unzipped. Anyone could access your device and steal from you. Learn to use a password for your wallet.

  • Losing Your Recovery Phrase(Passphrase).

This is very popular but it doesn’t hurt to still reemphasize it. Your recovery phrase is like your frontend access to your non-custodial wallet e.g Trust Wallet, Algorand wallet, Metamask, Terra station, etc. Always ensure you store it in a secure place where you can always find it.

  • Losing Your Private Keys.

Recovery Phrase differs from your private keys. They are the backend access to your non-custodial wallet. If you have your private keys, you can access your wallet and your funds.Some apps like Trustwallet do not show users their private keys but you can get it by importing your wallet to Metamask (for example), because Metamask shows users their private keys.

One could have the recovery phrase and still need the private keys because the recovery phrase gives you access to your wallet but your funds may not reflect until you use the private keys. But private keys unlock your wallet and give you access to your funds.

Yes, we learn from our mistakes but we can’t live long enough to make all the mistakes ourselves, a smarter way to learn is from the mistakes of other people. Ensure you don’t forget these. If you learnt something, please leave a comment, I’ll love to hear them.

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