lose your bitcoins

The 6 ways to lose your bitcoins and how to avoid them.

14th November 2023

There are many situations where unfortunately we can stupidly lose our precious bitcoins. This is even more likely to happen to beginners, but you should know that it can happen to anyone, even so-called “advanced” profiles.

In this article, you will find risky and clumsy practices that will lead to the possible loss of your bitcoins. If you are careful and follow the right precautionary measures, you can avoid this kind of loss. The most important thing is that you can be calm enough to store your bitcoins but “paranoid” enough not to do anything stupid either.

It's all about balance, indeed, even when it comes to bitcoin.

1/ Lose your private key

What we commonly “seed phrase” or recovery phrase is a series of 12 or 24 words that make up your Bitcoin backup. It is this series of words that you will use to open and manage your wallet. If it is stolen or lost, you will no longer be able to access your wallet.

It happened and still happens that people write down their series of words on a piece of loose paper. They take screenshots (not to be done) or he notes it on an email that he sends himself. It is typically a beginner's mistake. They end up losing the seed phrase, or their phone is lost or stolen and they forget the location of their seed phrase and ultimately no longer have access to their wallets.

The solutions :

  • Save your seed phrase in a notebook that you place in a secure place where few people have access. Ideally, you can protect it in a safe or better in a special fireproof bag which protects you from bad weather (fire, etc.). You can find this type of protection on Amazon for example for around ten euros.
  • There are both metal plates specific which allow you to engrave your seed phrase and to be safe in the event of a fire for example. You can consult our article to find out 12 tips to secure your seed.

2/ Lose your bitcoin on an exchange platform

This is perhaps the most ridiculous way to lose your bitcoins. The sudden closure of centralized platforms is a phenomenon that happens frequently. The masterful fall of FTX is a perfect example which caused many investors to lose their precious bitcoins.

These platforms are very attractive because they offer multiple additional services, particularly for those who have other cryptocurrencies. For example, you can do staking, lending or other activities on this type of platform. This can be attractive, of course, but it should not make you forget the risk you are taking.

Meanwhile, your bitcoins are on a centralized exchange that can shut down overnight. Never forget that bitcoin is irreplaceable.

The solutions :

  • If you purchased bitcoin on an exchange, it is recommended that you withdraw it immediately and send it to a non-custodial wallet that you fully manage.
  • Engrave this adage in your mind “Not your keys, not your coins”

3/ Type the wrong address

Sure, it's a stupid way to lose your bitcoins, but it can happen to anyone, because we can all be careless at some point. We can all make a mistake by sending bitcoin to the wrong address. It also happens that we use the wrong blockchain. For example, a beginner will be able to send bitcoin (BTC) to an address Bitcoin Cash (BCH) for example which may roughly resemble each other.

You must carefully check that you have made the correct copy and paste before sending bitcoin to this address. Remember that transactions are non-reversible. You cannot click “undo” a transaction once it has been made.

The solutions

‍- Be vigilant systematically. Always check the recipient's address. Use the “Scan” function as much as possible to facilitate your operations.

3/ Phishing attacks

This is the worst attack you can encounter. There are several known methods of phishing attacks that you should be aware of to maintain your alertness. You should know that phishing attacks also cause victims in traditional finance. It is therefore important to be aware of this and take appropriate precautionary measures.

It is possible to be the victim of a phishing attack by returning an email or SMS from a service you already use. Phishing consists of impersonating a company by copying all the features of its identity. This way, the malicious website will be identical to that of the company and the domain name will be very similar. Instead of reading “www.binance.com” for example, you will see www.binence.com. If you are not careful, you will not necessarily notice the change of a single letter.

So, by clicking on the wrong link, you will think you are on the right one and you will enter your identifiers. From there, the attacker knows your password and can happily pretend to be you, to empty your wallet.

Other, more sneaky methods include warning you that your account is in danger with an email from the so-called “customer support” of a site you use. You will be asked for your passwords, for example, to resolve this urgent problem. Of course, this is a scam and a site will never ask you for your password to resolve a problem.

The solutions :

  • NEVER give out your passwords, for any reason.
  • If you are asked for your phrase, you immediately know that it is a huge scam.
  • Be immediately suspicious of anyone sending you a private message.
  • When you buy Bitcoin hardware, such as a physical wallet for example, try to have it delivered somewhere other than your home, such as to a Relai location or a neutral location of this type.

4/ Getting trapped by malware

Malware is certainly one of the ways to lose your bitcoins that is the most difficult to avoid if it happens to you. These attacks are often linked to fraudulent downloads that a person will make against their will. Thinking of downloading healthy software or simply thinking of clicking on a banal ad, they will end up downloading malicious software.

This software is designed, for example, to replace the recipient's address that you think you entered correctly. There are even other ways to steal your bitcoins with software like this.

The solutions :

  • Always be careful about the software you download. Always check the URL of the site in question or the signature to open source software.
  • Clean your computer and smartphone. Use dedicated antivirus software.

5/ Redirection of your phone number

This is a way of losing your bitcoins which is rather rare but which is prevalent in certain regions of the world. In this situation, an attacker will successfully impersonate you to your mobile service provider and take control of your phone number which will be redirected to him.

Once the attacker takes control of your number, they can then gain access through SMS authentication to access centralized platforms where you have bitcoin and other cryptocurrencies.

The solutions

  • Again, do not keep any bitcoin in a centralized platform.
  • Try to avoid 2-factor SMS authentication. Prefer the one that is composed with codes like on Google Authenticator . In general, this is the method we suggest.
  • Be sure to check the emails you receive that tell you that your number has changed or been redirected.

6/ Overly complex security measures

With the fear of losing your bitcoins, you can become paranoid very quickly. This may push us to take security measures that are disproportionate. You should know that the stronger your security, the more complexity necessarily increases.

Depending on the level of knowledge you have, having a mobile wallet like Samurai ou Wasabi wallet is more than sufficient. Of course, you can add an extra layer of security by opting for an open source physical wallet like ColdCard ou Trezor for example.

However, if you opt for multi-signature wallets, decide to have your own node, etc., you will complicate the process. This may make your access to your funds more complicated and sometimes you may make configuration errors.

The solutions :

  • Take things step by step. Take the time to learn before choosing complicated solutions.
  • Practice importing and restoring your bitcoin wallet a few times before using a more difficult method.
  • Don't be paranoid either and be more calm with your bitcoins.

Final word

Many people have lost (forever) their access to their Bitcoin wallets. Thousands of bitcoin are lost forever. It would be a shame if this happened to you too. Stay vigilant.

Finally, we can only emphasize certain essential points that you must keep in mind.

  • Beware everyone.
  • People who supposedly want to help you are often there to take money from you.
  • Be careful of influencers who make a living selling you services and tokens that will go lower than the earth in the future.
  • Withdraw your bitcoin from exchange platforms.
  • Never disclose your private keys on a website. Never.

See as well:

Note: No financial advice is given in this or any other article on zonebitcoin. This is information of which you are the sole judge and master. Be responsible with your investments and only invest as much as you are willing to lose.

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Passionate about Bitcoin, our editors try to democratize their knowledge through varied articles touching on different subjects.

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