This article was originally published on coincentral.com the 29th of June 2018.
It was once said, a dumb person doesn’t learn from their mistakes, a smart person learns from their mistakes, and a genius learns from other people’s mistakes. This age-old saying rings ever true in the crypto market. Nobody’s perfect, and your Bitcoin mistakes can end up costing you big time. There are no refunds or take-backs on the BTC blockchain.
Everyone makes mistakes. In terms of cryptocurrency, they can range greatly in their repercussions. In many instances, a Bitcoin mistake is small enough to recover from, but that’s not always the case. As you’re about to learn, even a small typo can end up costing millions of dollars when you’re dealing with BTC. Here are seven of the biggest Bitcoin mistakes ever made.
Mt. Gox Incidents
The now infamous Mt. Gox story reflects the importance of working with a team of accomplished developers on your project. Initially, Mark Karpeles saw great success working as the only developer for what had grown into the largest BTC exchange in the world. Unfortunately for him, his luck quickly changed after a hacker was able to infiltrate the auditing system of the exchange and slash the price of BTC down to pennies. Consequently, the price of BTC plummeted for months following this incident.
That same year saw the demise of Mt. Gox but not until after it was revealed that another mysterious hacker reportedly made off with $340 million in BTC. The shadowy intruder had been siphoning crypto from the platform, unnoticed, for years. To make matters even worse, the Mt. Gox system interpreted the hack as deposits. This caused the system to then begin crediting individuals with free crypto. One wallet received 40,000 in extra BTC. Ultimately, there was a total of 850,000 BTC lost in the incidents, which resulted in the bankruptcy of the exchange.
Mt. Gox from the Grave
It turns out that the ghost of Mt. Gox wasn’t done plaguing the market, and, in 2014, Mt. Gox struck again. This incident was far more innocent but still resulted in major losses for one individual. The losses occurred when an unknown crypto investor accidentally sent 800 BTC to the exchange’s wallet. In a heartfelt Reddit post the individual explains:
“messed up big time. I sent this address 800 bitcoin:
As it turns out, the address was already stored in the investor’s wallet because they had sent Mt. Gox BTC in the past. The Reddit community came to the aid of the individual and helped him to track the mysterious address to the now-defunct Mt. Gox, but he was never able to retrieve his crypto. All of this has further fueled the aura of bad luck surrounding this infamous exchange.
Send Me Over Your Private Keys Real Quick
What would you do if someone sent you an email claiming to be your friend and asking for your private keys? It would probably be a good idea to verify that person’s identity before sending the requested information. Unfortunately, not everyone has the same level of common sense when dealing with the protection of their crypto.
The firm Canadian Bitcoins lost 149 BTC last year when an unnamed individual sent a simple request for access to the server. When he contacted the company’s data center, the hacker claimed to be Canadian Bitcoin’s CEO, James Grant. At that time, the company’s data was being migrated to a new provider, Rogers Data Centre. All it took was one email, and the new data firm sent over the information.
Would You Like Some Mastercoin?
The platform Fyfe was billed as the decentralized version of the internet. This project had seen extensive development over the last eight years, and this year saw the launch of their second stage ICO. Interested parties could invest in the platform by using either BTC or Mastercoin. The latter turned out to be a huge mistake. Mastercoin is a little-known altcoin that lost huge amounts of market value since the ICO date.
Maidsafe, the firm behind the Fyfe project succeeded in raising millions, but, since most of the crypto gathered was Mastercoin, the firm’s funds have now since dwindled. Till this day, no one can explain why or how Mastercoin became involved in this ICO but one thing is for sure, Maidsafe learned an expensive lesson about accepting unknown and obscure altcoins.
Never Complain About Fees
Bitcoin fees have been the subject of discussion in the crypto community ever since scalability issues began to emerge in 2016. At the peak of hysteria and volume, BTC users were paying substantial fees for their transfers. None of that compares to what one UK resident did in September 2013: accidentally input 80 BTC as his transaction fee.
To add insult to injury, the individual only wanted to send 0.01 BTC to the address in question. This mistake is more common than you would imagine. A similar incident occurred in July of 2013 when another BTC investor accidentally input 30 BTC as their transaction fee. Talk about inspiration to double check your transaction before pressing send.
The decentralized nature of BTC makes it crucially important that you maintain control over your private keys. You can lose access to your BTC forever if you lose these all-important codes. That’s exactly what happened to Wales native James Howells when he accidentally threw out a hard drive that contained the private keys to 7,500 BTC.
Mr. Howell mined BTC from 2009 – 2013. It was in 2013 that his laptop suddenly quit working and he was forced to discard it. In an interview with Telegraph, he explains how he accidentally placed the hard drive (HD) in the rubbish during a spring cleaning. The story made international headlines, and James even offered the landfill a reward if they were able to locate the HD. Considering that these coins hold a market value of $48,975,000 today, it would have been much cheaper for James to have purchased the landfill.
In the end, all of these incidents could have been avoided had the individuals involved chosen to follow a stricter protocol when dealing with their crypto. The immutable and unalterable nature of blockchain technology makes it perfect for most financial tasks. However, these same strengths can also become weaknesses when combined with human error and lackadaisical business practices.