New and old crypto users can make mistakes in their interactions with the digital currency. Here's top 5 conmon but costly mistakes that many people make.
Lack of basic information about cryptocurrency.
Bitcoin is the most popular and widely talked about cryptocurrency and some people make the rookie mistake of applying what they know about Bitcoin to every other coin. But, no two coins or tokens are the same hence the need to research each coin and understand its use cases and its underlying technology. In other words read the whitepaper of the currency. Some crypto investors are just attracted by the profit they hear about by word of mouth or internet news surrounding Bitcoin and other cryptocurrencies, so they just invest without understanding the asset class and how it works. Investing in a crypto you do not know enough about or trying to trade it without understanding the basics of how cryptocurrency works, is a recipe for disaster. Take time to educate yourself on different crypto coins and tokens and the goals of their developers crypto will make you a better investor.
Getting Scammed
Getting scammed is directly related to lack of enough information. As a completely computerized asset class, the cryptocurrency market is full of scammers. In 2022 alone the FBI says investors lost $10 billion in crypto scams. Crypto scammers employ many methods to gain access to your funds. Some use sophisticated phishing techniques while some use email or messaging apps, to lure you into investing with them, wallets can be hacked too especially if you use an online wallet, some use ponzi schemes and rug pulls. To avoid getting scammed, never give out your wallet password, seed phrase, or private keys, do your research before trusting anyone with your investment, only connect your online wallet to trusted applications, try and keep most of your crypto in offline hardware wallets.
Forgetting Crypto Passwords or Seed Phrases
Forgetting crypto passwords or seed phrases is notoriously common but this is the most disastrous mistake one can ever make in cryptocurrency. Many people make the mistake of creating a password in a hurry or make it when their minds are preoccupied. Others make a password and store it where it is easily lost like on a piece of paper or take screenshots. All these are dangerous exercises that may result in you losing your password or seed phrase. By forgetting your password not only do you risk getting your account or wallet locked but you risk failing to recover all your investments. A good example is of Stefan Thomas a computer programmer who in 2021 was publicised to be left with two password guesses before a cold wallet with 7,002 Bitcoin he was gifted in 2011 locks forever because he lost the piece of paper he had written the password. Read the full story . Even though most wallets have a backup seed phrase to gain access to the funds, if that seed phrase is lost or forgotten, there may be no alternative option for recovering your funds. There's also the option of hiring a password recovery expert but it is costly. Always make a password you can easily remember and store it in a safe and secure place.
Wrong Wallet Address
Transferring your funds to a wrong wallet address is the worst thing that can ever happen Some investors mistype the wallet address while some choose the wrong network. By making such a mistake you risk losing your funds forever as they will be sent to an erroneous wallet address which may be unrecoverable. It is quite hard sometimes impossible and takes very long to recover crypto sent to the wrong address. While there are companies that offer recovery services they can be very costly. To avoid such mistakes always copy and paste wallet addresses to avoid mistyping. Always confirm the network before making the transfer.
Order Errors
Order errors can be made in buying or selling crypto assets. It is very import to double check your order before submitting it. Not all exchanges have simplified order forms, some have complicated ones that may confuse you. When placing an order or making a transfer, a simple decimal point error ca cost you thousands in losses. A good example is how qn NFT seller endured losses of about $300,000 when he sold a premium NFT for 0.75 Ether instead of 75 Ether. To avoid such costly mistakes, double-check and recheck your orders or transfers before submitting them.
