Any person who has a lot of experience in the crypto world surely understands and acknowledges its volatility. Moreover, people that mainly deal with Bitcoin, understand the risks involved in this industry, and hence, posts about traders or investors losing money on their investments do not come off as a surprise to them.
Another reason one can suffer a loss is by losing their bitcoin or any sort of crypto that they have invested in. There are multiple ways of how one can lose their money by this. These ways or reasons are usually disregarded by investors and traders when they first start investing their money. People usually fancy the idea of making millions in profit through crypto trading that they disregard the levels of risks involved in this sector. In this article, we will be going over the facts of how crypto can be lost and what measures should be taken to prevent this.
Typical mistakes in Bitcoin exchange
1. Viruses & Bad Private Key Storage
One way to lose your funds is by keeping the private keys unchecked and open for anyone to go through. This makes it very easy for people to steal money. Another thing that must be taken into consideration is that keeping your recovery seed saved in the note's app or anywhere on the phone is not a good idea since there is certain software whose basic purpose is to scan through people's phones and check in the files to look for the 12 to 24 seed code.
No matter how safe your wallet can be, or how protected the device is, it is never a good option to be saving the recovery seed code on the phone or laptop since there are risks of it getting exposed to scammers. This can only be a viable option if the user is very tech-savvy and understands how the computers work well and can figure out how to develop an air-gapped device.
To save the recovery keys or private keys is not that hard as it may seem, all that has to be done is to record it somewhere offline where hackers would not have any access through the internet and would not be able to hack into any device. This way the money that has been invested in the bitcoin will not go to waste and cause a loss.
2. Losing the Recovery Seed
In a situation where the trader has lost their bitcoin, hence lost their money as well, due to hacking or any other reason, this is where the recovery seed comes into use. The recovery seed is a 12 to 24 words code that gives back access to the trader's wallet. Another occasion where this might come into use is when one has accidentally lost their phone or deleted the app. To put it in simple words, if one manages to lose access to their wallet without knowing what their recovery seed is, then there are very high chances that the funds invested in the bitcoin have gone down the drain.
It’s highly advised planning to back up the recovery seed, especially when the trader intends on doing it on a long-term basis and plans on spending large amounts of money. Backing them up will help a lot in a situation where things might not end up the steering in the right direction. It is also not advised to procrastinate and put it off for tomorrow. It is best if it is done as soon as possible to minimize the risks involved.
3. Leaving Funds on Exchanges
The pseudo-anonymous nature that cryptocurrencies hold makes it very easy for hackers and scammers to break into exchange accounts, which are normally the most common place suspected to lose money. In an event where the savings have been stolen from one's account, though the address to which it is being sent can be tracked down, there is no way of identifying who the person was.
There are some cases where people tend to hold their money mainly for the objective of holding money. If that is the case, then it is highly advised to get those funds out of the exchanges as soon as possible. There should only be one use for the exchanges which is to be provided with a platform that acts as a place to exchange cryptocurrencies. All it takes is to install and invest in a reliable wallet mainly if you are planning to hold large amounts of money.
How to exchange Bitcoin without losses?
People who just stepped into the crypto realm are bound to make mistakes, however, if few tips are kept in mind while trading and investing in cryptocurrencies, it will lessen the consequences. It is wise to learn from the mistakes of others and take the necessary steps to ensure a more sustainable career in the world of cryptocurrency.
Giving In to Emotions
Experts have advised beginners to first go through the psychology of trading and understand the effects that fear and greed might have on one’s trading decisions. It is important to make rational decisions while eliminating the element of emotions to have better results in the market.
It is good to follow a certain trading strategy and make sure that it is being implemented as well. It is advised that before jumping into the trading fiasco, one should already be enlightened by the knowledge for crypto assets, these include BTC, ETH, LTC, or any other type of cryptocurrency. Having adequate knowledge about the crypto in which one is going to invest their money is necessary before jumping the gun prematurely.
Not Analyzing Mistakes
The saying ‘learn from your mistakes’ fits perfectly in this matter. If a trade has experienced loss, it is suggested that they look at what mistakes they had made that lead them to experience loss. To analyze them and point out what went wrong and how can it be fixed in future investments is essential for traders and investors. People that learn from their mistakes, and make a strong comeback often taste success, and make a big name out of themselves in the competitive crypto market.