Bitcoin Forum

I am trying to come up with some entertaining ways to engage newbies in learning some basics about bitcoin, crypto, and online security.

I came up with the idea of creating stories and riddles about ways in which people can lose their coins or have them stolen. I hope our youngest forum members will find them interesting to read and discuss what went wrong. Hopefully, that will teach them how to properly secure their assets and not repeat the same mistakes as the unlucky individuals in these made-up stories.

If there is enough interest in the topic, I will add new stories regularly and handout rewards in the form of merits to the quickest and most-complete answers. 



Local Rules:

•   This thread is intended for users of Newbie, Jr. Member, and Member rank.
•   Everyone else can freely comment, give suggestions, or propose corrections. Still, I would like to ask you not to answer the questions and give our beginners a chance to participate.
•   If you have suggestions on what kind of riddles and stories I should post next, please PM me.
•   To prevent the possibility of abuse, I WILL NOT merit a newbie whose registration date is after a riddle was posted. Your account has to be older than the date of the problem you are solving.
•   Pay attention to the stories, check the pictures, and links to solve the riddles.

This thread will have two statuses: 
 
•   Open for all ranks
•   Open only to Newbie – Member ranks

When I post a new story, the thread will be in status: Open only to Newbie – Member ranks. It means that only users ranked newbie, jr. member, and member can post. When the thread is in this mode, this picture will be visible in the OP:

https://talkimg.com/images/2023/11/12/zUdv5.jpeg

If nobody manages to solve the problem after a couple of days, I will change the status to: Open for all ranks. In this status, members of all ranks can take part in solving the problem. When the thread is in this mode, this picture will be visible in the OP:

https://talkimg.com/images/2023/11/12/zUuiz.jpeg

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Riddle #1 (https://bitcointalk.org/index.php?topic=5324826.msg56596199#msg56596199)
Riddle #2 (https://bitcointalk.org/index.php?topic=5324826.msg56608592#msg56608592)
Riddle #3 (https://bitcointalk.org/index.php?topic=5324826.msg56671152#msg56671152)
Riddle #4 (https://bitcointalk.org/index.php?topic=5324826.msg56733684#msg56733684)
Riddle #5 (https://bitcointalk.org/index.php?topic=5324826.msg56820556#msg56820556)
Riddle #6 (https://bitcointalk.org/index.php?topic=5324826.msg56989250#msg56989250)
Riddle #7 (https://bitcointalk.org/index.php?topic=5324826.msg57228995#msg57228995)
Riddle #8 (https://bitcointalk.org/index.php?topic=5324826.msg57329874#msg57329874)
Riddle #9 (https://bitcointalk.org/index.php?topic=5324826.msg57397213#msg57397213)
Riddle #10 (https://bitcointalk.org/index.php?topic=5324826.msg57671857#msg57671857)

Let us start with an easy one…

Riddle #1

Tom watches a YouTube video about bitcoin. The video shows interviews with people who have made incredible profits in the last two years alone. After he watches the interview, Tom decides that he will purchase bitcoins.

He registers at a local exchange and buys bitcoin with his credit card. He remembers the YouTube video that he watched where several users recommended using Electrum for storing their coins. He decides that’s going to be his wallet of choice as well.

He opens up his Google Chrome browser and types “electrum” in the search field without researching further. The first result seems promising and looks like an ad of some sorts. It points him to Electrum’s website, as shown below:

https://talkimg.com/images/2023/11/12/zUXCd.jpeg

He downloads Electrum after just a few clicks, installs the software, and is ready to initiate his first bitcoin transaction.

It’s already late, and he has to go to work in the morning. But before he goes to bed, he withdraws his coins from the exchange and sends them to his new Electrum wallet. When he wakes up in the morning and checks his phone for any new messages, he notices an email from his exchange that confirms that his withdrawal was successful.

Excited, he turns on his computer and opens the Electrum client. To his surprise, the wallet balance is 0! His wallet history shows two transactions: one incoming transaction from his exchange half an hour after requesting the withdrawal and one outgoing transaction from Electrum to an unknown address.

Tom knows that bitcoin is irreversible and that he can’t recover his coins. Disappointed with the outcome and for losing $300, Tom heads off to work. He can’t understand what he did wrong, so he decides never to buy bitcoin again.   

---

What happened here, and how did Tom lose his bitcoin?
What did he do wrong, and how should he have acted?   

This is an easy one. I believe Tom didn't do a research of a website he found on Google and ended up on a fake Electrum website where he downloaded a hacked version of the Electrum software wallet. The moment he got the coins from the exchange, the wallet made a new transaction and sent the funds to the thieves.

How was he supposed to act? Perform a thorough evaluation of the website from which you will be downloading the new software. Learn how to recognize a fake website and never download Electrum from another source than electrum.org. When it comes to software wallets, it's also a good idea to learn how to check GPG signatures.

Tom was too hasty in his actions of downloading a wallet, in this case electrum wallet from an unofficial source denoted with .org.uk and as such, Tom downloaded a cloned Electrum bitcoin wallet and was phished for privacy details which enabled the scammer to have access to Tom's private details and as such, withdrew Tom's coins.

Tom should have firstly looked out for the official website for electrum wallet app using what ever source of information available to him or her, verifies the official site by asking on bitcointalkforum should he be a member or perhaps, ask a known crypto enthusiast before going ahead to download. After which, atom would be sure to ensure the wallets privacy details stay private before transferring his or her coins from the exchange.

Tom just got so much greedy by hearing about profits from one YouTube video and without researching about what is bitcoin? How to buy? Which are safe places to store it? Etc. He just bought btc. He didn't research about which are are safe ways to store crypto? And by just hearing from an YouTube video he go to download electrum wallet! When he search for electrum wallet. he didn't check the url of that site that is it official or a scam website? and end up with a hacked wallet. It was already late so he was tired up and without checking apps authenticity he sent btc and hacked app automatically sent that funds to hacker!

Tom should not get blind with greed and do some research about btc trading and storing! There are many articles about crypto knowledge and YouTube videos also about it! He should research about at least couple of weeks and then when he become confident he should start investing!

Of a truth, this is just why you can't tell new investors into crypto currency otherwise, that it isn't a scam or ponzi. When upon first attempt, they have there funds chatted away. Well, to answer the questions

1. Tom out of ignorance downloaded a cloned Electrum wallet app from Google by trusting the first thing Google suggested instead of verifying if it was the official wallet or not.

2. Tom should have done a lot more of one above, that is, Tom should have ensured to verify the wallet app being downloaded is from the official source or site before going ahead to install and transfer his coin to the et address.

What happened there was
 Tom was scammed of his Bitcoin, not by the exchange or his wallet but by the ignorance of not further researching more into Bitcoin and understanding it to a certain height, he had no information about wallet or crypto ,he was in for the profit.
 2 what did he do wrong and how should he have acted?
  Tom was wrong in all aspects , buying what he doesn't know much about, downloading a wallet without no knowledge and transferring his Bitcoin without private key which he never knew about ,Tom would have research further into Bitcoin or cyrpto , which I believe with more research would have introduced him to kinds of wallets, uses of private keys, etc.

That's correct. Tom was in a hurry and downloaded the first result that Google displayed. The first displayed result in Chrome is often a Google ad, and often these types of ads have been used to direct users to fake phishing sites and malware infected wallets. If Tom has acted smarter and done some research, he would have realized that electrum.org . uk is a phishing site. The only official site of Electrum is https://electrum.org/#home and there is even a warning at the top of the page that informs users not to download the wallet from any other sites.

The software he downloaded from the fake site was malware-infected. It was designed to empty the wallets of its users and send the transactions back to the hackers. Tom also didn't follow the recommendations on Electrum.org to verify the signatures of the wallet he downloaded. Had he done that, he would have realized that he was using a fake app.

The thread is now open for all ranks. I will post a new riddle soon...

Lots of people identifying the problem, but only one person identifying the correct solution: Verify the GPG signature!

The people saying you should always make sure to only download from the official site - electrum.org - are not wrong, but that isn't enough to guarantee your safety. Websites can be hacked. Hosting servers can be hacked. GitHub can be hacked. MITM attacks exist. There are a lot of ways you could still download a piece of malware even from the official site.

The only way to guarantee you are using the legitimate version of Electrum compiled and published by ThomasV, is to verify the signature of the file you downloaded using his public key. If you don't know how to do this, check out the guides below:

https://bitcoinelectrum.com/how-to-verify-your-electrum-download/
https://bitzuma.com/posts/how-to-verify-an-electrum-download-on-windows/
https://bitzuma.com/posts/how-to-verify-an-electrum-download-on-mac/
https://bitcointalk.org/index.php?topic=5240594.0

Riddle #2

The year is 2018. Anna works in the most prominent law office in town, and she just received her yearly bonus of $2.000 from her boss. During the lunch break, some of her colleagues talk about investing their bonuses in Bitcoin. She remembers watching news reports about Bitcoin and crypto on several occasions throughout the last couple of months. She decides to give it a try.

She has no experience with cryptocurrencies and thinks, how hard can it be? She powers on her computer and visits the only crypto website she has ever heard of, Bitcoin.com. Between the options Bitcoin Cash and Bitcoin Core, she clicks on the Cash version. She wants to buy digital coins, so that’s cash. What is she going to do with Core anyway, and is that even a thing?

https://talkimg.com/images/2023/11/12/zUUOI.jpeg
Image source: A thread on Bitcointalk that I won't link to, to not give away the answer.

She purchases the coins with her credit card. She withdraws them to a legacy address on her non-custodial bitcoin wallet. After a few days, she opens up her wallet to check the value of her coins. But the wallet is empty.

-   She sent the coins to the correct bitcoin address.
-   She used a genuine wallet.
-   The wallet has synced with the blockchain, and there are no other problems with it.


Why is her wallet empty? What did she do wrong, and how can she correct the situation?

Hello. It seems to me that she was not boiling what she wanted. She wanted BTC and bought BCH. Now she needs to convert her BCH to BTC. Maybe she bought BTC and is now looking at BCH? One out of two )

Well, which one is it? You started off good, but than you got off track. Look at the screenshot. Which coin did the site highlight and what did she buy?
Where are the coins, and how does she gain possession of them? Remember, her bitcoin wallet shows no balance. What does Anna need to do?

Anna thought she bought bitcoin but it was bitcoin cash. Bitcoin cash would not be compatible with any bitcoin wallet because bitcoin cash or BCH in short is a different coin and only alternative coin to bitcoin in abbreviation of BTC. BTC and BCH are again completely different, hence the transaction she had made will not appear to bitcoin wallet neither to blockchain.


Anna could still recover her funds by obtaining BCH wallet. However, in this case it was being bought in an exchange wallet so I still need to figure it out how could he she recover the funds using the BCH wallet in the exchange.

Lesson learn,

No knowledge is better than half knowledge. Having little knowledge is more dangerous than no knowledge at all. This will also goes similar to the phrase that "curiosity kills the cat." Whatever the things we do especially in cryptocurrency, one should learn first get the full knowledge needed to get it done successfully not like Anna.

@rosenbauer02
Good. We have now established that Anna bought the wrong coin. Instead of bitcoin, she purchased bitcoin cash. However, the coins are no longer on the exchange. She withdrew them to her personal wallet.

Is there something that she can do with the wallet/wallets to gain custody of the purchased coins, and what is it?

Anna bought BCH instead of BTC. She checks wallet BTC, it will be empty. Anna has private keys from his wallet. She needs to change BCH to BTC and she will be happy)
I am a beginner, I tried to answer correctly, but I probably have little knowledge. I use online wallets)

Anna should download a BCH wallet which has BTC wallet support too. She will going to use the seed phrase of her BTC to access the BTC address where she uses to send her purchase BCH. There are instruction in where other wallets could retrieve those BCH stored in BTC address. There were mentions about recovery tool that can scan and transfer BCH coins from BTC address to the BCH wallet.

This is a little bit complicated for me since I can't speak about the technical aspect of wallets but these are the only ideas that has derived after making some google search. I just overlook this before and didn't care at all because I am confident that I could not get mistakes when transferring bitcoins or any alternative coins like BCH. So, this could be a  perfect time to ask or see the possible answers I could get in the OP riddle. I think this is not literally a riddle but more on an application of ideas learn about bitcoin and wallets.

Anyway, I was happy that I get the right answer it was a bit easy for me but the follow up question was a little bit difficult to my current knowledge about cryptocurrency.

We are missing one more crucial piece of the puzzle.

@*1Bishop1*
You are correct. Anna can get the private key from her non-custodial bitcoin wallet. Before exchanging the bitcoin cash for bitcoin, she needs to do something with the key because she still doesn't have her coins. What does she need to do?

@rosenbauer02
Instead of the recovery phrase, can she use another "private" string that is derived from the seed? Hint: Look at the suggestions and my answer to *1Bishop1*. There is no need to use recovery tools, she has everything she needs already. She is just missing a certain wallet and something private that can be derived from the seed. What is she missing?

If Anna has a wallet that she started in another service, then she probably needs it to import it to the Bitcoin.com service using her keys?
I never used bitcoin.com, but I really want to come to the right answer )))

I guess this would be the right answer to the missing key of the answer. I do believe the answer would be right roughly 95% chance that this would be the answer.

Anyway, I am looking forward to answer another riddle if you permit to answer. I just ask this in advance so I will be able to know if I could still participate in the discussions. I am glad to learn a lesson for free without paying a user for me to learn. This is an opportunity actually because I do believe that there are things I overlook that might be needed or come in handy in the future.

As far as it also concerns with other newbie, they could get a lot of idea in this post where the OP had started. The world of cryptocurrency is broad and many to discuss with   . However, due to thousands of post being made daily other important post like this will get burried in the bottom in which I think this is an active discussion free for all posts.

@*1Bishop1* and @rosenbauer02
You guys almost got it all. And yes, feel free to discuss any other riddles I come up with in this thread.

Just to get a complete answer, I have opened the discussion for all ranks.
Current thread status: Open for all ranks

Any Bitcointalk member who wants to chip in, feel free to do it now.

If Anna did everything right, and Bitcoin did not come... Perhaps a problem with the blockchain network? Transaction did not receive confirmation? It is necessary to either wait yet, or turn off support for help.

I'm still not familiar with this wallet. But I can assume that if she did everything right, and there are no problems, but Bitcoin does not see, then maybe she checks the wrong wallet? Maybe she bought BTC, and now checks BCH? She just needs to check its BTC wallet (address). By the way, it can check the translation status for example in blockchain.com. So she will definitely know that her coins came to her address.

Anna has purchased Bitcoin Cash by mistake. The site Bitcoin.com tried to trick people in the past by giving the real Bitcoin a wrong name on their site. They referred to it as Bitcoin Core. When you pressed on the buy button, the site would set up your purchase for Bitcoin Cash just like you can see on the screenshot. Bitcoin Cash gets automatically selected. People who purchase Bitcoin for the first time got tricked this way because they thought they were purchasing the real Bitcoin and not Bitcoin Cash which is an altcoin.

That's what happened to Anna. She now owns Bitcoin Cash that she accidently sent to her Bitcoin non-custodial wallet. Luckily for her, she has full control of the coins because her wallet allows her to see and extract private keys for its addresses. What does she need to do with the private key of the address the coins were sent to?      

1. He decided to make use of the first result he saw without doing any research which lead him to a big problem encountering a scam.
2. He watched a video on YouTube and just decided to rush in to something he doesn't really have an insight on, That's wrong, he would have done at least a little research before going into that

I won't blame his reaction but it's his fault, but he should sit down and find out where he went wrong

This no joke, had similar problem but I figured it out later and made a post about it some months back
https://bitcointalk.org/index.php?topic=5309358.msg56092960#msg56092960

Why is her wallet empty?
Her wallet is empty because she made use of the wrong address, she decided to buy Bitcoin but instead she bought Bitcoin cash but made use of a Bitcoin wallet address as the receivers address

(But I think the site that she's buying from should had warned her that the address is not for BCH)

She can correct this by importing her current wallet by making use of her keys to another wallet that supports both BTC and BCH and when this is done she will probably see what she purchased

As I wrote earlier, she just can check the purse's balance on the site for example blockchain.com. And since she has a private key, it can at any time import a private key to any software wallet and she will see their coins there and will be able to send them where he wants.

I think I can consider this as solved now. Thanks *1Bishop1* and rosenbauer02 for giving it your all.

What I wanted to hear is that her coins are not lost. She was just using the wrong software to check the blockchain. Because she has a non-custodial wallet and access to private keys, Anna needs to export the private key of the address she funded, and import it into a Bitcoin Cash wallet. One wallet that she can use is Electron Cash (https://electroncash.org/). Case closed.

Note a couple of additional points:

• When doing this, it is far better to export and recover the private key of the individual address in question rather than trying to recover from your entire seed phrase in a BCash wallet. It avoids any problems you might run in to with incompatible phrases or incorrect derivation paths, and it also means you are not exposing your entire seed phrase and therefore risking every wallet derived from it. Exposing a single private key is a more straightforward and safer option.
• To be doubly safe, you should move any bitcoin on that address to a new address before exporting that address's private key. This is so there is no risk of your bitcoin on that address being stolen after you have exposed the private key to that address, and it has also been necessary in the past when some forks of bitcoin (and potentially in the future with future forks of bitcoin) have not implemented relay protection, meaning any transaction you make on the altcoin chain can be duplicated on the bitcoin chain.

Oh, exporting private keys is all it needs.  Hahaha I should have answered it that way.

Anyway, I learn from this scenario and wanted to get mor OP and since you permit it then I am glad to take part of it. Hopefully you will not get bored of my answer though I have some background and google to rely on but still google will not always get you the right answer. It is still the experience is the best teacher and to learn on. Sharing it here for free would be the most exciting thing here in the forum. I can't wait for the next riddle of the OP.

If ever I know the answer, then I will remain silent to give others the chance to discuss it with but if I do not.know the answer then I will be happy to try my best to answer and learn from it. It would be a pleasure also to meet legend users here in the forum doing all this for free. This is an extra baggage for them to carry just to share valuable knowledge and learnings. I am glad to participate and actively discuss. We will going to see the next riddle and again if I know the answer then I will remain neutral ans silent but if I do not know the answer then I will do mu best. Google search engine is also ready for reference. Hahahah

In any case, I would seek the right answer from us on the forum. There are many experts! Thank! It was very interesting! Very waiting for new mysteries!

All newbies, Jr. members, and members can freely participate in every riddle or brain-teaser I post. Even if you took part in the previous ones, got merited, or didn't get merited. It doesn't matter. The point is to get new members interested and have them discuss common problems and misconceptions about bitcoin and crypto.

@*1Bishop1*, @rosenbauer02
If you think you know that answers to the next questions, don't hesitate to share your opinions. Googling the answers is not a problem. No one knows everything, but learning how and where to look for problems is equally important.

That's great. Since I answered the first riddle, I decided to skip this last one.

Keep them coming, Pmalek.

Riddle #3

Peter is fresh out of college and is looking to make a quick buck. He checks the internet for recent investment trends and learns about bitcoin and crypto. While searching for new coins to invest in and make as much money as possible, he comes across tweets by John McAfee, the notorious businessman and investor.

John seems to know it all and has a huge following. He appears confident and knowledgeable and is precisely the person Peter was looking for. Someone to guide him on the path to success. He starts following McAfee and trusts everything John says.

John is such a selfless man. He tweets and recommends to his audience what coins to invest in. Bitcoin is, of course, a significant part of an investor’s portfolio, so Peter buys bitcoin before anything else. John says it’s going to be worth a million $ a coin after all.

But it’s not just bitcoin you should invest in. John shares exclusive info with his followers that privacy coin Verge is going to be the next big thing. Anyone who doesn’t see it coming and doesn’t jump in early is an idiot, Peter thinks. He invests a big chunk of his savings into Verge.

https://pbs.twimg.com/media/D1HdlzgU8AAU-Xd.jpg

Mr McAfee’s 2nd golden ticket is bezop.io – a decentralized marketplace that will overtake Amazon in the years to come. Amazon on the blockchain, how cool is that Peter thinks, as he places his buy order worth $3000.

https://steemitimages.com/DQmfH5XPcu9cTJvcspR8MSyS7esgZdPFAJeamNjAWLQB8gY/image.png


What does Peter’s portfolio look like now, a few years after his initial investment? Verge is down 85% and Bezop’s value has fallen by 95%. The only thing that looks good is bitcoin.

But Peter did everything right. How could this happen?
Where did Peter go wrong?

I believe Peter's first mistake was to blindly trust someone on social media, especially with regards to investment advice. Peter, like everyone else in this situation, should perform his own research before making any decisions.

That's correct Marvelman.
Peter's first mistake was to trust a social media influencer and online personality. Influencers are marketers and salesmen. They get paid for advertising, aka, shilling certain products and services on the general public. John McAfee was just like that. Each tweet he made suggesting his followers what project to invest in, was a paid tweet.

Before Peter invested his own money, he should have conducted his own independent research on the platforms, the development teams working in the background, and what issues are solved with that particular coin and network. However, Peter didn't do any of that. He believed in the recommendations of others and it resulted in him losing a big part of his investment.   

In additon to @Marvelman answer about doing some research before jumping into investment. Peter should only trust only investing on bitcoin (BTC). All coins in the market are only an alternative coin to bitcoin. Investing altcoins is too risky and that will not give an assurance to earn compared to bitcoin. If only peter had invested bitcoin then after some time he could have more money with bitcoin.

I myself had only been eyeing on bitcoin alone and no other crypto that can guarantee earnings or profit like bitcoin. Since Peter is new to cryptocurrency, then he would have only believe in bitcoin.

To all new to cryptocurrency and wanting to invest. As a newbie to cryptocurrency, I suggest to invest in bitcoin alone and leave it for a while. Hold it and see some time like 3 to 5 years what could happen to your money with bitcoin. History repeats itself and the 2017 ATH of bitcoin was already being surpass with the current market and still counting.

In addition to what others have said. I believe Peter's mistake started from not seeking knowledge about how to make a profitable investment in crypto first and also having the thought of cryptocurrency to be quick to the rich scheme which was also the same mistakes most newbies of this day make.

Thanks for yet another round of riddle, somehow, I missed to participate by means of trying to figure out the answer on this one but yeah. You guys are write on the ground that, Marvelman committed the error of blindly following a project based on recommendation. Its wrong! Especially when the recommendation is based on a social media advert. He should have first wondered if the advertiser would have done otherwise apart from praising and projecting the company or coin above others in the market. Is the way of things and a personal investigation or research is all that is needed to safe guard the available funds. I look forward to the next round.

If he made 2 mistakes and did everything right, then I think like this:
1. he confided in a stranger. It could be a swindler.
2.1 Maybe Peter invested almost all of his funds in bitcoin? He had heard about bitcoin, but not about other things, so he invested almost all his money in bitcoin? And the rest only a little.
2.2 And Peter could have invested all his money in bitcoin, but he simply did not have enough for other projects. This was a problem for him then. But later he realized that he was lucky.
If there is any other way Peter could have made a profit in this case, I'm curious to know. Thanks!

This is a very good learning format. This is the puzzle that make think a beginner and they may be faced with such situations in reality.

This is a good way to have some entertainment for having fun and also learn at the same time. Maybe some are very lazy to learn slowly just by asking someone right away without searching first before asking rather having fun plus it also help exercise our brain to store such knowledge about cryptocurrency.

Riddle #4

John loves computer technology and is always on the lookout for the newest trends. After buying a new graphics card at a local PC shop, he gets offered a 50% discount on a brand-new hardware wallet. John already owns a few coins, but they have been sitting on an exchange ever since he purchased them.

The store clerk explains that hardware wallets present a much safer method of storing cryptocurrencies. John is hesitant at first, but for $39.99, he decides that it’s a good deal. He has heard about hardware devices in the past and is pretty confident that he knows everything to operate them properly. The clerk gives him his business card and tells John he can call anytime he has any questions or runs into problems, and he will receive free support.

Back home, John unpacks his new hardware wallet and connects it to his computer. There is an instruction manual and a couple of cardboard pieces where you are supposed to write down some kind of backup words - what a waste of time. I’ll just save the words somewhere on my phone or computer; it’s not the 19th century anymore. The coins will be on the wallet after all.

https://www.stedas.hr/pics/png/ledger/recoverysheet.png

He sets up his wallet and is given a long list of words he saves on his computer. He is also required to set up a PIN code. Finally, something that makes sense, John thinks. Not a bunch of useless words. Now that he has protected his wallet with a PIN code, he has everything that he needs to work with his digital coins. He logs in to his exchange account, barely remembering the password, and transfers all his funds to his new crypto wallet. It worked like a charm.   

John loves playing PC games, but after 2 years of continuous use, his computer has slowed down quite a bit. He reformats the OS to get his machine back to normal. He decides to check on his coins, but it’s like his wallet isn’t recognized anymore. It asks him to restore his accounts or create a new wallet. He dropped the device a few times in the past while searching for other things in his drawers.

It’s time to call Mike, the store clerk who sold him the device. He will ask him to reset his accounts, email him a new set of recovery words or something. After he makes the call, Mike tells him something he never expected to hear.


What did Mike tell him?
What happened with his device? Why is it not working even though he has his PIN code and all?
Can cryptocurrencies disappear from a hardware wallet? They were there after he sent them from his exchange, weren’t they?

I think Mike caught a virus. The virus infected his computer with a Trojan, for example. The virus could send the data to enter the wallet to the person who wrote the virus. Mike saved the passphrase on his computer - this is a mistake. There was a piece of paper with the wallet, it was there that you had to enter the phrase to the wallet.
Also, if Mike saved his phrase on the C drive, which had the operating system, and formatted the drive, then he lost access to his wallet.
Never store your recovery phrase on your computer or smartphone. It is not secure if your computer or smartphone is connected to the internet or if someone else is using this device..
I've never used a hardware wallet, but I know the general rules for using it.
Everyone who deals with cryptocurrency should know and understand how to store access to the wallet.

It's John, but the name isn't important. Mike is the guy who works in the tech store who sold him the device.

Let's focus on the recovery phrase. He saved it digitally on his computer. After formatting his OS, the phrase was lost. But Mike promised him free customer support. After he called the store, couldn't Mike just reset his accounts and send him another copy of his recovery seed?
John transferred the coins from an exchange to his hardware wallet. They are now stored on the wallet like pictures and videos on a USB, correct? If not, what is stored on the hardware wallet?   

Let's give riddle #4 another try before giving the green light for all ranks to answer. Newbies, Jr. Members, and Members can you solve the problem?
Another question for our 3 lowest forum ranks: Are the riddles and questions too difficult, or does it hurt when you strain your brain and you are not that into it?  

Current thread status: Open for all ranks

I learned a little more about hardware wallets. The wallet only provides additional security. The device stores the data for accessing the wallet, and additionally asks, for example, to press a physical button to confirm the transaction. He doesn't store anything else! Even if John broke his wallet (broke, drowned, it doesn't really matter), he could ask Mike to send him the same wallet and help restore access to his money. And he would have succeeded if he had a seed phrase. Only if you have a seed phrase, you can restore access to your wallet and your money. For this, it was proposed to write down the seed phrase on a piece of paper, so that in the event of a breakdown or loss of a physical wallet, access could be restored.

John need a phrase of 24 words in the correct sequence. If the phrase is lost, then everything is useless! Without phrase, access does not restore. He can transfer money at his wallet as much as you like, but access to it will not receive it without a phrase. And vice versa, if someone found out the phrase John, he can control his wallet. Wash the cold key keeps only private keys in yourself, or am I mistaken?

Tell me more precisely what kind of data the hardware wallet stores and what it doesn't store? 

That's good. So with the help of his recovery phrase, John can easily restore his accounts in the same or in a new hardware wallet. Can Mike the store clerk do it for him and find his seed?

Can you please explain this quoted part of your post?

There are different hardware wallets. It can be a protected flash drive, then anything you want can be stored there. The point is that access to data is carried out only after entering a password. All data is encrypted. If the password is lost, then access to the data is also lost.
But there are also dedicated hardware wallets that have physical buttons. I think they store the wallet software. Probably nothing else can be written there. But I am not sure of my words, I have never had such a wallet.
Mike will not be able to recover the seed phrase for John, it is impossible. If Mike can still restore the seed phrase for Mike, it means that John is not an honest person and can take all his clients' money at any time.

Oops! I wanted to write a cold hardware wallet. I thought there was only private keys stored? Well, yes, still firmware for performance.
There are still hot wallets, they work online, these blockchain are stored there, they occupy a lot of space and work slowly.

OK, riddle 4 can now be considered solved.

John made several mistakes. He did not take enough time to study how hardware wallets work and the importance of properly storing a recovery phrase. He stored the seed on his computer and after he reformatted his machine, the seed was gone. A seed phrase shouldn't be stored digitally. It should be written down on paper and stored in a safe and dry place.

Had John invested more time in reading about his hardware wallet, he would have learned that a properly generated recovery phrase can't be known by another person. Mike from the store doesn't have a copy of John's seed, and he has no way to restore or otherwise reset his wallet. Hardware wallets are physical devices that store private keys. They don't store coins because coins only exist as inputs and outputs on the blockchain. Therefore, there were never any coins on John's device. If a hardware wallet malfunctions, the only way to regain access to the coins is by restoring your account via the recovery phrase. Sine John lost his, he ultimately lost his coins the moment his hardware wallet stopped working. 

Riddle #5

Marcus has never owned bitcoin in his life. He holds some stablecoins and finally mustered up the courage to treat himself to a few bitcoins that he plans to store long-term. Marcus doesn’t know much but knows that Binance is one of the most popular cryptocurrency exchanges globally. He visits the official site, creates a brand-new account, and logs in.

It all seems a bit overwhelming to him, so he decides to speak with someone from customer support to obtain some basic advice for beginners. He notices that Binance’s Telegram group has almost 200.000 members and decides to talk with someone there.

He writes a quick introductory post and asks if a support agent can help him navigate the platform to exchange his USDT for bitcoin. After a few minutes, he receives a PM from Binance Official Support. The agent asks him if this is the first time he uses Binance, to which he answered affirmatively.

Lisa, the support staff, informs Marcus that new accounts need to be activated before they can be used for trading crypto. She tells him that the activation fee is 0.0003 BTC or $20. His account will automatically obtain the status ‘activated’ as soon as the deposit is confirmed. The funds he deposited will be added to his trading account and used to purchase coins or withdraw. Lisa gives him a deposit address where he needs to send the $20 for account activation.

Marcus thinks that it’s a reasonable request and sends the requested money. He informs Lisa that he has sent the funds. She tells him that she will check and contact him when she is done. After not hearing back from Lisa for an hour, he decides to send her another message to ask about the status of his account. He still doesn’t see an ‘activated’ tag anywhere on his profile. But it’s as Lisa disappeared from the face of the earth. He can no longer find her on Telegram, and their conversation is missing as well. He never received a reply from Lisa.


What happened, and where did Lisa go?
How did the Telegram conversation between Marcus and Lisa disappear?
Will his account still be activated eventually, and when will his funds be deposited to his Binance account?

Oh, cool! Another riddle.  :D

I sensed a scam already in the third paragraph. I believe I know the answer, but I'll let the other members take a shot first.

Feel free to take a shot at it. No one seems interested or knows the answer. I guess newbies are better at complaining how unfair Bitcointalk is and that they can't get any merits. But when there is an opportunity to take part in a discussion and provide the answers to a few questions, they are nowhere to be found. ::)

Tom was too much in a haste to purchase his first coin. I guess he didn't download the right electrum wallet. The exchange where he bought the bit coin from was right but the electrum wallet was from a fake site owned by scammers.

If he had little or no knowledge about the coin he should have asked questions. You only get electrum wallet from spectrum.org

@Zilon
Are you talking about Tom from riddle #1? We are currently on riddle #5. Take a look at that one and reply if you think you know the answer.

Please don't refer to bitcoin as "bit coin". You did it a few days ago in a Meta post where you talked about "bit coin talk" users being "barned".
No, you don't get Electrum wallets from spectrum.org. The official website is electrum.org.

She didn't purchase bitcoin rather she purchased bitcoin cash. she transfered the bch to the wrong address so the coin  hanged. She made the mistake of sending Bch to a btc wallet address

I have seen that this question is basically meant for newbies who are new forum user depending on the rank according to op, I will like to know when the question will be open generally, from my understanding any user who is beyond junior member position and member position is not entitle for any reward based on my view, when can full member, senior member, hero member and legendary member I notice the proper time to render suggestions???

She asked mike if he wrote down the private key given to him while he was creating his hardware wallet account

While his pin could not work even though he had his pin is because he misplaced his private key

Crypto can't loss from hardware wallet he only mosplaced his assess to the wallet

Yes there Crypto was there

Yes, this was intended for users of Newbie, Jr. Member, and Member ranks. If no one from these groups provides the proper answers, I open the thread for all other ranks after a few days. There isn't a set timeframe and the lower ranks found the answers to all the previous riddles. In just one case I had to open the thread for everyone, but even then, the answer was provided by a member of the targeted rank.

Can you at least make an effort to read the entire thread, particularly the posts from Pmalek? He started this entertaining game to help younger members advance on the forum while also teaching us all something useful.

You keep answering and quoting riddles that have been solved long ago instead of trying to understand and solve the most recent one (https://bitcointalk.org/index.php?topic=5324826.msg56820556#msg56820556) posted.

OK I get your point right op, until the time is manured for every user that wants to partake because I taught initially when I saw the subject of these post that the question is general to everybody, thanks for clarification

No problem mate, you are welcome.

These are general problems and questions that have been raised many times by various members of the community. Whoever has been on the forum for a few months/years has either read about or experienced problems related to seeds, recovery phrases, wallets, scams, etc. Most of them know the answers to these riddles. That's why this is an (unsuccessful) attempt to get some of the youngsters to say something meaningful and carry out some easy research.   

Telegram is notorious for a high number of scams, ranging from phishing sites to impersonation. Anyone can set up a fake Telegram account and post anything they want. It's difficult to say whether the person offering assistance is legit or not.

What I believe happened here is that Lisa is not a Binance support staff member and she tricked Marcus into paying a fake activation fee.
After that, she deleted the entire conversation from the Telegram app to cover her tracks.

I'm not sure if Marcus' account will be activated after this, but Marcus will have to find that out for himself through official support channels on the Binance platform.

There are a few ways to differentiate a fake and genuine support member or admin of a Telegram channel. Marcus talked with someone whose profile said "Binance Official Support", but where was that written and how will he know that he is talking with a staff/admin of the channel?

Good. She deleted the conversation on her end, but will Marcus still have access to the Telegram chat on his end?

Is it a common thing to pay activation fees for accounts on crypto exchanges or wallet software?

Well, that is easy. When we go to group members area, we should look for the star mark indicating the group administrators.
Just because someone named their profile "Binance Official Support" does not mean that he is a member of the official staff. Anyone can name his or her profile whatever they want in Telegram.


Anyone in Telegram has the ability to delete any messages they send on both sides. We can also delete the complete chat history on both ends. So, unless Marcus made a backup or screenshot before that, deleting it from Lisa's side would wipe the entire conversation.


No, I don't believe that's common thing. If an exchange or online wallet requires payment of an activation fee, it is most likely a scam.

There are a few ways to spot a fake admin or support member of a Telegram group. Looking for the star icons is one of the ways. Telegram admins have special tags next to their names. These tags will say owner, admin, staff, etc. Some groups mention the names of all their staff in the group description or the pinned post.

The way to spot a scammer is by looking at the username in his profile. Scammers try to impersonate the admins by using the same or similar name to that of the admin. If the admin is Pmalek, the scammer will use Pnalek or Pmaiek or something similar. Because the scammers can't use the identical usernames of the people they are trying to impersonate, they often leave the username field empty and fill out the Bio field with the correct username instead. So if you spot someone named Binance Official Support, check if that is indeed the username or the Bio of the profile.

Another thing to keep in mind. A scammer who impersonates admins in the Binance Telegram group, wont be a member of that group. Why? Because he will be discovered, reported, and banned. They follow the discussions without joining the groups because Telegram allows you to contact anyone via PM even if you are not part of the same group. If you have joined a Binance Telegram group, and you are talking to a real admin of that group, it's only logical that both you and that admin are members of the group and have that group in common. You can test that with any group by clicking on someone's user profile and checking the field that shows which groups you have in common. When you do that with a scammer, you will notice he is not a member of the group where you seek help.

And always remember that admins won't PM you first even if you seek help. They will talk to you in public, and suggest that you PM them in case you need help.

---

Marvelman is correct. Any party can delete the complete PM exchange between two users. Telegram is not suitable to engage in trades because any proof you might have on the other party, can be deleted at anytime. That is what Lisa did when she received the money from Marcus. There is no such thing as a wallet activation fee or exchange account activation. Anyone who request such things is trying to scam you. 

Oops, I missed the task! )
And the main thing is that I knew the answer to this question for sure.
I will also add, when you delete a message, for example, from viber, then a mark remains that something has been deleted. There is not even such a mark in telegram. Not a trace remains. I may be wrong, but earlier it was still possible to remove yourself from the contacts of another person. Now I don't see this function.

Riddle #6

Brian is a regular bitcoin user. He is often paid in crypto for the services he offers and is happy when he sees his wealth increase. Just like many other people, his wallet of choice is the user-friendly and straightforward Electrum client

One day as he was going over all the received transactions for that week, he noticed that an unknown address sent him around 600 satoshis two days ago. He knows that the sending address doesn't belong to any of his friends or clients, and the received amount is too small for a service that he offers.

Brians starts doing some research, and he learns about dust attacks and their dangers. He doesn't want anyone to infringe on his privacy or realise how much bitcoin he owns, and he needs to find a way to deal with this dust attack.


Why was that small amount of bitcoin sent to him, and what can he do to ensure he never spends those coins?

I exactly know what to do but maybe I am not that good at a complete explanation, okay I will try it.

Brian needs to ensure that the received address should not link to all the addresses in his wallet because the reason why dust attack happens just to find the identity of an individual by linking the addresses together via exchange or any other source they have but anyway dust attack is only harmful for our privacy but it not going to give access of our funds to the hackers/scammers.

Electrum allows the UTXO freezing option which means we can opt for an input to be nonspendable so the funds will never move out of that address so it will not link to any other addresses of his wallet.

To freeze an address : View ==> show coins ==> addresses ==> select the address which received the dust amount ==> freeze

@mersal
Riddle solved!

That's correct. A dust attack is an attempt to try and identify a user and discover other coins that belong to him. If a received dust transaction gets consolidated with other UTXO's and sent to an exchange where the customer performed KYC, it's possible to find the real identity of the person behind certain addresses. The worst thing that can happen is that the government and other 3rd parties (potentially malicious ones) will know how much bitcoin Brian has. 

Receiving dust transactions can't result in your wallet getting hacked or your coins being stolen. The easiest way to deal with dust transactions in Electrum is through the Coins tab. You just right click on the input, and click on freeze coin or freeze address. If the dust was sent to an address that already contains coins, freezing just that dust input would allow the user to spend the remaining UTXOs from that address. Freezing the whole address wouldn't make that possible. 

Riddle #7

Ivan is from Croatia. His younger brother Igor studies abroad in Canada. Ivan wants to send Igor a $100 gift in bitcoin, but he is worried. Canada is far away, and the transaction will inevitably include international transaction fees, he thinks. Ivan hesitates whether or not bitcoin is the best payment method to use and thinks the more coins you spend, the bigger the fees will be.

Can you help Ivan to figure out how bitcoin transactions work and how the fees are determined?

Bump

Bitcoin transactions are essentially messages, like email or chat messages. Each message is digitally signed using cryptography and verified by the Bitcoin network.
Almost all transactions include transaction fees, which are paid to the bitcoin miners to secure the network. Transaction fees are calculated based on the size of the transaction rather than the amount of bitcoin that is being transferred or the distance it must "travel". In other words, it makes no difference whether you send $ 10 or $ 10000 - your transaction fee can be the same.

OK, so the amount of coins we send and the location of the receiver doesn't have any affect on the required transaction fees. The mining fees are determined based on the size of the transaction. In that case, what would be the ideal type of bitcoin transaction (size-wise) that Ivan can send to his brother, and what would a bad one look like or be made up of?

This is an old riddle from the USSR for students who go to technical institutes to become an engineer.

https://i.ibb.co/Hqd61XS/image.png (https://imgbb.com/)

A is the lowest point of the left circle. The line begins from it.
B - The highest point of the right circle. This is the end of the line.
The area that is shaded in red is equal to 10 square meters, the area that is shaded in blue is equal to 80 square meters.
What is the area of one circle?

I think the ideal type of bitcoin transaction (size-wise) would be a transaction with one input and one output. A bad one would be a transaction with multiple dust inputs.

--


Using logical reasoning, I came up with the result of 40 square meters for the area of one circle.

The answer is that the area of ​​each circle is 40m²

Because the two points A and B are the highest point and the lowest point , it can be known that the blue area occupies half of the graphic area.

So the overall area is 80*2=160 m²

Because the area of ​​the red is 10 m².
The overall area plus the area of ​​the 4 red areas is the area of ​​5 circles.
160+10+10+10+10=5circles
so 1circle=40m²

I was looking for a transaction with multiple legacy inputs combined with overpaying on the network fees, but transactions with dust inputs is also a good answer. More and more people are using Segwit nowadays, so it's not as common to see as many legacy inputs as it was years ago. Dust on the other hand is present no matter the type of the inputs/outputs. 

I stumbled on this thread and I have been enjoying it, but sadly to me I could not participate, because one of the rules is that accounts birthed after the date of the post should not participate. Luckily I saw this on 17 June. So I can participate.

Ivan, Yes Canada is far away, but in BTC transaction, proximity is not a yardstick to an express transaction. This could mean that  Igor your brother can get his money delivered to him faster than your Father in the sitting room if you engage a simultaneouse transaction.
Also, inevitably there is a fee, but it is not called international fee, it is no tariff neither is it controlled by the nations. It is called  BTC transaction fee, paid to the miners who will register your transaction in blockchain.

Ivan your thought is correct here. Since you will be seeding more coins to your brother. I will be good if you can use a Lightening Network, by this, hence you open a channel, you can send more coins to your brother with minimal fees, until the channel is closed.
Ivan, don't be skeptical, use BTC to send your brother the money because BTC is a decentralized system. When you execute transaction in your own end, it takes some minutes (the time it takes is depending on how free or congested the network is, and it also determines the transaction fee). So, if your brother Igor is in urgent need of the money, you can choose to pay a higher transaction fee for fast delivery. Thanks!

Your account was created in May, so you are free to participate when I post a new riddle. All the previous ones have been solved already.

Actually, this would be a bad use of the Lightning Network. Why? Because it's just one transaction. The LN is suitable if you are sending/receiving multiple (usually low-amount) transactions. If it's just one transaction, it will be more expensive to use the LN.

Here is why.
If I need to send you some bitcoin, all I need to do is make 1 on-chain transaction to move the coins to your address.

If I used the LN, I would have to:

• make an on-chain transaction to open a channel.
• send the coins via the LN and pay LN transaction fees.
• close the channel by making another on-chain transaction.

Some of this can be avoided if used the Blue Wallet LN wallet.

So you see, the LN would require 2 on-chain transactions + a little bit of fees to route the payment to the recipient compared to just one transaction on the first layer. Also, it doesn't matter how much value Ivan sends to his brother. 1 BTC or 0.001 BTC can cost the same or one transaction can be more expensive than the other. What matters are inputs and outputs, address types and scripts. 

Riddle #8

Andy believes the current situation on the crypto market is a great time to get involved. Many coins are cheap and undervalued, and he sees great potential in making some money out of it. He uses Telegram daily, and one day one of his online friends added him to a Telegram investment group. Andy has a great feeling about this group because everyone seems friendly. They talk about the profits they made in the past and how there will be great opportunities for new members to earn some serious money if they follow them. They have thousands of members who share their experiences and post screenshots of their profits.

The next day, the group admins posted a notification that another investment round will start two days from now. The rules are very simple. The whole community gets together and starts buying the same coin. The coin's value goes up, and then the community will receive a signal from the organizers when it's time to sell. It's so simple, yet so effective, Andy thinks. He prepares the money he will invest and waits in anticipation on when the day will come.

What kind of investment group has Andy gotten himself involved in?
Is this a bulletproof way of earning money, or what are the potential dangers?   

Ok, Thanks! I misunderstood this statement "...and thinks the more coins you spend, the bigger the fees will be." as the more transactions you make, the bigger the fees.




I can't actually tell if there is a specific name for the investment group. If there is none, I can call it "Coin influencers group" or "Pump and Dump" investment group


It is not a bulletproof way of earning money because the rate of manipulation involved can confidently make one call it a scam. It can be a bulletproof way of earning money in two conditions; 1. If Andy is a god of time. 2.if he is one of the organizers.
The Potential Dangers
1.He can loss his money if he enters the market later than the call or withdraws later than the call
2. The organizers most times take extra money from some set of people (VIP), then give them early and privileged information before the call. Thereby making them sit comfortably before the public would be notified. If it is time to withdraw or sell, the VIP will also sell first after they might have ran in massive profits. Before the public is notified, the coin is already down.
3. So, it is either Andy is a time machine, a VIP or not greedy to wait to x2 or x10 they promise before he sells. By so he can make money, yet is not a bulletproof way of making money.

I have never personally participated in such a groups but I believe they are called pump-and-dump groups.

They are considered illegal in regulated markets like the stock market. As stated on Quora, they are extremely risky in both stock and cryptocurrency markets.
https://www.quora.com/Are-pump-and-dump-groups-risky

Andy has been added to a pump & dump Telegram group, it's not an investment community of any kind.

Let's focus on the organizers. Some of these groups are free to enter, others ask their members for an entry fee to become VIP or whatever they call it. So, the organizers make money by selling those VIP packages.

How do the organizers of pump & dump schemes make the most of their money? How does it all work from the organizers' point of view?

IMO, I think it's a game of timing. Most times the organizers might be the creators of such coin. In this scenario the continues pumping and dumping campaign is indirectly promoting the coin.
Also, the organizers take the first seat in the coin. Just like a 100 students in a hostel, who depend on the sound of a bell for their breakfast. Now, the bell ringer knowing too well that he will ring the bell by 8am, he went and informed 20 of his friends (the organisers) to go the dining at 7:45am. Thereby making them feed well, leaving little/nothing for the rest of the students who will appear by 8am.

That is one theory and it is a possible one. If they are the developers of that coin, they could do a pump and dump campaign to sell what they own at a higher price. But what if it's not their coin? What if they aren't part of the team? When and where did they get the coin and how will they profit from its sale?

The Riddle now developing offsprings ;D
Maybe the organizers gain by first inflating the coin price before the call. While the coin is being bought at already inflated price, then they keep reaping the profits.
The coin is always as low stable asset.
If there are things am not getting as desired, please help to the fullest.

The organizers are prepared for the pump & dump scam well in advance. Weeks and maybe even months before the scheme is planned to take place, they start buying the coin in small amounts as to not arouse suspicion or create hype. When they have enough, it's time for the event. They create their sell orders well above market value and send the signal to the unsuspecting members to start buying. When they do, the group members buy up the bags from the organizers earning them a lot of money, and end up becoming the new bag holders of a coin that will probably never get to those highs ever again in the future.

The Riddle was solved by KingsDen.

@Pmalek thanks for the detailed explanation. I am happy to have solved the Riddle. I confess this Riddle thread does not only improve reasoning. It will also improve knowledge of cryptocurrency, especially to low ranking members like me. Please, keep it up.

I believe it called crypto pump and dump investment group.


Is not a bulletproof way of earning, most of the admin usually use the members as a prey which is the potential danger.

In my last reply I already posted that this riddle was solved by KingsDen who made a few posts just above yours. There is no need to repeat the answers already provided unless you are bringing something new to the conversation that wasn't already said in the thread. Feel free to keep an eye on this topic and try to solve one of the upcoming riddles once they become available.

Sorry, I guess I miss that cause I have drafted the message before.

Riddle #9

Paul has used a software wallet for his crypto for almost two years. Although he has never had any issues with it, he has learned that using a hardware wallet is much safer. So he took advantage of a Black Friday deal and purchased a brand-new hardware wallet with a discount.

Once the product was shipped to him, he started the setup process for his new hardware device. When the installation wizard asked him whether he wants to create a new wallet or restore an existing one from seed, he chose to restore from seed.

He entered the seed of his multi-coin software wallet, which he has kept written down on a piece of paper in his new hardware device. Within a few minutes, all his portfolio and crypto balance became visible to him on screen.

Paul is happy to have increased the security of his assets and that they are now safe thanks to his new hardware wallet.


But are they really?
Did Paul make any mistakes in the setup process, and is there something he should have done differently?

Help Paul to figure out the correct steps.

Paul bought the hardware wallet with the intention of better security, but the power of better security from the hardware wallet isn't utilized because his portfolio is still connected to the software wallet which means if he loses his seed phrase written down on a piece of paper, then access  to his coins is also lost.

The best he  should have done imo is create a totally new wallet on the hardware wallet and sent the coins from software wallet to this hardware wallet without forgetting to backup the hardware wallets seed or private key.  

You would lose access to your coins on a hardware wallet as well if you lost the corresponding recovery phrase. So it doesn't matter if that seed is used on a software or a hardware wallet.

OK, we are moving in the right direction. You are saying that he should create a new wallet on his hardware device and generate a new seed. Why can't he use the old seed that was entered in a hot wallet? Is that not a good option and why not?

A small correction in regards to your quote. When you are using a hardware wallet, the private keys remain on the device at all times. You don't have access to them. They are only used during the transaction signing process. There are advanced methods to get them them out, but that's another story.

Paul has moved his wallet to a more secure device, but his wallet data is still in his hot wallet. This means that Paul did not get rid of the hot wallet vulnerabilities by moving to a new device. If Paul has any doubts about the hot wallet, then he'd better create a new address using a new device and transfer coins there.

First of all, I want to know that Paul bought the hardware wallet from the official website or some online site where we can buy things with high discounts, if he bought it from a third party website then,

I assume Paul is going to be one of the victims to lose all his portfolio to the scammers because he bought a Ledger wallet which already tampered with by the scammers who sell the actual product for cheaper price with a flash drive so all those recovery seeds entered by Paul will be sent to the scammer then the scammer will take all the money from the wallet will be moved by the scammer to his wallet in no time.

Because for the past couple of years people are losing their money by buying those fake hardware wallet/ or hardware wallets which are already compromised and shipped.

Let's switch the focus from potential phishing exploits and fake devices back to the recovery phrase. Paul already has a seed. The seed he used in his software wallet. Instead of wasting time in generating and writing down a new seed, why not just recover the wallet with his old seed? The one used with his hot wallet - the software wallet.

Since Paul used the same seed phrases that are in his hot wallet, it totally defeats the purpose of having a hardware wallet. If Paul copies the same seed phrases, if his hot wallet gets compromised, others can access it. Further, if the hot wallet stores the private keys online, then if a hacker is able to hack into the database, the wallet can still be compromised. Further, if the hot wallet stores the private keys on the device, even though Paul deletes the hot wallet, hackers can recover the file from residual data and get the private keys (hence such data should ideally be erased and not deleted).

The right steps would have been to create a new wallet and write down the seed phrases in the piece of paper. Then he should transfer all of the assets in his hot wallet to the newly created wallet.

Because that way he would lose all the extra level of security that hardware wallets provide.
The advantage of a hardware wallet is that private keys are stored in a secure manner and never leave the device, but are used only to sign transactions. If Paul has already used (or will use) the same seed to generate keys in some other software, all the added security of hardware wallet is wasted.

A properly secured seed should never come in contact with the internet or be stored digitally. Paul's seed was used on a software wallet, an app that is considered a hot wallet. If his software or computer experiences a breach, gets hacked, or infected with malware, an attacker could get his hands on the private keys like it was mentioned amongst the replies. Whoever has the private keys/seed, owns the money they protect.

Even if such a breach didn't happen, it's better to create new wallets and get a new seed than using the same seed across multiple software. 1 piece of software represents one item that could be attacked. Replicating the same private information across new apps creates 2 or more attack vectors and ways to lose your coins. Compare that with sharing a secret with one person vs sharing the same secret with 3 people. With 3 people knowing what you know, the chances of someone exposing you have increased greatly.

Riddle #9 is solved!

Didn't I write the same thing before the others? )
I also wrote that Paul, by not creating a new wallet, but using the old one that he used on the hot wallet, will not get rid of the hot wallet vulnerabilities by transferring his wallet to a new device)
Why was my answer wrong? Maybe the answer was simply not seen?

Your answer was incomplete. You mentioned vulnerabilities, but didn't go into more details about what vulnerabilities you are talking about. You also wrote that Paul should "create a new address." He should have generated a new seed and created a completely new wallet. UKprod's  (https://bitcointalk.org/index.php?topic=5324826.msg57420767#msg57420767)answer is more complete. You were also not the first one to answer. roosbit's (https://bitcointalk.org/index.php?topic=5324826.msg57398825#msg57398825) answer was faster and he mentioned creating a new wallet, not a new address. 

Thank you, Pmalek. I look forward to solving more riddles here on your thread. I am from a taxation and legal background and these technical questions provide me a good opportunity to read up and improve upon my understanding of bitcoin and cryptocurrencies.

No problem, I am glad they are of help. Feel free to read the previous eight riddles as well and see if you come to the same conclusions as the members who solved them. There is no need to post your answers in the thread because they are already a thing of the past, but you can do it to practice your knowledge about bitcoin and crypto if you like.

Oh yes. I wrote the address. And I wanted to write a wallet. Well, ok, I thought they just didn't see me. Next time I'll try to be more careful if I know the answer.

Waiting for riddle #10

Riddle #10

Pete’s brother sadly passed away in a motorcycle accident. When his younger brother Sean cleaned his room and packed up his stuff, he found a note hidden in his brother’s belongings. “Bitcoin” was written on the top of the paper. The second line contained a string of letters and numbers that began with “bc1”. The last piece of info was another long sequence of numbers and letters that started with “5Kbss8….”

Pete knew his brother was interested in Bitcoin and understood that what he found must be a key to some of his brother’s assets. He learned a little about Bitcoin and understood that he would need to import the found private key in a wallet to access the coins.

Pete downloaded and installed Electrum and begun the process of inserting the private key. But when he added the private key “5Kbss8xxxxxxx…”, the software would open an empty wallet with a different address than the one written down on his brother’s note. The address, which supposedly belongs to his brother, starts with “bc1”, but Electrum only displays one beginning with “1”.


Why is that happening, and what is Pete doing wrong?
Can you help Pete restore the correct wallet?

What happens is that Pete makes the mistake of choosing the wrong derivation path of BIP44 which is non-bech addresses but he supposes to choose BIP84 instead of BIP44.

Yes, he can. He just need to start over again by creating a new wallet using the same private keys by selecting the right derivation path
 

Pete was never offered an option to adjust the derivation path while importing the private key, so it's not that. The private key is correct, but there could be something wrong with its format. It's like the key is missing something. What does he need to do to get the software to display the correct Bech32 address?

He is doing the wrong thing. Since the private key started with Bc1, he needed to chose Bech32 format specified by BIP 0173. He will do this by prefixing "p2wpkh" to each private key before importing.

That's correct. Sine the private key is the same for both legacy, nested segwit, and native segwit addresses, you need to specify the correct prefix for the software to know which address and wallet it's supposed to recover.

If you just import the private key as "5Kbss8....", Electrum will recover a wallet with a legacy address.
If you add the prefix "P2WPKH" before the address to make it "P2WPKH:5Kbss8..." Electrum will recover a wallet with a Bech32 address.
Similar to that, the "P2WPKH-P2SH" prefix should be used for nested segwit addresses.

It is definitely true that you learn something new each and every day here. Thanks for sharing this information, I hadn't read about that before.

My opinion is that Peter give too much trust to an unknown person he just meet on social media platform. It's a lesson no to follow too much and random trading signals, and Peter was looking for short cut and easy way to make profit that's why it happen, and also he forget to learn more and gain more knowledge before investing.

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Such investors are not to be trusted, they can have a team that can make a crypto coin, pump it to attract some investors after a while they scam the investors. Andy can end up losing the entire money he kept if he follow such investors, they have a target of number of people and total amount of money to be scammed, after that, they luck up the group and no more information about them again.

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What Tom did wrong was that he downloaded the wrong app. Tom could have make further research on the Electrum wallet, to know how it works, know all the security challenges involved and also how secure it is because there are a lot of scam apps in play store, and this types of scam wallets are what lead Tom to loose his bitcoin.

[moderator's note: consecutive posts merged, fixed broken quotes]

I was wondering why is this person answering riddles that have been solved a long time ago, but then I checked the trust feedback that The Pharmacist posted about you. Everything is clear now. I guess we can't expect anything better from someone like you.