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March 26, 2014, 01:06:20 AM |
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If you’re dealing with many different altcoins like I am, online exchanges can seem like a godsend. The ability to store multiple altcoins all in one place, setting up advance trades, easy and convenient buying and selling, and more. The exchanges court us with boasts about multiple levels of security, redundant backups, about fast, real-time trades, and more. “Trust us,” their websites say, “your data and your coins are safe with us – BUT if something happens, we aren’t responsible and you’re out of luck.”
I learned this hard lesson first hand today.
My oldest son is going to be graduating from high school in a few months. It’s a day we were never quite sure would come to pass. He’s bipolar and has ADHD and over the years has been arrested several times for violent behavior (sometimes at our insistence). He never cared about school, if he did well, if he did poorly. This is actually his second senior year, but the difference this year is that a fire got lit under that boy’s butt and he has been doing incredibly in his classes. No discipline issues, honor roll every quarter, you name it.
My husband and I told him several months ago that our graduation gift to him was going to be taking him and a friend to Atlanta this summer for DragonCon. My husband and I have gone several times, but this will be my son’s first time.
If you’ve ever gone to DragonCon, you know that it isn’t cheap. Hotel plus ticket prices plus meals and gas are going to run us close to $3,000.
Why am I telling you this? Well, after falling in love with digital currency, I decided to use it fund at least part of the trip.
I don’t have a lot of Bitcoin – in fact, I don’t even have HALF of a Bitcoin – but I do (or rather DID) have significant quantities of several Altcoins. What I was in the process of doing is setting up several faucets on my resource site and putting any advertising revenue toward the trip.
It seemed like a good idea – and was starting to work. In a week I had earned .02 Bitcoin through ad clicks alone. Not a lot, but it was encouraging.
Here’s where it all went sideways.
I was on Twitter this morning and saw a tweet from one of the exchanges that I use (MintPal) that they had fixed some login issues they were having. I hadn’t experienced any problems, but I logged in just to make sure everything was alright.
As I’m going through my account, I start getting alerts popping up that all of my coins were being sold – mind you, I hadn’t set up any sell orders. So I’m starting to panic. I didn’t understand what was happening – was I being hacked? Was it a residual issue left over from whatever they had done this morning? I had enabled 2FA (two-factor authentication) this morning, so my account should have been secure.
In less than a minute, all of my coins except for 2 or 3 obscure ones that weren’t worth anything, had been sold and the resulting Bitcoin withdrawn. I received the standard withdrawal confirmation email, which I did not click. I immediately notified support about what was going on and asked if they could please help me.
The end result? They can’t help me. Well, they could – their Terms of Service clearly states that compensation for losses is at their discretion – but they won’t. I got several emails from them explaining how it had to have been something on my end – someone else got my confirmation email and clicked the link, how what I was describing as having happened wasn’t possible, etc… I ran multiple scans on my end – on my system and on my server – to see if their ‘explanation’ held water. It did not. Everything is clean on my end.
All in all, I lost:
0.01431272 Litecoin
7994.8 CageCoin
20299.50074888 ContinuumCoin
60097.01527963 KarmaCoin
75050 MintCoin
1.25906734 MarsCoin
8.84510185 MazaCoin
10001.06 PandaCoin
78.36295105 PotCoin
1.01726935 SunCoin
10078.043398 TeslaCoin
1809.53836786 TakeiCoin
I know it’s only about .03 Bitcoin worth, but it had the potential to be much more toward my son’s graduation gift.
So what is the lesson to be learned from all of this?
DO NOT STORE YOUR COINS ON ANY EXCHANGE EVER.
I know it’s not as convenient, but download the wallet client for each coin you are trading in. Store them offline. Keep backups of your wallets on a flash drive. Make a backup of your backup.
If you want to sell some of your coins, transfer ONLY the amount you want to sell to an exchange and then sell it right away. After it sells, withdraw your earnings immediately.
Don’t listen to the “you can trust us” rhetoric on the exchange websites. You CAN’T trust them because no system is 100% secure. It’s not necessarily their fault, it’s just the way things are.
Some lessons are best learned firsthand – this isn’t one of them. I hope you learn from my experience.
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