Lessons From the Biggest Bitcoin Losses in History.

[SuperBitMan]

Over the years many people has ended up losing their bitcoin that is worth billions because of exchanges being hacked, scam activities, forgetting passwords, security practices that are very poor and errors made by people holding bitcoin.

Mistakes are bound to happen but the question is are we ready to learn from the mistakes of others.

1. The Mt. Gox Collapse: Not Your Keys, Not Your Coins.

In the year 2014, a lot of people trust Mt. Gox exchange just like the way banks are being trusted to store your fiat currency, that’s the way they trusted the Mt. Gox exchange and they stored all their bitcoin on that exchange but the exchange collapsed and all those bitcoin were lost till date.

lesson learnt:
The lesson learnt in this is that once a third party or person is controlling your private keys they actually controls your bitcoin.
Convenience often comes at the cost of sovereignty, know this and no peace.


2. Lost Wallets and Forgotten Seed Phrases.

The largest bitcoin losses are not actually because by  hackers or scammers but because of forgotten passwords and failure to record or keep recovery phrases well or properly.

lesson learnt:
It is true that self custody provides or gives us freedom but let’s not also forget that it also comes with responsibility.
Having a good backup strategy to our wallet is as important as owning a bitcoin.

3. Investment Scams and Fake Opportunities.

A lot of people has been scammed of their bitcoin and till date people are still being scammed of their bitcoin because they decided to listen to lies of getting huge profits or returns if they should invest their bitcoin into fake investment sites.
This set of people allowed greed to cover their eyes so they won’t see truth and reality, they allowed greed to overrides caution.

lesson learnt:
When the opportunity is too good to be true avoid it.

4. Sending Bitcoin to the Wrong Address.

Some traditional bank transactions can actually be reversed, but bitcoin transactions cannot be reversed meaning if you make a mistake in the address your bitcoin is lost forever.

lesson learnt:
Always verify addresses very well before sending and you can also consider sending a very small amount for testing before transferring large amount.

5. Emotional Losses During Market Crashes.

Some people lost their bitcoin because they were panicking and decided to sell during bitcoin dip and later they regretted that action or sell.

lesson learnt:
A lack of conviction about bitcoin can be just as costly as poor security.

6. Overconfidence Is Dangerous.

Being over confident and claiming to know all has actually made some people lose their bitcoin

lesson learnt:
Bitcoin rewards discipline more than intelligence. Even experienced users benefit from following simple security principles consistently.

[Zaguru12]

2. Lost Wallets and Forgotten Seed Phrases.

The largest bitcoin losses are not actually because by  hackers or scammers but because of forgotten passwords and failure to record or keep recovery phrases well or properly.

One of the most common habits that leads to loss of one’s seed phrase is actually not keeping it simple. Some investors you will read about them splitting their keys or seedphrases and storing them apart or they write the words in disorderly manner or they don’t save the words directly but uses other means like signs or even colours to designate each word. All this processes requires you to actually trust your memory the more, that is you memorize the process and sometimes when trying to scramble the process back again you simply forget some things.

For me simply backing up your seed phrase without complications is the best way to go. Save your seed phrase in proper manner and simply add a second layer like pass phrase and save it elsewhere and this to me is a proper way of saving seed phrase. It’s still idea to actually duplicate your back ups but not in so many places to cause redundancy and most importantly using materials that will last long for the back up is a most

[uchegod-21]

Other easy ways of effortlessly losing your bitcoins include


Trusting the wrong persons:Some bitcoin losses recorded in history was because the victims trusted their spouses, children,  friends,  siblings and even strangers with lots of information,  information that was best kept private. Through that means,  wallets have be accessed without authorisation from the original owner. People should learn to take privacy seriously.


use of compromised devices: Many lost their bitcoins without knowing what went wrong. Little did they know that they have been moving about with compromised devices all along. For those using hot wallets, the simple  act of charging their devices in a public place or using a public wifi can leave their devices compromised. Newbies and everyone who own bitcoins should only ensure that they get their devices from trusted vendors only.  Downloads should come from trusted sources only and they should be careful of public facilities. Regular updates too will help keep their devices secured.

Sharing too much information with the public: when you do this, you just make yourself an easy target for criminals.

[Supreme Donvic]

Nice thread OP, I think one of the mistakes I will never make is to hold my Bitcoin in an exchange, it is one of the biggest risk to take and I will never take that risk I will rather take the responsibility of protecting my Bitcoin than given that responsibility to an exchange, anyone who was to invest in Bitcoin for the first time should avoid holding his Bitcoin in an exchange because you may end up losing it, thank God that the OP brought out this story of an exchange many years ago I believe new beginners we learn from the story and we avoid using an exchange to hold their Bitcoin.

One of the ways that some people have also lost their bitcoin is by this investment scam and just like the op said it is still happening the date many people are still getting scammed through this way and it because of greed that is why people fall for this scam, I don't think I can make a mistake like that.

[kingstep]

lesson learnt:
When the opportunity is too good to be true avoid it.

Don't just avoid it because it's too good to be true. Make the neccesary investigation into any asset you're about investing in and ascertain wether or not it's something that's worth putting your funds into. If it's not as transparent as possible, avoid it and don't think you can be too smart.

If you're dealing with bitcoin, then it's easy to know what works and what doesn't. Just stay focused on investing through the right means and don't give out your private information to the wrong source that can endanger you. Avoid cheap bitcoin give away by all means and don't listen to anyone that tells you to deposit a particular amount of bitcoin with the promise that they will double it. Those are all false.

[Audrey Simmons]

Don't just avoid it because it's too good to be true. Make the neccesary investigation into any asset you're about investing in and ascertain wether or not it's something that's worth putting your funds into. If it's not as transparent as possible, avoid it and don't think you can be too smart.

Avoid it when it's too good to be true, don't be the one to take help from strangers, such offers usually comes with a price, the most of it is that you might become the big fish for their catch, following how they managed to convince you once they have your audience.

There is always a sweet side of every scam story, you probably won't see it coming if you give more space to hear more, don't hesitate to cut off any interaction that has to deal with crypto investment, especially from strangers, a safe investments is usually not the most rewarding.

[ColdLava40]

Replied on similar thread earlier and the truth is we are the cause of our own losses in Bitcoin.

Those which you have listed are quite the most common ways in which alot of investors have lost their coins. Yes we make mistakes but don't make some stupid one.

Imagine leaving your coins on centralized exchanges till now and be of the mind that the exchange you are using is trusted and it cannot be hacked. It's dump to start with.

We can list out so many terrible mistakes a lot of investors makes but the truth is they won't ever learn. As more people come into crypto, the repeat same mistakes over and over again.

[dzungmobile]

1. The Mt. Gox Collapse: Not Your Keys, Not Your Coins.
2. Lost Wallets and Forgotten Seed Phrases.

These things are related to understanding importance of non-custodial wallets, risk of custodial wallets, then how to back up non custodial wallets and have good backups for wallet recovery later.

Not only Mt. Gox exchange but there are also many cryptocurrencies exchanges hacked, died, abandoned, bankrupted, and unfortunately many people lost money by storing their bitcoins or cryptocurrencies on such exchanges.
List of Major Bitcoin Heists, Thefts, Hacks, Scams, and Losses.
Cryptocurrency exchange graveyard.
Documented timeline of hacked exchanges.

4. Sending Bitcoin to the Wrong Address

It's related to carelessness of Bitcoin users or compromised devices.
How to lose your Bitcoins with CTRL-C CTRL-V

3. Investment Scams and Fake Opportunities
5. Emotional Losses During Market Crashes.
6. Overconfidence Is Dangerous.

People have to learn about Bitcoin's fundamentals, history of the market, how to invest, which investment strategies are good to use, and most common scam methods have been ever used in Bitcoin market.

The cryptocurrency scambook.

[Cookdata]

Don't just avoid it because it's too good to be true. Make the neccesary investigation into any asset you're about investing in and ascertain wether or not it's something that's worth putting your funds into. If it's not as transparent as possible, avoid it and don't think you can be too smart.

Avoid it when it's too good to be true, don't be the one to take help from strangers, such offers usually comes with a price, the most of it is that you might become the big fish for their catch, following how they managed to convince you once they have your audience.

There is always a sweet side of every scam story, you probably won't see it coming if you give more space to hear more, don't hesitate to cut off any interaction that has to deal with crypto investment, especially from strangers, a safe investments is usually not the most rewarding.

It's not all time something too good to be true turn scam. Something can be clone like original without red flag and turned scam. It could be modified software or malware embedded on another software. 2 months ago, some users lost their coins for downloading fake Trezor suite app from apps store. Normal hardware wallet doesn't ask for wallet seed phrase but they did included their seed phrase and the scammers wipe their coins on instance.

If you are into Bitcoin, just take basic knowledge as your friend and doubt will always be the first instincts on you when you see things that are abnormal. Even if you are greedy, there are things that when you see them on on first sight, your greed will disappear and doubt will set in, you wouldn't even think it twice before you exit; make Bitcoin basic knowledge your friend.

[Franctoshi]

Over the years many people has ended up losing their bitcoin that is worth billions because of exchanges being hacked, scam activities, forgetting passwords, security practices that are very poor and errors made by people holding bitcoin.

Mistakes are bound to happen but the question is are we ready to learn from the mistakes of others.

2. Lost Wallets and Forgotten Seed Phrases.

The largest bitcoin losses are not actually because by  hackers or scammers but because of forgotten passwords and failure to record or keep recovery phrases well or properly.

lesson learnt:
It is true that self custody provides or gives us freedom but let’s not also forget that it also comes with responsibility.
Having a good backup strategy to our wallet is as important as owning a bitcoin.

If you can trust a third party, the bank to hold your funds what stops you from taking responsibility of your own money? because we should understand that the core paradox here about self custody is, not your keys, not your crypto vs your keys, your problem.
When you self custody your crypto, take note that your backup phrases is your bank.

Lastly, people like self custody which is =(Freedom plus 100% responsibility), but unfortunately they don't like to take full responsibility of their cryptos.

[Mia Chloe]

Bitcoin rewards discipline more than intelligence. Even experienced users benefit from following simple security principles consistently.

I beg to differ. Bitcoin is not rocket science and not something that's a hundred percent sure regardless of how much ROI it has cumulatively achieved over the last few decades. Intelligence is key in Hodling without intelligence you'll Hodl through the bull runs and back into the bear and you get stuck.

Fact is majority of these events you mentioned mainly only created FOMO and FUD that's basically what most of them do and that's how price influence happens.

[Sticky Bomb]

2. Lost Wallets and Forgotten Seed Phrases.

The largest bitcoin losses are not actually because by  hackers or scammers but because of forgotten passwords and failure to record or keep recovery phrases well or properly.

lesson learnt:
It is true that self custody provides or gives us freedom but let’s not also forget that it also comes with responsibility.
Having a good backup strategy to our wallet is as important as owning a bitcoin.

Backups should be done securely offline, if it is stored in any hot device, compromising that device could give their wallet away to the scammer and their coins would be lost

3. Investment Scams and Fake Opportunities.

A lot of people has been scammed of their bitcoin and till date people are still being scammed of their bitcoin because they decided to listen to lies of getting huge profits or returns if they should invest their bitcoin into fake investment sites.
This set of people allowed greed to cover their eyes so they won’t see truth and reality, they allowed greed to overrides caution.

lesson learnt:
When the opportunity is too good to be true avoid it.

This is more like ponzi which exploits people's greed. Truth is that most people knows that those offers are scam but patronize them to cash out early but most of them don't get that lucky

4. Sending Bitcoin to the Wrong Address.

Some traditional bank transactions can actually be reversed, but bitcoin transactions cannot be reversed meaning if you make a mistake in the address your bitcoin is lost forever.

lesson learnt:
Always verify addresses very well before sending and you can also consider sending a very small amount for testing before transferring large amount.

Mindless CTRL+C & CTRL+V has made people loose coins a lot, better crosscheck every character in the receiving address to ensure it is correct before proceeding

It's not all time something too good to be true turn scam. Something can be clone like original without red flag and turned scam. It could be modified software or malware embedded on another software. 2 months ago, some users lost their coins for downloading fake Trezor suite app from apps store. Normal hardware wallet doesn't ask for wallet seed phrase but they did included their seed phrase and the scammers wipe their coins on instance.

Still their mistake and/or ignorance or laziness, they could've gone to the official site to make that download. The truth is that most of the problems we face in bitcoin is our fault, they're all avoidable, but people exhibit various levels of carelessness.

[Joy- maker]

This thread would be helpful to newbies. However, the things you mentioned are commonly discussed on the forum. All the best practices we see today are a result of the mistakes the OG's made at the early stages of bitcoin. They trust third parties with their bitcoin which resulted in them losing their bitcoin, when some crypto exchanges vanished with user's funds without a trace. Therefore, let's learn from the OG's mistakes, trusting your coin in the hands of a third party is always at your own risk.

[Marykeller]

Let me add to, some of the mistakes we make that we procrastinate a lot about, that is not letting someone close about our seed phrase. We forget that something like death can come our way when we don't expect it. Many Bitcoins have gone through that means without someone's family knowing their sons and daughters have Bitcoin in their portfolio.

The advice, tell someone close to you today about your seed phrase. Stop procrastinating on that matter because the unexpected can happen to any of us at any time.

Another mistake to point out is using a phone number to open an exchange account. Hackers can get hold of your SIM and siphon the whole money you have on exchange.

The advice, don't use phone number to open an account on crypto exchanges. Use emails mostly and create a 2FA password

[bhadz]

4. Sending Bitcoin to the Wrong Address.

Some traditional bank transactions can actually be reversed, but bitcoin transactions cannot be reversed meaning if you make a mistake in the address your bitcoin is lost forever.

lesson learnt:
Always verify addresses very well before sending and you can also consider sending a very small amount for testing before transferring large amount.

This can only happen if someone doesn't check the receiving address quite times before sending. And the possibility of someone sending to the wrong address is through being infected by a clipboard malware. It also teaches us to be patient when we do transactions. Not only checking the first and last addresses because it has become the common way of verifying before sending. It won't eat a lot of time before we check all characters before doing a transaction.

[EluguHcman]

Over the years many people has ended up losing their bitcoin that is worth billions because of exchanges being hacked, scam activities, forgetting passwords, security practices that are very poor and errors made by people holding bitcoin.

Mistakes are bound to happen but the question is are we ready to learn from the mistakes of others.

Of course yes and that has also contributed to the enhancements of users security beings which has preserved us from being victimized either by the scammers schemes or the errors of users wallets operations and using the wrong wallets simply by acknowledging the past experiences of others.

Moreover without the learning of others experiences we would not had learn about most of the schemes of the scammers and the risks of using specific formats of storing our Bitcoin.
This is literally one of the reasons why we shares trending phishing schemes and the users fallen victims to it so that we can be at alart not to be victimized in case we are targeted.

Of course this learning experience from others also includes investment schemes such as potential and reputable coins and the fundamentals of how to invest safety and in good health.

These are very much important informations for beginners to adhere.

[BlackBoss_]

Moreover without the learning of others experiences we would not had learn about most of the schemes of the scammers and the risks of using specific formats of storing our Bitcoin.
This is literally one of the reasons why we shares trending phishing schemes and the users fallen victims to it so that we can be at alart not to be victimized in case we are targeted.

People need to do very first important steps: Learning about Bitcoin blockchain, wallets, transactions like which wallets are good (open source, no custodial) to use, how to download, (verify if possible), install, creation, backup, test backup for recovery, and fund the wallet. They have to learn about Bitcoin testnet and use tBTC for their learning and practice before actually use Bitcoin main net with money spent for purchasing bitcoin on main net.

They have to know about risk from shit coins as Bitcoin forks, and don't let these shitcoin claiming results in losing their valuable bitcoins.
LoyceV's Bitcoin Fork claiming guide (and service).

They have to be careful with transaction broadcasting.
How to lose your Bitcoins with CTRL-C CTRL-V

[noorman0]

I Sometimes people have a high curiosity about something new, especially if it can give them an incentive even though they know it has deviated from the safety standards they have learned. Installing random software, interacting with new sites, etc. I read quite a lot of stories from people who suddenly drain their wallets which started from a trivial curiosity.

[Porfirii]

According to what I read in the news in recent days, the aftermath of the Mt. Gox collapse is still being felt, and a new wave of freed funds must have contributed to the Bitcoin's price falling even further. Not only a good reminder to avoid custodian wallets and centralised exchanges, but also about the fact that even if you don't make mistakes, you can end up suffering the effects of others' mistakes, in unexpected ways.

[KingsDen]

lesson learnt:
The lesson learnt in this is that once a third party or person is controlling your private keys they actually controls your bitcoin.
Convenience often comes at the cost of sovereignty, know this and no peace.

Some people believe they don't have the capacity to safe Keep 12 words for 4 years. They just want others to do everything for them.

lesson learnt:
It is true that self custody provides or gives us freedom but let’s not also forget that it also comes with responsibility.
Having a good backup strategy to our wallet is as important as owning a bitcoin.

So many people put much attention to earning bitcoin and not securing it.

lesson learnt:
When the opportunity is too good to be true avoid it.

Some people's instinct will still tell them to try... It might be real. Just try! The greed factor will play in heavily at this time.

lesson learnt:
Always verify addresses very well before sending and you can also consider sending a very small amount for testing before transferring large amount.

Clip board malware can always change your copied address. Cross check and don't do it hastily.