Six Largest Mistakes in the History of Bitcoin
Everyone makes mistakes. However, consequences may vary and, related to Bitcoin, a simple typo can cost millions. Let’s look into six most dangerous mistakes in the history of Bitcoin.
The notorious story of the exchange tells how important is development experience in cryptocurrency projects. When Mark Karpeles was the only developer, Mt. Gox became the largest BTC exchange in the world. Later it happened that hackers breached the exchange and decreased value of Bitcoin to a couple of cents, greatly affecting Mt. Gox.
The same year the exchange closed, while another hacker withdrew $340 million in Bitcoins – looks like he did this for many years. Making things worse, the exchange considered these actions as funding and began giving free Bitcoins to users (one wallet received 40000 BTC in such a manner). Finally Mt. Gox lost 850000 BTC and turned bankrupt.
Ghost of Mt. Gox
In 2014 an anonymous cryptoinvestor incidentally sent 800 BTC to the wallet of Mt. Gox (while the exchange itself was already closed). In the post on Reddit he explained:
“I made a fatal mistake by sending 800 Bitcoins to this address: 113MmkyjjH6zS9VMvbwrhBNoMe6upzdvNC”.
He did this as the address was saved in the wallet, as he was sending assets to Mt. Gox previously. The Reddit community tried to help the investor and traced the address to Mt. Gox. However, this did not help and the assets were lost.
Send me your private keys
What would you do if you receive an email from your friend asking you to send private keys? We hope you would at least verify the identity of the “friend”. Unfortunately, many users do not apply common sense when working with cryptocurrencies.
Last year, a hacker sent an email signed by the CEO of Canadian Bitcoins James Grant to withdraw Bitcoins. As a consequence, the company lost 149 BTC.
Do you want some Mastercoins?
Fyfe was designed as a decentralized version of the internet. The project was actively developed for the last eight years, and passed the second ICO step. It was possible to invest either in BTC or Mastercoin, which turned out to be a mistake – Mastercoin was an unknown crypto and dropped significantly since ICO.
Maisafe responsible for the development of Fyfe, raised millions, but lost much as they invested mainly in Mastercoin. Noone can tell why they selected Mastercoin as an option to Bitcoin for ICO.
Don’t blame transaction fees
There are many disputes about transaction fees in the Bitcoin network, especially in 2016 – when fees were significant. As an example, in 2013 one user set the transaction fee to 80 BTC by mistake while sending 0.01 BTC. Another user paid 30 BTC as a transaction fee.
As Bitcoin is decentralized, it is highly important to control private keys – without them you lose access to your money. This happened to a guy who accidentally disposed of the hard drive with 7500 BTC. He mined Bitcoins for five years when his laptop with private keys stopped working. He pulled out the hard drive from the laptop and threw it away by mistake.
The specified incidents are related to the selected protocol and immutability of blockchain. These properties make blockchain convenient for financial tasks while turning out to be a disaster for inexperienced or forgetful users.