Crypto Currency Pit Falls – Read up and Avoid These Costly and Time Consuming Mistakes!
A lot of folks are making money in crypo currency. Some by trading it (the same way one would day trade stocks), some buy buying and holding it to sell later (same as investing in stocks), and some by mining it (although the ship as mostly sailed on this one) and then either doing one or both of the the previous two things.
I have tried all three and here is what I’ve learned.
A little history first. I started messing with crypto back in 2014 when Bitcoin was making the news for breaking $1200 a coin and alt-coins like Litecoin, Dogecoin, Quark, and many others were popping up all over the place. I jumped in by buying some miners and using graphic cards to generate coins as I figured the worse that could happen is that I would end up with high end video cards for my PC’s if the whole thing tanked. My whole family plays PC games and we have a mini LAN center at our house so it was a no brainer. I made a few grand (under 5K) mining, trading, and holding, but in the end after the price of bit coin crashed down to $280 a coin I figured the cost of electricity and cooling my house was more than the profit I made mining, so I shut down my machines and exchanged all my alt coins for Bit Coin and called it a day. With a full time job and other business ventures starting, I just didn’t have the time to devote to day trading crypto. I figured I would be safe just holding for some future point in time when the value of Bit coin rose to where it is now… and here is where we pick up the story.
Pitfall #1 leaving coins in exchanges: I had accounts on multiple exchanges and would frequently leave small amounts of coins in their accounts so I could trade at a moments notice. So now that the price of Bitcoin has gone thought the roof I figured I would log into all my old exchange accounts and see if there was any alts scraps I left behind (that I could exchange for Bit Coin). Keep in mind 10 Litecoins had dropped to under $3 each back then so $40 bucks worth wasn’t anything to care about…. but now that same amount of coins is worth over 2 thousand dollars (Litecoin is currently hovering at $151 a coin as I write this). Low and behold all of the exchanges (except Coinbase) I previously used had completely disappeared or shut down (crypsty – GONE, CoinMKT – GONE, Cryptrush – GONE, etc. etc.) and with them over 10 grand in crypto cash by today’s standards. Lesson: Don’t leave coins in exchanges.
Pitfall #2 leaving coins in pools: Same as the above. (Tomspool – GONE, MultiPool – Account deleted due to being inactive for over 18 months, Hypernova – GONE, Cleverming – GONE) etc. etc. Lesson: Don’t leave coins in pools.
Pitfall #3 Paper crypto and paper wallets: I was so into Crypto that I bought real coins (ie minted coins like THIS that was supposed to be pre-loaded with a digital version in a paper wallet. Again, I paid about $30 dollars each for these to give as gifts to friends and help get them into crypto (Litecoin was valued at around the same price when these were purchased). I gave out a bunch of these back in the day. So now that Litecoin is at $150 a coin I go to redeem the few I had left only out now that I need the public and private keys to actually move the digital version into the Litecoin core wallet. So basically they are worthless and now it’s almost four years after the original ebay purchase, so fat chance at getting a refund or even finding the original seller who is long gone. Lesson: Make sure you get public and private keys for all paper wallets!
Pitfall #4 Don’t forget your passwords… maybe… or maybe not? OK, so if you can’t store your coins on the exchanges or pools, that only leaves you with paper and digital wallets. Both of which are risky to hold crypto and ultimately I think this is the major downfall of doing any long term investing with it. I mentioned earlier in this post that the bulk of all my altcoins were converted to Bitcoin and dumped to a Bitcoin Core wallet back in 2005. So now I want to cash them out as with close to 4.8 Bit Coins I would be able to sell them on Coinbase for almost 75 Grand. So I download the latest Bitcoin core wallet, load in my backup wallet.dat file and wait for it to sync up. Four days later, the wallet is synced and I’m ready to cash out, only the wallet will not decrypt in order to send my Bitcoin to the exchange. At first I assumed that I had just forgotten the password and spent hours trying every known possibility of my default passwords to try to get it to unlock to no avail. So then I decide to use a wallet recovery service and read up on how to send them a partial wallet (so they can’t just decrypt the wallet and cash out) only to get one error message after the other while trying to create the partial wallet. After reading tons of forum posts and doing technical research I find out that the wallet.dat file is actually corrupted/damaged and that in combination with changes to the Bitcoin Core Software (They now use something called HD in the software and the problem occurs when the wallet backup file has to be converted to the new format.) is what might be preventing the wallet from decrypting when I put in my passwords. (So technically I don’t know if I actually forgot the password, mistyped it, or it’s just data damage to the old backup wallet.dat file preventing me from using ANY password.) In any case I have to use a variety of open source tools to try to repair it and I believe I have been successful, although I have to run the Bitcoin Core Software in non-HD mode or it will crash. I am now ready to send off my password list to wallet recovery services and see if they can recover my password or not. Lesson: ???? I’m not sure here. The problem with keeping a digital backup isn’t just that you can loose it, or forget your password, but rather how that digital wallet backup file is going to integrate into whatever new software is running the wallets years down the road. And you can bet that the wallet software is going to continue to change over time. I really don’t see how the average non technical person is going to hold crypto long term on a digital wallet for this reason. Lesson: The best bet for long term storage is to extract it to a paper wallet and put it in a safe. Just make sure you have the public and private keys.
As for me… It’s highly unlikely that I will ever get any of my Bitcoin back. But I’ll let you guys know if Walletrecoveryservices is successful or not.
UPDATE: 12-18-2017
I was able to figure out my password by exporting my browser saved passwords in chrome to a .csv file then running them though an open source password cracking program called “John the Ripper”
If you are currently using google chrome to store passwords you will be very surprised at the number of site – password combinations chrome has saved. For me it was over 1200 saved passwords and site combinations.
Pitfall #5 After recovering my BTC the next struggle was to cash out as fast as I could. What I found out rather quickly is that Coinbase had set a limit on how much you could cash out in a given week. Since I had a Coinbase account back in 2014 and was verified my limit was 15K per week. But with the volatility of bitcoin this is a bad thing, as I would have loved to cash all of them out at the highest value which was a little over 19K at the time I finally figured out my password. Made an account for my wife, but they set her account at 10K withdrawal per week. I tried getting verified on other exchanges such as Gemini but they were so backlogged they didn’t clear me until a month later. Lesson: If you plan on investing or trading in crypto get yourself verified on MULTIPLE exchanges ahead of time, otherwise you may not be able to cash out when you want to.
Well, I’m a happy camper that I am able to go into 2018 Debt free as I used my windfall to pay off all my personal and business debts and even had some left over to reinvest (went with Ripple, Iota, and Electronium, but will also be dumping some money into streamer data coin.
If you find this post useful feel free to send me a donation to my coinbase address of: 1AMgSJe5p7aTxvNRbPvYQbnJh2dPsWegvn
And if you plan on setting up an exchange account I recommend using CoinBase as they have been around for a very long time (they were the only exchange that I used previously that was still around.) and you can buy and sell in Bitcoin, Litecoin, and Ethereum. (just make sure you extract to paper if you decide to get out!)
