There are nearly 19 million Bitcoin tokens in circulation. Bitcoin miners are actively increasing that number, but can only go as far as 21 million.
Unfortunately, a staggering 20% of all mined Bitcoins are lost forever. How did that happen, and could it happen to you? If you hold Bitcoin tokens in your digital wallet, you might wonder if they could disappear all of a sudden.
One way to avoid that is to create trustworthy online Bitamp Bitcoin wallet, but there are other considerations to keep in mind. Here’s everything you need to know about how holders can lose their digital money.
How Are Bitcoin Tokens Lost?
When fiat currency is lost or misplaced, there is a chance to get it back. But that’s not the case with cryptocurrency. If something happens and you lose access to funds in your crypto wallet, the coins remain permanently trapped in a kind of limbo.
They’re not in circulation anymore, but they still technically exist. Your cryptocurrency can also be stolen. Therefore, it’s crucial to know all the potential ways you can lose them.
The Loss of Private Key
One of the most critical components of Bitcoin investing and mining is a secure digital wallet for storage. It doesn’t matter what type of wallet you’re using; to get to your coins, a private key is required.
Upon creating a digital bitcoin wallet, you receive this key with the instruction to keep it somewhere safe, preferably offline. Many reliable wallets also offer a 12-word “seed” phrase as a recovery protocol. If you create trustworthy online Bitamp Bitcoin wallet, that is the exact process you can expect.
But if you don’t have either, then you can never get your coins back. The loss of the private key is the leading cause of lost cryptocurrency. The same applies to hardware wallets, which typically resemble USB flash drives.
If you lose the device, you no longer have access to your tokens. However, if the device is damaged or has malfunctioned, you might have a chance if you hire a data recovery team.
Sending Money to the Wrong Address
When you want to send funds to another person’s Bitcoin wallet, you’ll need to enter their address. As these addresses are a string of 26 to 35 characters, it’s not easy to differentiate them. Therefore, entering the wrong address is a possibility.
With fiat currency, that might be a solvable problem, but not with Bitcoin. Once payment has been sent, a refund is impossible. Plus, if you make a mistake, there’s almost no chance of knowing the identity of the actual recipient.
However, you don’t have to worry about entering a non-existent wallet address. Most reputable wallets have an advanced system that recognises whether the address is real or not.
The Wallet Is Not Secure Enough
Those curious about cryptocurrency may still have some safety reservations. After all, the mainstream acceptance of Bitcoin is on the rise, but so is scepticism in many ways.
You might wonder how can you be sure that a private company that owns a wallet won’t simply steal your funds someday.
After all, if you use a custodial wallet, you don’t hold the private key to access your money. Even though that rarely happens, it’s often best to use non-custodial and preferably open-source wallets.
Your Wallet Is Hacked
There is a lot of concern about Bitcoin and its hacking potential. However, in reality, it mostly comes down to human error.
Hacking a Bitcoin network is virtually impossible, but hackers do unfortunately get into online wallets. This happens when you don’t safely store your private key or share it with someone who cannot be trusted.
Public networks are also unsafe, and phishing email scams are a real problem in the crypto community. When hackers get hold of your private information, they can steal all the funds from your wallet.
Never Losing Your Crypto Assets
Whether you’ve made significant investments into crypto or have spent resources to mine it, you deserve to have them safely stored.
The odds of your tokens disappearing into thin air without good reason are incredibly slim, unless you’re using an unreliable digital wallet. More often, the loss of assets has to do with carelessness regarding the safety of the private key or being the victim of hacking.
Also, when paying with Bitcoin, make sure to double-check the sender’s address. If there’s a mistake, the payment is non-refundable.