(Para versión en español haz click aquí)
With the recent significant price increase in Bitcoin, which only in 2017 went from USD 950 to an all time high of almost USD 5.000, lots os people want to invest. What they forget is that this currency, besides being highly volatile also requires a certain amount of technical know-how for your investment not to be completely lost due to your own mistake.
There is no precise data for the amount of Bitcoins lost, but estimates range between 10–20% of the total supply. Let’s use 15%. There are currently 16.5 million bitcoins in circulation, so about 2,47 million (15%) are forever lost within the blockchain. At bitcoins current value of about USD 4.100 the total amount of lost coins value would be over USD 10 billion!
The most common mistake is the loss of private keys (code used to move your coins). But mistakes made by sending coins to wrong address which are valid but have no owners also occur.
Several exchanges have also been hacked in the last few years, where the investor ended up losing all his/her money. Those amounts do not enter the in the sum above, as they were stolen and not lost. But we should know better than leaving our money/coins in a exchange for a longer period of time.
There is a saying that states: if you do not own your private keys you do not own your coins.
Before investing in Bitcoin, invest in yourself.
An easy way to gain practical experience would be to buy a small amount of a coin (maybe Dogecoin), that has functional tools and and practice buying, selling, making transactions until you become familiarized with some basic concepts:
1. Learn the difference between a private and a public key;
2. Learn how to use a block explorer to verify accounts and transactions;
3. Have the patience to download a core wallet (this may take days), then a light wallet and later use a online wallet
4. Create a paper wallet and learn how to import it.
5. Send your coins to an exchange, always use 2FA and put in a buy and sell order. Then redeem your coins from the exchange.
After having those experiences, you will be more prepared to invest in cryptocurrencies.
There is no doubt that this is a fascinating market and should have a prosperous future, but as the ex-owners of the more than USD 10 billion worth of lost coins can attest, the risks go way beyond the price volatility.
CryptoAnalyst on AirTM
