Risk management firm Elliptic has just published a report estimating that $10.5B was lost to theft and fraud in the cryptocurrency world in 2021. This is an increase of $1.5B from Elliptic’s estimate in 2020. I don’t have the details about Bitcoin, but the general idea of what I’m going to explain here applies to Bitcoin as well as to other cryptocurrencies.
The first thing I’d like to say is that I’m not surprised by the increase in this number. We are in a Bull Market, and it makes sense that the appetite of hackers grows as the price of assets in this market increases. The higher the rewards, the higher the motivation for hackers. This is obvious.
The irreversible nature of transactions on a blockchain such as Bitcoin makes it virtually impossible to recover stolen money. So it’s important to remember once again that while Bitcoin gives you power over your money, it’s up to you to take responsibility for the security of the fruits of your labor.
No pain, no gain in life. You can’t expect to take control of your life by letting someone else take responsibility for it, as in the current monetary and financial system.
However, protecting your Bitcoin is no big deal in my opinion. The first rule is well known: Not your Keys, Not your Bitcoin. You must therefore absolutely take possession of the private keys of your Bitcoin by taking it out of the exchange platforms. Once you’ve done this, you’ll be protected from two things:
Possible hacks of these exchange platforms. Remember the story of Mt Gox being robbed of 850K BTC in early 2014. The risk of censorship from the exchange platform that could act as the powerful people within the current system.
Once you have sent your Bitcoin to cold storage, the next risk is that you will lose your seed phrase which will allow you to regain access to your private keys at any time from any wallet. It’s up to you to make sure this doesn’t happen. Your seed phrase is the key to your future financial freedom. It’s the most valuable thing there is. Treat it as such.
The last and most important weakness in securing your Bitcoin is yourself!
Indeed, if you look at all the scams that have occurred in history, they all exploit two human feelings: greed and gullibility. And all of them are looking for one thing: to take your Bitcoin. As I always say, if it looks anything like a scam, it is a scam. With this mantra in mind, you’ll avoid sending your Bitcoin to someone promising you an extraordinary investment or sending you 2x more BTC in return.
Remember the Twitter hack in the summer of 2020 with hackers using the accounts of celebrities like Elon Musk and Bill Gates to steal Bitcoin from greedy and gullible people.
This may sound brutal to you, but I do not pity those people who send Bitcoin to so-called Elon Musk or Bill Gates in the hope that they will send them x2 more BTC in return. Take a step back and you will see that this is something impossible.
There is nothing more valuable than hard money like Bitcoin, except time. Do you think someone will give you Bitcoin like that for no reason? Bitcoin is far too valuable for that to happen.
If you want to get Bitcoin, you don’t have thousands of options:
- Buy BTC by exchanging fiat currency.
- Ask to be paid in BTC for your work.
- Sell goods in BTC.
- Become a Bitcoin Miner to help secure the Bitcoin network.
Everything else is just a potential scam. With that in mind, you won’t fall for any more scams. That’s a certainty. Those who have complete confidence in Bitcoin never fall for these scams, because they know that their Bitcoin is far too valuable to be sent to dubious strangers in this way.
It’s up to you to follow these rules to the letter, and you’ll see that the security of your Bitcoin will be assured in the long run.