Bitcoin: 5 mistakes that can cost you everything

Many people see a Bitcoin wallet as a bank account. It is not: the safety of your funds depends entirely on you. If you lose your recovery phrase The 12 or 24 words a wallet gives you when it is created: they rebuild your keys on another device. Whoever has them has your bitcoin: never give them to anyone. 5 mistakes to avoid (the “seed”, 12 or 24 words depending on the wallet) along with access to your wallet, your bitcoin is gone. No customer service can get it back.

Those words let you restore your wallet if your device is lost, stolen or broken. Treat them for what they are: the key to your bitcoin.

• Write them down by hand, on paper, in several copies if possible, kept somewhere safe, out of sight, away from fire and water. A metal plate holds up even better.
• Never in digital form: no photo, no note on your phone, no cloud, no email. That is an open door for hackers.
• Never given to anyone: no support team and no serious app will ever ask for them. Whoever asks is trying to rob you. The booby-trapped Ledger case shows how far thieves will go to get them.

It is tempting: the coins stay where you bought them, it is convenient and you avoid transfer fees. But an exchange can be hacked, freeze withdrawals or go bankrupt. Customers of Mt. Gox (2014) or FTX (2022) waited years to see part of their money again.

The Bitcoin world has a saying for this: “not your keys, not your coins”. If you do not hold the private keys The secret that proves some bitcoin belongs to you and lets you spend it. Your wallet keeps it; the recovery phrase can rebuild it., you do not really own your bitcoin: you hold a promise from the exchange.

As soon as you can, withdraw your bitcoin to a wallet whose keys you hold:

How these wallets differ, and how to choose: hot, cold or hardware wallet.

Bitcoin transaction fees do not depend on the amount you send, but on the transaction’s size in bytes (strictly speaking, in vbytes The unit of size of a transaction. Fees are paid per vbyte, not according to the amount sent.) and on how busy the network is when you send it. Sending €10 or €10,000 can cost exactly the same, and fees can climb sharply during peaks of activity.

• Check the fee before every payment. mempool.space shows live what a transaction costs, and helps you pick a quieter moment.
• Use addresses that start with bc1 (native SegWit or Taproot): their transactions are lighter, so cheaper than those of older addresses starting with 1 or 3.
• Avoid receiving lots of small amounts. Each amount you receive becomes a separate piece of your balance, a UTXO A piece of bitcoin received in one go and not yet spent. Every payment you receive creates one; the more you have, the more fees a payment costs., and each one adds weight, and so fees, the day you spend. Fewer, larger transfers are better.

Crypto attracts a lot of scams, and they keep getting more polished. The classics:

• Guaranteed returns: “triple your money in 3 days”, a miracle trading bot, a “risk-free” investment.
• Fake giveaways: “send 0.1 bitcoin, get twice as much back”. Nobody will send anything back.
• Fake support: someone who contacts you to “fix a problem” with your account or wallet, and ends up asking for your recovery phrase.
• Fake traders messaging you privately about an “exclusive opportunity”, and disguised Ponzi schemes, which pay early investors with the money of later ones.

In mining too: beware of cloud mining contracts promising a fixed return, and of fake miners sold as lottery tickets.

The rule: a real investment never rushes you. Urgency and pressure are warning signs. In France, the AMF (the financial markets regulator) publishes blacklists of unauthorised sites; elsewhere, check your own regulator’s warning list before sending anything.

Bitcoin is a volatile asset. Its sometimes brutal swings push people into two costly reflexes: buying in the euphoria of a spectacular rise, and selling in the panic of a crash. Its volatility has tended to fall over the years, but it is still high: after its peaks of 2013, 2017 and 2021, the price lost more than 75% each time.

To avoid deciding on impulse, two approaches come up often:

So far, people who kept their bitcoin for four years or more have most often ended up with a gain. But the past guarantees nothing about the future. The golden rule does not change: never invest more than you can afford to lose.

This guide offers good practice; it is not investment advice.

Bitcoin gives you total control over your money, and with it total responsibility. Take the time to understand before investing, always secure your funds, and keep a cool head when the price moves. In short:

And if you mine: on FindMyBlock, as on any solo pool A server that machines connect to. A regular pool shares the earnings, a solo pool does not. Solo or pool?, a block reward lands straight on your address, without going through anyone. So it is your wallet, and your recovery phrase, that protect it. To set up that address: solo mining on FindMyBlock.

In Bitcoin, knowledge remains your best protection. A question? Ask it under the video or on Discord.