5 Stupidest Bitcoin Mistakes Made by the Smartest People

By Cam / October 12, 2017
stupidest bitcoin mistakes

As with any newfangled technology, many of us have made mistakes when it comes to Bitcoin. They span the range from the most common blunders to regrets about the times we could’ve bought Bitcoin and for some unlucky few, even include absolutely horrifying cases like losing millions of Bitcoin.

And while all of the above are cringe-worthy, there are some Bitcoin fails that you just have to laugh at. Like when the popular cryptocurrency makes fools out of even the smartest of us.

So let’s laugh learn from # of the stupidest Bitcoin fails of all time – courtesy of the smartest folk out there.

U.S. Government doesn’t know how to email…

One of the big talking points in Bitcoin’s turbulent history was the U.S. government’s seizure of dodgy Bitcoins associated with the shady Silk Road trading scheme (an online black market, used throughout the dark or deep web for selling drugs and other, much nastier paraphernalia).

The interesting part about this seizure, however, was the government’s decision to auction off the Bitcoins seized. Given that police/governments often refrain from auctioning off the illegitimate, darker things (like drugs, obviously) seized in their operations, the authorities’ decision to do so with the Bitcoins gave the cryptocurrency a sense of public legitimacy at an important part in its evolution.

Unfortunately, the whole thing became an administrative disaster. Good old BCC strikes again. Some governmental official or other, in charge of the proceedings, sent a mass email out to potential buyers or investors who might be interested in the auction. Unfortunately, nobody taught the poor soul the art of BCCing an email (meaning that the recipients can’t see who else the email has been sent to, unlike the CC option).

The result was that names, addresses and contact details for these heavyweight figures were leaked publicly. An embarrassment which led to…

Bitcoin coercion

… a hacking. One of the email’s recipients, Sam Lee – associated with Bitcoins Reserve at the time – was sent a document from a wily hacker pretending to be an interested media party. They simply wanted to ask Sam a few questions for their reportage. Hey, what’s free publicity worth?

100 Bitcoins, apparently. The hacker directed Sam to a website which prompted him for his password. The hacker then took over his email account and held it hostage for the price of 100 coins.

Now, there’s an argument to be made here for common sense when it comes to your private passwords, but that’s none of my business.

Outdated software

Back in early 2013, a now-notorious slip-up occurred at Bitcoin HQ (big castle on a cliff, overhead costs are staggering). A new version of Bitcoin’s software was released allowing for much a larger blocksize to be used than the older version. Sounds great, right?

Sure, if you’re one of the folk whose hardware is up to speed. Unfortunately, this new version basically wasn’t compatible with the older software – which meant that Bitcoin found itself in a sort of financial purgatory, with its capital essentially divided into two different camps.

Luckily, the community got out their pitchforks and torches and the issue was resolved relatively quickly by reverting back to the older version, but it was a wake-up call for many investors regarding the business practices over at Bitcoin (they had an insanely small staff of only two engineers working on the core software at the time) and the fallibility of cryptocurrencies.

Spending it willy-nilly!

Envy the early adopters of Bitcoin and secretly hate them for their wise premonition? No worries – they’re not perfect, either, and certainly not immune to the all-time favorite American pastime: consumerism!

I doubt you’re any stranger to the concept: your credit or debit card takes a hammering come pay-day, because it’s an intangible, abstract sort of number. It’s not hard cash in hand, so it doesn’t quite carry that same weight. A round of drinks for the bar? Screw it! Why not? Put it on the plastic, my man!

There’s an endless plethora of similar stories when it comes to Bitcoin spenders, especially back in its earlier days when it wasn’t taken quite as seriously as it is now.

A lot of folk spent their pixel-coins on some weed for the weekend, unaware that that 40BTC could be worth a staggering amount a year or two down the line. Luckily, they had something to take the edge off.

Or, how about this Reddit post asking fellow investors what their biggest slip-up was, where the author claims to have sunk his Bitcoin savings into buying in-game fictional gold in Diablo 3. Fake money for fake money, right?

When he made his purchase, the in-game price was a million Diablo 3 gold pieces for one, single, Bitcoin (valued at $4). A few years down the line? One cent worth of Bitcoin would fetch you just as much Diablo 3 cash.
Ah, the wonders of the digital age…

Mt. Gox. Twice.

One of the big dangers about a de-centralized, somewhat unregulated digital currency is that it’s de-centralized and somewhat unregulated (at least, Bitcoin was when it was finding its feet).

Chances are that even if you’re a total cryptocurrency philistine, you’ll have at least caught a whiff of what happened with Mt. Gox. But just in case you missed the memo, here are the broad strokes: Mt. Gox was originally a site designed for trading Magic: The Gathering cards, anchored around a kind of stock exchange type format. Obviously, this presented a perfect structure to use for trading Bitcoins when it arrived on the scene.

Shortly thereafter, the original website founder, Jed McCaleb, sold the site on to French developer Mark Karpelès. Things were looking good until an anonymous hacker broke into the website, transferred a huge amount of currency to himself for incredibly low prices and cut the heart out of the Bitcoin value by doing so.

The value was rectified quickly, but the precedent was set. Not long afterwards, the site was hacked again and this time the collected value (around $340m worth of Bitcoin) basically vanished into thin air.

Naturally, suspicions were raised. It all sounded a little bit like a mob boss robbing his own card game and Karpelès was investigated. He was arrested in August 2015 on suspicion of having falsified the site’s data himself and was charged with embezzlement.

He was released on bail, in 2016, but is now held in Japan. But the real question is: why did these savvy investors continue to keep their money on Mt. Gox after the first hack? Possibly because human error knows no bounds…

Click here to add a comment

Leave a comment: