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Loss and Grieving: How to Cope with Bitcoin Theft

5 min reading

They say the best offense is a good defense- and that is never truer than when you’re dealing with cryptocurrency.

Getting swindled out of money is a hard reality to come to terms with. Whether it’s $20 or $2,000. But with bitcoin and crypto currencies, getting conned out of just one BTC could mean you’re out $34 grand. So, for many, it’s not even more difficult to deal with the loss, but there are also far fewer avenues of recompense. 

Cryptocurrencies are often much easier to boost than fiat. They’re incredibly portable, borderless, and almost entirely anonymous- making tracking, sentencing, and convicting these perpetrators incredibly difficult. So just how does a new trader deal with this? Well, you should start by always choosing the best exchange. Platforms like Bitvavo not only offer incredible security, but they are also retail investors focused, making them a less likely target for attack. Outside of this, users should always consider their technological literacy and personal security- from how they use their computers, to which crypto wallet they select. 

So the best way to deal with a crypto hack? Is not to get hacked in the first place. But if you do, here are some things to think about that may just make that loss- or the possible recuperation- much easier. 

Your Bitcoin Was Mismanaged…

In the history of bitcoin, there has been no more a famous blunder of funds than the Mt.Gox hack of XXXX. Despite the money being stolen, the exchange itself should have been held accountable for the loss- however, they weren’t. Thousands of customers that stored their bitcoin with the exchange in digital wallets never saw settlement or return. Some lost millions. Despite them contacting the exchange and attempting legal action. 

So what may have started as a hack, quickly dissolved into total mismanagement of funds. The absolute best way to respond to this sort of breach, is to pick a good exchange to begin with. Take a close look at any and all applicable terms and conditions, discover their policies regarding theft, and above all- keep your stored coins offline. Cold storage is generally the answer to most crypto problems. This refers to a storage wallet that is completely offline at all times- like a USB stick or removable drive. 

There are a number of hardware wallets that are specifically made to house cryptocurrency. From these, you can then move any coins or tokens you plan on trading or spending onto the exchange of your choice as you need them. 

Your Bitcoin Was Stolen… 

Hacks happen. Much like the Mt. Gox example, nearly all online stores of cryptocurrency are susceptible to hacks. While exchanges may be the best option for “hot”, or web connected, wallets- because they usually have much better security than other mobile and online wallet options- cold storage is always best. That being said, if a hack does happen. You have to act fast. 

There are a few avenues available to try and reclaim what was taken, but in reality- few of them actually pan out. Expediency is definitely key when it comes to any type of cryptocurrency loss. The second you find your stash is out of cash- you need to contact professionals. Make a police report as quickly as you can, then turn to a blockchain sleuthing firm like Coinfirm or CipherTrace. Companies such as these essentially treat your kiped crypto similar to a bounty, where if recovered, they keep a percentage of the recovered funds. Oftentimes these firms also work hand in hand with law firms or authorities. Giving you the best chance possible to get your money returned. 

Your Bitcoin Was Scammed…

Bitcoin scams are just as prolific as any other type. While you may not soon receive a letter from a Persian prince, or a phone call from your “grandmother” in a Canadian jail- crypto scams still exist. And they’re often far less obvious. Most recently- the massive twitter hack turned bitcoin scam involving three teens from across the globe and a number of high-profile accounts caught media attention. In this particular scam, the teens hacked high profile twitter accounts like Apple, Barack Obama, and Bill Gates, then posted a coordinated message urging their followers to deposit crypto into a wallet. 

While few actually fell for it, even a small percentage of a million followers yielded some big returns. However, not all crypto scams are even that overt. Most of the successful ones (scams that rake in thousands of bitcoin per year) actually involve creating fake web pages that exactly mimic intended valid sites. Making the smallest change to a web address. Mobile apps also fall prey to this cunning design and even protective and cautious investors can get duped. The best way to avoid these is by being extra careful anytime you use a new website or app, and always have updated and sophisticated virus and malware protection on any device that is associated with a bitcoin wallet. Once scammed, file a report and hope for the best, but these usually get filed under “tough luck”.

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