The cryptocurrency world has its terms and lingo and this can seem perplexing for newbies just learning about it. People are gaining immensely from trading Bitcoins daily but there is no gain without pain. Learning your way around in the cryptocurrency world will protect you from making an irreparable mistake like sending your Bitcoin to the wrong wallet.
Cryptocurrency rookies and experienced Bitcoin expertise alike can do with a little crash course on the subject of Bitcoin wallet. Therefore, it is essential to know what not to do when using a Bitcoin wallet.
What is a Bitcoin Wallet?
A Bitcoin wallet is where your private and public keys are stored. Bitcoin wallets do not keep your Bitcoin like a normal wallet will keep your money. A Bitcoin wallet is a digital wallet that contains data that represents the value of your coin. A Bitcoin wallet may be in the form of hardware, software, a website, or even paper. Furthermore, you can keep your Bitcoin in either a custodial or non-custodial wallet. You can move your cryptocurrency from one wallet to another just like you send fiat money to other people.
Mistakes to avoid when sending Bitcoin from one Wallet to another
Mistake 1: Not taking time to understand the workings of cryptocurrency wallets
You may want to send Bitcoin between different exchange wallets belonging to you or another party using a different type of wallet from you. Learning about Bitcoin wallets is not complete without knowing about public and private keys. Simply put, a public key is what you use to receive digital currency and a private key is a PIN to access them. You can share your public key but you must keep your private key to yourself. Before sending Bitcoin to another wallet, acquaint yourself with the wallet type as some wallets only accept a particular type of cryptocurrency and not the other. You can set up multiple wallets for yourself and practice sending Bitcoin among the different wallets before attempting to send it to someone else.
Understanding the workings of cryptocurrency wallets and the pitfalls associated with them will give you armor against unnecessary mistakes later on. In addition, making money from cryptocurrency is as easy as learning the rope and understanding basic concepts.
Mistake 2: Refusal to pay the right transaction fee
Whenever you are sending Bitcoin from one wallet to another, the exchange you use deducts a processing fee. While some exchanges take some percentages of your transaction, others prompt you to deposit a certain amount the moment you initiate the transaction. If it is the latter, do not send below the amount required as a transaction fee.
Your Bitcoin might be deducted from your account and it will not be received by the intended recipient. However, some exchanges give you the option of selecting the type of fee you want to pay. If you choose the minimal fee, the processing time might be a little longer than if you select the optimal fee. Although the choice is yours, if you use a reputable wallet, paying the right transaction fee will speed up your transfer.
Mistake 3: Storing your Bitcoin in a wallet without a backup
You can store your Bitcoin either in an online or offline wallet. Most online wallets provide backup for you on the cloud while you are in charge of your security and backup with offline wallets. If you use a custodial wallet where an exchange platform is in charge of the security of your Bitcoin then they also provide backup. On the flip side, a custodial wallet is vulnerable to hackers because of the volume of users’ data in their position.
On the other hand, cold storages are generally secure from hackers because they are offline wallet. Yet, if you lose your USB stick or the physical item where your data is stored without backup, then you have lost your Bitcoin. There have been many instances of people losing their wallets and losing access to their Bitcoin.
If you want to send Bitcoin from your wallets, first set up a regular backup process. Also, keep your password and seed phrase safely away from hackers.
Mistake 4: Not paying attention to details
When it comes to transacting from your digital wallet, be detail-oriented as most transactions are not reversible. For instance, if you are sending Bitcoin (BTC), do not select Bitcoin cash (BCH). Even though Bitcoin Cash is a fork of Bitcoin, they are not the same. The volume of trade also matters. Check if you are sending the correct amount of Bitcoin and nothing more. The problem with this is that if you send less than you want, you will have to start the process of sending all over again with a new transaction fee. If you send above what you are meant to transfer to the other party, then you need to make a request for retrieval which might not be fast.
Thoroughly checking and double-checking the input of the transaction you are initiating will save you from a rookie mistake.
Mistake 5: Not sending to the correct wallet or address
When you want to send Bitcoin from your wallet to another, you are given the option of either using the public key or QR. It is preferable to use QR as this contains all the information you need to send to a receiver. However, if you are using a public key that you likely copy and paste, pause and verify that the address is correct before sending.
Another mistake you can make is sending Bitcoin to an Ethereum or Bitcoin Cash address. You can never retrieve a digital currency that you send to the wrong wallet and you can lose a huge amount of money. If a wallet is specifically designed to receive Bitcoin, then only send Bitcoin to it, the same goes for other cryptocurrencies.
Final words
You can gain from Bitcoin like everyone else if you can avoid the mistakes associated with it. Your wallet contains your valuables, take precautions by first understanding how it works and the necessary security measures you need. To learn more about Bitcoin wallets, read more here on CoinText.
