10 ways you can screw up with cryptocurrencies - by Focus on Blockchain speaker Piotr Gryko

Piotr Gryko, a speaker at Business Review’s first event dedicated to emerging technologies, Focus on Blockchain, shared his tips on how to avoid making the most common ten mistakes when dealing with cryptocurrencies.

1. Gambling what you can’t afford to lose.

Cryptocurrencies are speculation at best and gambling at worst. Studies show that people from low income environments and who lead unstable lives have a much higher appetite for risk. They judge risk differently and are more vulnerable to fraud.

2. Trusting a ‘hacked’ coin exchange.

At worst, some crypto currency exchanges claim they’ve been hacked and use that to run away with the money. Even well-known and established exchanges are constantly under attack. Tip: Prefer popular exchanges that have been around for longer and enable two-step authentication for logging in.

3. Getting hacked yourself.

Be careful with software you run on your machine, choose the wallet software to hold your crypto currency carefully, and beware of phone number changes, especially if you haven’t requested them yourself. Tip: If you get a text message saying that your mobile phone provider has received a request to change your number, call the provider immediately.

4. Sending to the wrong account.

Bitcoin addresses are not checked to exist. If the address you send to is mathematically correct, you can end up sending money to an account that you don’t have access to. Tip: Triple check the address and send a small amount of money first to check.

5. No backups – getting locked out.

If you store your cryptocurrency in an offline wallet make sure you back it up and record the password. Tip: Test recovering the backup and keep a backup in several different locations.

6. Putting money into an ICO where there is no white paper.

Tip: A white paper should describe on both a business and a technical level what the project plans to do, and how it plans to do it. It should list flaws in the software project and things that might go wrong. Tip: take a look at the bitcoin and ethereum white papers for comparison.

7. Toilet paper as white paper.

Not everything is shines is gold, and not all white papers are worth the paper they are written on. Some white papers can be extremely clever in the way they try to hide information or mislead the reader. Tip: if in doubt, ask a technical friend or check hacker news.rom, run by the Ycombinator for research. The comments section can be extremely useful.

8. No source code or closed source.

Cryptocurrencies are trust less systems and require all participants to run the same code. The source code must be public. Tip: Look for the project Github/Gitlab project pages. Tip: Check for how often the code is updated. For example, ethereum’s is updated daily, while dodgecoin’s was last updated in January.