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Managing your crypto assets takes time and attention.
Some people want to own crypto but don’t want the hassle of keeping track of their funds in various wallets. We’ve gotten used to allowing a central authority, like a bank, to keep track of our money for us. Then if there’s a problem with our account, we call the bank and ask them to fix it. With bitcoin and other crypto assets there usually is no one to call for help. With one exception, if you keep your crypto in an online exchange, you might get help from their customer support. But then again, you might not.
How I lost over $200 in a Mobile Wallet
Coinbase is one of the exchanges I use for buying cryptocurrencies. Sometimes I use their Coinbase mobile wallet because I like how easy it is to transfer crypto between my exchange wallets and the mobile wallet. On the mobile wallet I sometimes make decentralized trades for hard to get cryptos using the Uniswap dApp (decentralized app). I’ll talk more about this subject in a separate course.
Earlier this year I was moving a little bit of Ether in and out of the Coinbase mobile wallet (I don’t remember why now). At one point the mobile wallet app told me there was a newer version of the wallet available and I needed to download it. So I did.
But then something went wrong. After I downloaded and installed the latest version of the wallet from the iPhone App Store, and right after I finished a trade, I noticed the balance was wrong in my wallet. Somehow my ETH balance was incorrect. It was clearly off over $200.
Take a look at the screenshot of my mobile wallet and the table of the transactions. If you add up all the pluses and minuses they don’t equal the balance.
I created a support ticket with Coinbase and about a month later I finally got a reply! The agent told me to download the most current version of the wallet and install it. Huh?! I clearly told them in my support ticket, that I already did that! Unfortunately, Coinbase’s customer support was not helpful. They still have not solved the problem, nor has Coinbase replaced the missing ETH in my mobile wallet.
So how can this happen? How did I lose Ether in this mobile wallet? You see, because I use Coinbase, they control the private keys to my online and mobile wallets. They control the signing of transactions and the addresses I use to send or receive bitcoin or other crypto. So, if something goes wrong, I’m at the mercy of their customer support. In many ways Coinbase looks and acts like a 21rst century bank. It’s an exchange that operates like a bank.
Honestly, on a problem like this, I don’t expect to ever get my $200 back from Coinbase. It’s very difficult to explain in a chat or email what happened. As a result of this experience, I’m now much less trusting of the Coinbase mobile wallet.
User Error – Public Address Entered Wrong
Another caution when sending bitcoin or other crypto is to be sure to use the correct public address. As you learned in earlier lessons, for now, public addresses are long complex strings of numbers and letters. Never try to type one. Always copy and paste.
Malware Spoofing of the Public Address
Let’s say you’re transferring bitcoin or other crypto to a friend. You copy their wallet address accurately, but malware on your computer replaces the address in the clipboard buffer with a hacker’s public address. This is why it’s important to keep your computer’s antivirus software up to date. It’s also why you should always double check at least the first 4 digits and the last 4 digits of the address to which you’re about to send crypto.