Bitcoin Horror Story: How I Lost S$2 Million Overnight
Singaporean entrepreneur Darius Cheung, 35, wasn't sure how his bet on bitcoins would turn out. But he could never imagine what happened next.
Worst bitcoin stories!
It was rainy day in July 2013 when Darius first heard of cryptocurrencies, specifically something called bitcoin. A year back, he had sold his startup to MCAfee. Post the sale he decided to start investing his money in various instruments to see if he could increase his wealth.
While he sipped his kopi o at the mamak shop in Ayer Rajah crescent, his engineer friend Bill introduced him to the world of bitcoins.
It sounded fascinating; and in a spur-of-the-moment decision, he declared, "What the heck lah, let's try," and bought US$19,960 worth of bitcoins at $80.
Over the next few months, he watched it grow spectacularly over 5x to over US$300. Pleased with his investment, he soon forgot about his bitcoin bet and started focusing on other ventures, most notably, his current company, 99.co.
Then, one fateful day less than a year later, he received a horrifying email.
Pick your jaw up off the floor. Yes, in a single night, thanks to the nonchalantly announced bankruptcy, he had lost US$75,000.
For Darius, even more painful is the fact that today his bitcoins would have been worth a whopping S$2.4 million.
The cons of cryptocurrencies
Sadly, Darius’ bitcoin horror story isn’t an exception. From tech glitches to well-disguised scams to getting hacked or losing access to your bitcoin wallet, and of course, to experiencing those massive price drops, tales of horror abound.
Which brings the inherent paradox of cryptocurrencies into focus:
What sets it apart from money is that transactions are instant and irreversible. No one, not even the government, can stop a digital currency transaction from happening.
This is also its flaw. There is no way of getting fraud protection.
In 2016, US$28 million losses from cryptocurrency crimes were reported to the FBI—note that these are just a shadow of the true state of the crimes as the figure is based on voluntary reports by individual victims.
So what do you do if you want to keep your bitcoins safe? Lots.
Here are a few ways to keep your bitcoins safe:
- Use a unique password
- Don't post on social media that you have bought bitcoins
- Sign an account with a trusted cryptoexchange
- Don't store your money in a Bitcoin exchange. Instead, use the exchange to transact, but withdraw your bitcoins and keep them in your private Bitcoin wallet
- Back up your wallet
- Consider multiple wallets to store your cryptocurrency. Paper and hardware for large amounts and software/online wallets for smaller amounts that you can access quickly for transactions.
- Know and review your transactions so you won’t realize too late if you’ve been stolen from
- Put a “do not port order” on your phone
- Don't use text message to factor authentication
The world of cryptocurrency presents exciting investment opportunities, yet is full of security flaws. While we can’t predict what will happen in the cryptocurrency market, being vigilant and securing your investments is a must if you want to hold onto your money and keep your bitcoins safe.
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