A crypto investor recently told their experience about how one careless click might have lost their whole life savings of $120,000. While Bitcoin has made inroads into the mainstream, this terrible story serves as a reminder that the internet is still wild west. Redditor PowerofTheGods said in a discussion two months ago that they had been investing in cryptocurrencies since 2016, and that they considered themselves to be pretty informed about the technology and ideas involved in this industry.
They kept 80% of their money in a physical “cold” wallet and 20% in four Metamask digital “hot” wallets. They utilized Metamask to check the balances of the wallets one day, and everything looked to be normal. However, when they checked later that night, they discovered that every wallet had been emptied. They discovered the Hacker’s ETH address from the transactions and saw how the wallets were cleaned in a couple of minutes, just as he checked his balance. They claim they were never asked to sign off on any of the transactions.
“This message is primarily intended to serve as a warning to others. Even if you believe you are safe, you might be in danger. With today’s skilled hackers, I suppose all it takes is one bad click. Apart from a few emergency money in my regular bank, this was my life savings. I don’t think I’ll ever be able to recover financially, emotionally, or mentally from this. It has had a significant impact on my life “they penned. The Reddit user isn’t sure how it happened, but they believe it was due to them clicking a bad link, which let a Trojan horse virus infect their browser and take control of it while the ledger was unlocked.
This may explain how the online “hot” wallets were deleted, but how would the hacker have gained access to the offline “cold” wallet, which functions similarly to a physical USB stick? Private keys — passwords that give access to your crypto – are stored in both hot and cold wallets. Your crypto can be stolen if someone gets their hands on your private keys. There’s also a “seed phrase,” which is a human-readable version of a private key. It’s also known as a seed recovery phrase or recovery seed. It’s made up of a string of 12, 18, or 24 words created by your bitcoin wallet, which contains all of the information needed to retrieve your funds.
Because the firm that administers the hot wallet retains your private keys on its servers, hackers may be able to obtain them this way. Because the private keys are held offline, cold wallets are more secure. If you have a cold wallet, you can write down your seed phrase and use it to deduce your private keys if you ever need to retrieve your bitcoin. According to PowerofTheGods, they wrote down their seed word on a piece of paper and placed it in a secure safe that no one else has access to, leaving them puzzled as to how the hacker gained access and destroyed their cash. Others on Reddit chimed in, reasoning that the individual must have set up their cold wallet using the seed phrase from their hot wallet and then forgotten about it. After gaining access to the hot wallets, the hacker was able to get the cold wallet. The lesson of the tale is to be on the lookout for fraudsters and never open any strange websites or files. If you’re working with a substantial quantity of bitcoin, an offline cold wallet is always the best option. There is no way to retrieve your seed phrase from the cold wallet unless you make sure it is unique and concealed. Of course, don’t lose your seed phrase or your real wallet like this unfortunate individual did.
