So if you make a mistake, you’re on your own. There is no crypto customer service that you can call (unless you’re using Bull Bitcoin) to help you get your money back.
When you lose your bitcoin by mistake, it’s gone forever, so let’s look at some of the top crypto and bitcoin mistakes that you need to avoid.
Investing in Bitcoin Without Doing Your Research
Any bitcoin mentor worth their salt will tell you to avoid over-investing without first learning how bitcoin works. Research is your first step, because without it, you are almost guaranteed to lose your coins at some point.
Here are some of the most important topics you need to understand before diving in:
- Choosing your first Bitcoin wallet is critical for keeping your funds safe and accessible.
- Learn where to buy Bitcoin anonymously to protect your transaction and balance privacy
- Understand how to send Bitcoin anonymously.
- Read up on Bitcoin’s value proposition to appreciate why it matters for financial sovereignty.
- Find out which cryptocurrencies to invest in and strategies to avoid common scams.
- Decide how you will backup your wallet and protect your seed phrase to secure your investment.
- Learn more about Bitcoin’s economics by reading The Bitcoin Standard by Saifedean Ammous.
The list goes on and on. It takes many hours of study and practice to fully understand how to use bitcoin, and you should only ever invest an amount that matches your understanding.
Don’t put your life savings (or anything significant) into bitcoin until you’re extremely confident that you understand these basic concepts.
Otherwise, you are very likely to make bitcoin mistakes and damage your financial health.
Investing In Altcoins
An altcoin, also known as a shitcoin, is any cryptocurrency that isn’t bitcoin. This is an area of crypto investing where so many people make their first big mistake, and it’s a very difficult one to avoid.
There are thousands of crypto influencers all over the internet that want you to invest based on hype instead of fundamentals.
They try to sell you on the idea of their particular shitcoin by promising extremely bullish gains and superior technology, but these coins always underperform against bitcoin.
Bitcoin’s focus is on being the best form of money, and it achieves this by being the most scarce resource that’s ever existed. Bitcoin’s value keeps going up for good reason, while altcoins consistently decrease in value against it. Even though their USD value goes up, they have never been a good bet compared to bitcoin, the King of cryptocurrencies.
For a more in depth analysis of bitcoin vs shitcoins, read the following article:
Bitcoin vs. Crypto: Empowering the Sovereign Individual
Failing to Properly Secure Your Seed Phrase
When you download and set up your bitcoin wallet, you’re prompted to write down a list of 12 or 24 words. This is your seed phrase, and your seed phrase is the key to your bitcoin.
Here are the most common seed phrase mistakes bitcoin beginners make:
- They write down the seed incorrectly. To avoid this mistake, check and re-check each word to ensure accuracy.
- They store their seed phrase digitally. Internet-connected devices and cloud storage can be hacked. The best way to store your seed is on paper or stamped on a steel plate. The tweet below shows what can happen if you store your seed in a password manager.
- They misplace their seed phrase. If your desktop or phone breaks or gets lost, you need these seed words to recover your funds. If you can’t find the seed, your bitcoin is permanently lost.
- They only store their seed phrase at home. What if you have your life savings stored on one seed phrase, and your house burns down? You must have a contingency plan in case of disaster.
- They password protect their seed phrase and forget the password. If this happens, your seed is worthless. If you use a password, make sure you have it safely backed up as well, in a different place than your seed.
Your bitcoin seed is precious and you need to be very careful with it. Back it up accurately and securely, or you’re likely to make a catastrophic mistake.
Reusing Bitcoin Addresses
Reusing Bitcoin addresses might seem convenient, but it’s a bad habit that compromises your privacy and security. Every time you use the same address, it becomes easier for others to track your activity, link transactions together, and potentially connect them to your identity.
Best practice is to use a new address for every transaction. Most modern wallets do this automatically, generating a fresh address each time you receive funds. It’s a simple step that helps keep your financial history more private.
Proper address hygiene and coin control are crucial to avoid having your transactions and balance easily tracked. For more details on bitcoin privacy, read this post.
Sending Bitcoin to the Wrong Address
One of the most common and irreversible mistakes in Bitcoin is sending funds to the wrong address. Unlike traditional banking systems, Bitcoin transactions are final—there’s no customer service, no chargebacks, and no “undo” button. If you mistype a Bitcoin address or accidentally copy the wrong one, your funds could be lost forever.
That’s why it’s crucial to double-check the address before you send. Always verify the full address (or at least the beginning and end of it), especially if you’re copying and pasting from somewhere. Be extra careful for high-value transactions. It only takes a few extra seconds to check, but it could save you from a costly mistake.
You can use a Coldcard hardware wallet to help you confirm addresses. Even if your computer is compromised, the Coldcard’s screen will always show you which address your bitcoin is being sent to.
Falling For a Phishing Scam
When you sign up for a service like Coinbase, or buy a bitcoin hardware wallet, you normally submit your email address and personal information.
This is very bad news for you, but very good news for hackers.
On June 28th, 2025, hardware wallet manufacturer Trezor warned their users to avoid falling for the latest phishing scam.
Here’s how it goes down:
You buy a Trezor and receive the order confirmation to your email address. Trezor’s email list somehow leaks, and then you receive an email claiming that you need to enter your seed on a fake web dashboard.
You follow the link to protect your bitcoin, and in a moment of panic, you enter your seed and the phishers immediately drain your wallet.
Watch out for this, and avoid the next mistake to harden yourself against phishing scams.
Buying a Hardware Wallet to Your Real Name at your Home Address
When you buy a hardware wallet, avoid using your real name, and if possible, ship it to a PO Box. And don’t receive the order confirmation email to an address like this: “Firstname.Lastname@gmail.com.
You will be unharmed by data leaks if you take these precautions. This bitcoin mistake is easy to avoid, and you should take it seriously, because the most popular wallet manufacturers (Ledger and Trezor) have had their email lists stolen by hackers and you must assume it will happen again.
Alternatively, you can buy a hardware wallet at a bitcoin conference. Regardless of where you purchase it, I recommend the Coldcard wallet. It’s the most feature-rich bitcoin hardware device, and they regularly delete customer information.
If you buy a Coldcard online, buy it from their official website or an official reseller.
Buying a Fake Hardware Wallet From Amazon
Several hardware wallet manufacturers have official stores on Amazon, but you need to carefully avoid buying a fake hardware device.
The fake wallets are compromised. They generate non-random bitcoin seeds, and your funds will be stolen if you send coins to an address generated by one of these malicious devices.
Just buy a Coldcard from the official website, but if for some reason you need to buy something from Amazon, I recommend the Blockstream Jade. Make sure it’s sold by the official Blockstream store.
Telling Everyone You Own Crypto
Being a bitcoiner is exciting. I get it. But your entire community doesn’t need to know that you bought some at $20,000. If you did, that’s fantastic, but when the price is $100,000 or $1,000,000, the people you were trying to orange pill shouldn’t know how much bitcoin you have.
Orange pill: Trying to convince people to invest in bitcoin.
Your wallet balance is none of their business. You don’t go around telling people what’s in your bank account, and sharing your bitcoin wallet balance is even worse. You’re painting a target on your house if all of your friends’ friends know you own a whole bitcoin and that it might be stored in your house.
I understand the desire to orange pill the people you care about, but be careful about letting on how much bitcoin you have in self-custody. It’s not worth it.
Alternatively, you can look into using a geographically distributed multi-signature bitcoin wallet.
Buying and Holding Crypto on Coinbase
There is no larger honeypot than a major centralized cryptocurrency exchange like Coinbase.
Coinbase, Binance, and other exchanges collect extensive user data, making data breaches all but inevitable. In fact, Coinbase customer service reps leaked a treasure trove of customer KYC data in May 2025.
So if you’re a Coinbase customer, you can be certain that your personal information is floating around on the internet. Perhaps you’ve been receiving scam phishing emails from a fake Coinbase domain.
Beyond buying and selling, Coinbase will also hold your crypto for you in a custodial wallet, but this is a terrible idea if you want financial freedom. Always remember the common bitcoin adage, “not your keys, not your coins.” If you let someone else manage the keys to your cryptocurrency, it can easily be taken from you.
If you’ve never used a large centralized exchange like Coinbase, don’t start now. Buy bitcoin from a superior company like Bull Bitcoin instead. They never sell customer information and they respect their users’ privacy.
Chasing Yield On Bitcoin
Bitcoin has returned an average compound annual growth rate of 65% per year since 2019 (Jan 1, 2019–Dec 31, 2024), according to price-based community estimates.
Some bitcoin investors feel that 65% per year isn’t enough, and so they invest their bitcoin in a yield generating service. This is what Hodl Life Bitcoin decided to do. He made 1-2% per month yield on his bitcoin, but the investment company eventually ran away with his money and he lost everything.
Other investors sell their bitcoin to buy a dividend paying stock like MSTY, an ETF that uses options on MicroStrategy stock to generate high monthly income (4% to 19% per month).
This may seem like a great way to generate income from your investment, but it also removes your bitcoin from self-custody. Many people have lost their bitcoin by chasing yield in this way.
Bitcoin is freedom money for the sovereign individual, so if you’re going to chase yield, be very careful, and never invest 100% of your bitcoin.
Ignoring the Lightning Network
Bitcoin’s fantastic, but it comes with trade-offs—transaction fees can spike when usage is high, and regular, on-chain transactions aren’t private. These aren’t flaws, just characteristics of how Bitcoin works.
Fortunately, solutions like the Lightning Network help address both scalability and privacy in practical ways.
Lightning transactions are much cheaper, and they don’t appear publicly on the blockchain. If you only use on-chain bitcoin transactions, you’re missing out on the added privacy and lower fees that Lightning offers.
Lightning transactions are highly effective, and it’s well worth downloading a Lightning wallet to see how it works. More on Lightning here.
Overlooking Tax Implications
One of the most overlooked aspects of using and investing in bitcoin is the tax burden that comes with frequent trading. It’s easy to get caught up in the hype of swapping between coins and chasing short term gains.
But every time you trade one crypto for another—even if it’s just trading bitcoin for a USD stablecoin—you’re creating a taxable event. Each of these events requires you to track your cost basis, calculate gains or losses, and report them properly. It’s not just tedious—it can significantly eat into your returns if you’re not careful.
This isn’t about evading taxes. The smarter approach is to structure your activity in a way that minimizes taxable events. That usually means not trading.
Bitcoin is the means to achieve financial freedom—trying to time the market is just a distraction. So the most tax-efficient strategy for most people is simple: buy, hold, and only sell small amounts when needed.
Sure, timing the market can make a lot of money in the short term. But that usually comes with higher risk, more stress, and a growing tax bill.
If you believe in Bitcoin’s long-term trajectory (and history suggests you should), then trying to outsmart the market often just results in giving more of your stack to the government—and losing some to bad decisions fueled by emotion or greed.
Sometimes, the most powerful move is doing nothing at all.
In a world where bitcoin keeps trending upward over time, staying focused on accumulation and long-term holding is both financially prudent and tax-efficient. Don’t let short-term noise or FOMO distract you from stacking and securing more Bitcoin.
Summary
Okay, we’ve made it to the end. Let’s review this list of 13 common bitcoin and crypto mistakes before you buy any significant amount of bitcoin.
- Investing in Bitcoin Without Doing Your Research
- Investing In Altcoins
- Failing to Properly Secure Your Seed Phrase
- Reusing Bitcoin Addresses
- Sending Bitcoin to the Wrong Address
- Falling For a Phishing Scam
- Buying a Hardware Wallet to Your Real Name at your Home Address
- Buying a Fake Hardware Wallet From Amazon
- Telling Everyone You Own Crypto
- Buying and Holding Crypto on Coinbase
- Chasing Yield On Bitcoin
- Ignoring the Lightning Network
- Overlooking Tax Implications
Everyone’s made mistakes with Bitcoin, but if you’re starting out in 2025, there’s no reason to repeat them.
Take your time, and carefully follow these steps:
- See how bitcoin gives sovereign individuals true financial freedom
- Choose a bitcoin wallet
- Buy bitcoin anonymously or from a company that respects your privacy
- Learn how to privately send and receive bitcoin transactions
Bitcoin rewards patience and knowledge. As a sovereign individual, the responsibility is yours—so do the work, avoid costly mistakes, and free your money from prison.
Best Bitcoin Exchange in Canada and Europe
Are you ready to buy your first bitcoin? Here’s my recommendation for the best bitcoin exchanges in North America and Europe.
If you’re in the USA, I generally recommend looking into River.com or Bitcoinwell.com, but in Canada and Europe (and Mexico and Costa Rica), Bull Bitcoin is the best exchange.
Bull Bitcoin is bitcoin only, so if somehow my article has convinced you to buy an altcoin, look elsewhere.
But if you want bitcoin, Bull offers many useful features:
- Best-in-class customer service – unlike most large exchanges, you get to speak to a real human being.
- Multiple ways to fund your account – Bank transfers, e-transfers, SEPA, or even buy with cash in-person at Canada Post.
- Lightning, Liquid and DCA – Save on fees and increase privacy with bitcoin buys and on lightning and liquid networks. You can even set up hourly, daily or weekly dollar-cost-average buys.
- Pay Bills with Bitcoin – You can sell bitcoin directly to any credit card, bank account, or bill payment invoice. Bull Bitcoin allows you to live on a Bitcoin Standard.
- Respect For Your Privacy – Bull Bitcoin never sells your personal information to governments or chain analysis companies.
If you’d like to make your first purchase on Bull Bitcoin, use my referral link to save 0.25% on all bitcoin buys, and help me get a small commission to stack a few extra sats.
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