Level 4: Risk & Safety
How People Lose Crypto
Understanding the most common ways funds are lost permanently.
6 min read
This Chapter is Critical
According to various estimates, millions of Bitcoin (worth billions of dollars) are permanently lost. Most losses are preventable with proper education. Read this entire level before interacting with cryptocurrency.
Permanent Loss
In crypto, most losses are irreversible. There's no bank to call, no transaction to dispute, no insurance to claim. Once funds are gone, they're typically gone forever.
Loss Categories
Lost Access (35%)
PreventableLosing seed phrases, forgetting passwords, hardware failures, death without estate planning.
Scams & Fraud (30%)
PreventablePhishing, fake giveaways, romance scams, rug pulls, Ponzi schemes.
Exchange Failures (15%)
PreventableExchange hacks, bankruptcy, frozen withdrawals (FTX, Mt. Gox, Celsius).
User Errors (10%)
PreventableSending to wrong address, wrong network, falling for address poisoning.
Smart Contract Exploits (5%)
DeFi hacks, bridge exploits, protocol vulnerabilities.
Market Losses (5%)
PreventableCoins going to zero, excessive leverage, bad trades.
The Hard Truth
- • 90%+ of crypto losses are preventable with basic security knowledge
- • Most victims thought "it won't happen to me" until it did
- • Experienced users get scammed too — complacency is dangerous
- • The complexity of crypto creates many opportunities for mistakes
- • Attackers are sophisticated and constantly evolving their methods
Real Numbers
$3.8B
Stolen in 2022 hacks
4M+
Bitcoin permanently lost
$1B+
Lost to phishing yearly
$40B
UST/Terra collapse
Protection Starts With Education
The upcoming modules in this level will teach you:
- How to identify and avoid common scams
- Why keeping funds on exchanges is risky
- Common wallet mistakes to avoid
- How phishing attacks work
- What rug pulls are and how to spot them
- A comprehensive safety checklist