According to a recent study by Chainanalysis, around 20% of all Bitcoins are lost in the ether (no pun intended) and unrecoverable. That is highly frustrating for the individual investors but in the main won’t affect the volume of BTC traded. This happens because people simply lose their private keys. One company called Wallet Recovery Services are receiving on average 70 calls a day from people you can’t retrieve their Bitcoins.
However, there is another problem that is happening regularly, and it is much less commonly discussed. That is, those making mistaken transactions of their crypto holdings to the incorrect wallet address. Even experienced users can make this mistake and they often do.
What Has Happened?
There have been a collection of cases where users have reported their mistaken transactions to Bitcoin.com, where they have mistakenly sent Bitcoin Cash to Bitcoin wallets and vice versa. If a user transfers holdings to the incorrect personal wallet then the individual relies on the receiver to return their cryptos. Not only can the individual on the other side of the transaction rarely be traced, but also someone must cover the fee for the mistaken transaction.
Then come the cases where users send mistaken transactions to exchanges. Often the exchanges will remedy this, but at an astronomical cost to the sender.
Such wallets have locally-stored keys unique to the user, though. With exchanges it’s another matter — multiple users might be sending transactions to the same address. Verifying and refunding those mistaken transactions, they say, is inherently time-consuming and risky. Here’s an example on Reddit of exactly that. It is up to the exchange of course to verify and refund and in this case apparently the exchange did so with no charge.
Been doing crypto almost 6 years now and I still panic when sending a transaction even after quadruple checking the address character by character
— ∞ CO฿IE (@CryptoCobain) December 10, 2018
However, in many cases where funds have been sent to the wrong address at digital exchanges like HitBTC the user can simply say bye bye to their sent funds. Meanwhile, Coinbase, “strongly suggest that you double check addresses before sending or receiving crypto through Wallet.” However, they have no clear policy on what to do in case this does happen.
Yet, other exchanges will return the transaction but it comes at a hefty cost. Some exchanges charge 0.05 BTC per recovery, no matter what the size of the transaction. This equates to an astonishing 2,573 USD in at today’s rate. Bittrex, though charges 0.1 BTC which is a mind blowing 5,146 USD at today’s rate of exchange. If you have sent any less than this then you can cut your losses. Bittrex policy is to only recover $5,000 USD or more in mistakenly sent BTC. So
What Can We Do About It?
So what is the solution to this rather common problem? ethbox is promising you will “never lose funds due to a wrong transaction address again” with their new platform that allows users to secure their holdings by using exchanges or trading OTC through their own platform. The ethbox API makes it easy for both centralized and decentralized exchanges to interoperate with ethbox.
They offer users the chance to securely transfer their crypto assets without the risk of losing funds through human error. They currently offer this product for ETH but will soon be expanding their repertoire. As if that weren’t enough of a reason to use them, they also offer their users the chance to stake their holdings in return for yield or a revenue share. ethbox is certainly giving security in crypto transactions a new face.
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