- >Ask CryptoVantage: What Happens When You Send Bitcoin to the Wrong Address?
Ask CryptoVantage: What Happens When You Send Bitcoin to the Wrong Address?
The thought of sending bitcoin to the wrong address can be scary, even for experienced bitcoiners. Losing your bitcoin by sending it to the wrong address is not as common as you might think, but it’s a mistake anyone can make – so it is important to take measures to prevent it from happening.
In this article we discuss how wallets will sometimes protect you from sending bitcoin to invalid addresses, scenarios where wallets cannot protect you, and best practices to avoid sending bitcoin to the wrong address.
Billy Garrison | Dec 24, 2020
Sending to a Non-Existent Address
A common worry amongst newcomers to bitcoin is that they will make a mistake when sending bitcoin by typing in their address incorrectly. Initially, this appears to be a valid concern considering the fact that bitcoin addresses are made up of a seemingly random string of letters and numbers such as 3J98t1WpEZ73CNmQviecrnyiWrnqRhWNLy. However, most bitcoin wallets have a failsafe built in where they check to make sure that the address is valid based on what is known as a “checksum”.
Basically, part of a bitcoin address represents instructions on who owns the bitcoin, and another part is the “checksum” which is calculated based on that first part. When you type in an address, the wallet will calculate the checksum, and compare it to the checksum that you typed in as part of the address. So, if you mistype either the address or the checksum, the wallet will detect that they are not equivalent and will not allow the transaction to take place.
Sending to an Existing, Incorrect Address
A more likely mistake that could occur is sending bitcoin to a valid address that is different than the address you meant to send it to. For example, if you have a list of addresses and you try to copy one address but accidentally copy another, then you might accidentally send it to a wrong, but valid, address. If this happens, the transaction is irreversible.
Remember that bitcoin is digital cash. Like physical cash, if you accidentally give it to the wrong person then the only way to get it back is if the person willingly gives it back. If you accidentally send bitcoin to a friend then it might be easy to convince them to send it back to you. But if you send bitcoin to a stranger by mistake, you might be out of luck.
Another possible way to send bitcoin to the wrong address is if your computer has a virus that is designed to steal bitcoin. There are viruses that automatically detect bitcoin addresses and replace them with their own bitcoin address, making you send bitcoin to the hacker instead of the intended address. These types of viruses are one of the reasons we recommend not to use a general-purpose computer for bitcoin. We explain this and other beginner mistakes in “What are the Most Common Bitcoin Beginner Mistakes”.
Best Practices for Sending Bitcoin
- Always double check bitcoin addresses before sending a transaction.
- Be sure to check more than just the first few characters of the address because sophisticated hackers can create addresses that match a small part of the address.
- Have a dedicated computer that you only use for bitcoin.
- Store your bitcoin on a hardware wallet.
- Use high-quality bitcoin wallets and do not try to experiment with making your own wallet unless you have a lot of experience.
While the idea of sending bitcoin to the wrong address is scary, it is less likely to occur than you might think. Still, you must be careful when sending bitcoin because there are several problems you could encounter regarding the address. These problems could stem from copying an incorrect address, or even having a virus replace the address on your computer’s clipboard with an address of their own. You can mitigate these risks by following our best practices and by always being extremely careful when using bitcoin.