Learn from others' errors, not your own.
Mistake #1: Storing Your Seed Phrase as Plain Text on a Connected Device
What people do:
- Take a photo of the seed phrase
- Store it in Notes app
- Email it to themselves
- Save it in cloud storage
Why it's dangerous:
- Cloud storage can be hacked
- Photos sync to multiple devices
- Phones get malware
- Digital files leave traces even when "deleted"
The fix:
Write on paper or stamp into metal. Store securely. Never store as plain text on a connected device. Encrypted digital backups are also an option when done properly - but plain text in your iCloud is not that.
Mistake #2: Only One Backup
What people do:
Write seed phrase once, store in one location.
Why it's dangerous:
- Fire destroys the backup
- Flood destroys the backup
- Theft takes the backup
- You forget where you put it
- Paper degrades over time
The fix:
Multiple backups in multiple locations:
- Home safe
- Bank safety deposit box
- Trusted family member's home
Mistake #3: Not Testing Recovery
What people do:
Set up wallet, write seed, never test if it actually works.
Why it's dangerous:
- Wrote a word wrong
- Wrote words in wrong order
- Used different derivation path
- Wallet uses non-standard format
- Won't discover until it's too late
The fix:
Reset device. Recover from seed. Verify same addresses. BEFORE you send significant funds.
Mistake #4: Buying Hardware Wallet from Wrong Source
What people do:
Buy from Amazon, eBay, or other third-party sellers to save money.
Why it's dangerous:
- Device could be tampered with
- Seed phrase could be pre-generated
- Malicious firmware could be installed
- Packaging could be resealed
- You'd never know until funds are stolen
The fix:
Buy directly from manufacturer only. Verify packaging integrity. Update firmware before setup. Our shop stocks direct from Coldcard and Foundation - never third-party resellers.
Mistake #5: Using Pre-Generated Seed Phrase
What people do:
Accept a seed phrase that came with the wallet, or generated by someone else.
Why it's dangerous:
- Anyone who knows the seed has access
- Some scams involve "helping" you set up with their seed
- No way to verify it wasn't recorded
The fix:
Always generate fresh seed phrase yourself. Ideally use device's own RNG or verifiable dice rolls (Coldcard supports this natively).
Mistake #6: Telling People About Your Holdings
What people do:
Brag about Bitcoin on social media, tell coworkers, show off wallet balance.
Why it's dangerous:
- Makes you a target for robbery
- Makes you a target for phishing
- Makes you a target for $5 wrench attacks
- Family members could be targeted
- Creates inheritance disputes
The fix:
Keep quiet. If you must discuss Bitcoin, never reveal amounts. "I own some" is enough.
Mistake #7: Ignoring Inheritance Planning
What people do:
Secure Bitcoin perfectly, tell no one, die unexpectedly.
Why it's dangerous:
- Funds are lost forever
- Family has no access
- No one knows to look for it
- Even finding it, can't access it
The fix:
- Write clear instructions
- Store with will or trusted person
- Consider multi-sig with family member
- Test that they can follow instructions
- Use our inheritance planning tool to build a plan
Mistake #8: Connecting Hardware Wallet to Compromised Computer
What people do:
Use hardware wallet on infected computer.
Why it's dangerous:
- Malware could swap addresses
- Clipboard hijacking
- Phishing pages could steal passwords
- Fake firmware update could be installed
The fix:
- Always verify address on hardware wallet screen
- Use dedicated computer for Bitcoin if possible
- Keep software updated
- Consider air-gapped signing (Coldcard, Foundation Passport support this natively)
Mistake #9: Rushing Large Transactions
What people do:
Move entire holdings in one transaction without testing.
Why it's dangerous:
- Address entry error = total loss
- Wrong network = funds stuck or lost
- Fee estimation error = long confirmation or overpayment
- No recourse for mistakes
The fix:
- Send small test transaction first
- Wait for confirmation
- Verify receipt
- Then send the rest
- Take your time
Mistake #10: Leaving Coins on Exchange "Temporarily"
What people do:
Buy Bitcoin, plan to move it "later," never do.
Why it's dangerous:
- Exchange gets hacked (Mt. Gox, etc.)
- Exchange goes bankrupt (FTX, etc.)
- Account gets frozen (regulations)
- Withdrawals get suspended (bank run)
- "Later" becomes "never"
The fix:
Set a rule: coins leave exchange within 24-48 hours of purchase. Every time. Read our full guide on why you should take your Bitcoin off the exchange.
Mistake #11: Using "Custom" or Unknown Wallets
What people do:
Download wallet from random source, or use obscure software.
Why it's dangerous:
- Could be malicious
- Could have bugs
- Could disappear (no support)
- Could have weak cryptography
- Could be honeypot
The fix:
Stick to well-known, open-source, audited wallets:
- Hardware: Coldcard, Foundation Passport, Trezor
- Software: Sparrow, Specter, Electrum (from official sources only)
Check our hardware wallet comparison for detailed breakdowns.
Mistake #12: Not Understanding Change Addresses
What people do:
Don't understand that Bitcoin transactions create change outputs.
Why it's dangerous:
- Check balance on old address, think funds are "gone"
- Panic and make more mistakes
- Don't back up wallet that holds change
The fix:
Learn how the UTXO model works. Trust wallet's total balance display. Back up entire wallet, not just one address.
Mistake #13: Sharing Screen During Setup
What people do:
Set up wallet during video call, on shared screen, or with remote access.
Why it's dangerous:
- Seed phrase visible to others
- Recording could capture seed
- Remote viewer could screenshot
- "Help" could be exploitation
The fix:
Set up in private. Alone. No screens shared. No cameras. If you need help, use phone for voice, separate device for setup. Or book a butler for in-person guidance.
Mistake #14: Creating Fake "Decoy" Seeds
What people do:
Create decoy wallets with small amounts, thinking it will fool attackers.
Why it's dangerous:
- Sophisticated attackers know this trick
- May increase torture time as they look for "real" wallet
- Adds complexity to backup strategy
- Could forget which is real
The fix:
Decoy wallets have limited value. If worried about physical attacks:
- Geographic distribution of backups
- Timelock (where supported)
Mistake #15: Not Updating Firmware
What people do:
Keep running old hardware wallet firmware indefinitely.
Why it's dangerous:
- Security vulnerabilities get discovered
- Old versions may lack protections
- May become incompatible with wallet software
The fix:
Update firmware periodically. Always verify updates come from manufacturer. Keep seed phrase accessible in case update causes issues.
Every mistake on this list has cost someone money. Don't be the next example.
Bitcoin Butlers helps you get it right the first time.