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Ask CryptoVantage: Do I Still Need to Send Test Transactions?
As any newcomer will quickly notice, crypto transactions are irreversible. There’s no walkback option or an undo button. This irreversibility is due to the immutable or indelible nature of the underpinning technology of cryptocurrencies called blockchain.
In crypto, immutability is a necessary evil. It makes it impossible for records to be edited, deleted, or changed in any way, shape, or form once they go on the blockchain.
Crypto adherents extol immutability as one of crypto’s most revolutionary qualities because it solves the thorny problem of double spending and promotes censorship resistance by making it difficult for records to be deleted, while critics assert it’s one of its biggest pitfalls.
But when it comes down to it, it falls on you as a crypto user to ensure the highest degree of safety while transacting crypto.
Sending Crypto is a Different Beast
Crypto isn’t your run-of-the-mill currency, and the same goes for how it’s moved around.
Once you hit send on a transaction, no one can revert it. Not you, the government, the exchange, or your lawyer. A cursory check on the top three exchanges shows each one issues a warning to users about this.
Coinbase cautions users: “Due to the nature of digital currency protocols, transactions cannot be or altered once they are initiated.” It adds that “users must be careful when they send funds as transactions cannot be undone, outside of asking the recipient for a refund.”
The exchange’s proposed last resort is the only known way to attempt to recover crypto that’s been sent out. The only way to do that is if you know the recipient — and you’d still be relying on their goodwill.
Binance warns it’s “unable to locate the receiver of your funds” in the event you sent them to the wrong address, while Kraken admonishes users to “always be careful when withdrawing cryptocurrencies, noting once a withdrawal is marked as Success “it’s impossible to cancel or reverse the transaction.”
The point is that making a single error can cost you your money. Luckily, implementing a few basic safety practices can avert this eventuality. Before looking into that, let’s look into the whole business of sending crypto.
How to Send Crypto
The process of sending crypto can seem convoluted if you’re new, but it’s actually relatively straightforward.
Crypto transfer services are no longer confined to the niche — several non-crypto services now allow people to send crypto. One such service is Cash App, a mobile money payment service created by Block Inc.
Through Cash App, UK and US users can send Bitcoin in the form of USD from as little as $1 to family and friends via text or email. You can also send BTC on-chain or using the Lightning network.
Another way to send crypto is through an exchange. If you don’t already have an account, your first step would be to set up an account, followed by funding the account with a card, bank transfer, or PayPal, depending on the exchange. The rest of the steps would include:
- KYC verification (ID, proof of residence, and so on.)
- Purchasing crypto from the exchange
- Sending the money to your recipient’s wallet address
- Confirming receipt.
- The crypto will show up in your recipient’s account between a few minutes to several hours, depending on network congestion. You can also check the status of the transaction at any time. For instance, if you’re sending BTC, visit https://live.blockcypher.com/btc/ and paste the transaction ID or the receiving address in the search bar. They’ve likely received the funds if the transaction has at least three confirmations.
Test your Transactions Before You Hit Send
By now, you already know that double-checking and even triple checking the receiver’s address before you hit send is uber crucial.
One sure-fire way to do that? Send a negligible amount to the address before the real transaction. You can even practice by sending crypto to yourself until you get the hang of following best practices.
Here are other best practices for sending cryptocurrencies:
- Double-check the address: Hackers have been known to hijack addresses copied into the clipboard and replace them with malicious ones. Be sure to double-check your address before sending money. At the very least confirm the last four digits of the address.
- Copy, don’t type: When sending crypto, consider pasting the address rather than typing it. Typing poses the risk of getting keylogged and increases the risk of a typo, which could lose you money.
- Don’t use public WiFi: Free WiFi in public places can be enticing but also risky. Hackers usually set up fake WiFi routers to target and intercept user data, such as online wallet data. Even if you think you have fortified your wallet with safety features, it’s not worth the risk.
Transaction Fees and Network Compatibility
There are a couple of things to consider when sending crypto: transaction fees and network compatibility.
Transaction fees: Networks that rely on mining, such as Bitcoin, are maintained and secured by computer nodes called miners spread worldwide. Miners are rewarded with Bitcoin and transaction fees — which are automatically deducted in the process.
Usually, users can request the network for faster processing of their transactions, for which they pay higher fees than other users who rely on the standard processing speed.
Wallet compatibility: Ensure the currency you’d like to send is compatible with the recipient’s address. For instance, you can’t send Bitcoin to Metamask or Myetherwallet, which only support ERC-20 tokens. Sending your crypto there is like sending it to a black hole — it’s simply gone.
The Bottomline: Take an Extra Second When Sending Crypto
Sending cryptocurrency is a completely different ballgame from sending fiat. Transactions are irreversible, meaning you must exercise great care when sending funds.
Follow best practices, regardless of whether you’re a beginner or an expert, and you’ll be less likely to ever encounter losing your money. These pointers are common-sense best practices to help you send crypto securely.
