8. Don't invest in stuff you don't understand
Don't invest in cryptos unless you understand its complexities.
This happened recently...
A crypto investor lost $500,000 after sending wrapped Ether (wETH) directly into a wETH wrapping smart contract.
wETH came into existence as a way for Ether (ETH) to conform to the ERC-20 token standard so that it can be traded directly with altcoins minted on the Ethereum blockchain.
To wrap Ether, users first send ETH to the wETH smart contract address and receive an equivalent token in return.
However, to unwrap wETH, users must either swap for ETH on a decentralized exchange like Uniswap (UNI) or call the withdrawal function in the wETH smart contract.
Instead, the investor sent the wETH directly back into the wETH smart contract address in the hopes of receiving ETH back.
Unfortunately for the investor, this process is the equivalent of “token burning” and results in an irreversible loss of crypto. You read that right - the investor lost half a million dollars!!
How much of this did you understand?
If you said “everything”, you are good to go and I wish you the best on your Crypto journey.
If not, please don’t start investing just yet. Wait for a few more lessons :-)