If you’re like most people, the thought of moving a large sum of money at once can be daunting, especially when it comes to cryptocurrency. As a cryptocurrency CPA, this is where we recommend a test transaction. This is a great way to ensure you’re protected from address-poisoning scams and can give you peace of mind before moving forward with a transaction.
What are test transactions?
If you’ve withdrawn or deposited Bitcoin, Ethereum, or a similar cryptocurrency, you’ve likely seen a warning that pops up before the transaction is verified. One minor mistake in entering a wallet address or network and you could potentially be out a significant amount of money. Sending a smaller sum of money as a test transaction on the blockchain can help reduce any hesitations or doubts.
When completed successfully, a test transaction confirms that your funds will be received by the right crypto exchange or wallet and that your network is working as it should. From preventing the wrong address to ensuring your ledger is working as it should, a test transaction can give you invaluable peace of mind.
Why should you use test transactions?
The most popular reason that people opt for a test transaction is for peace of mind. From simple cryptocurrency transfers to testing smart contracts to trying a different type of blockchain, test transactions are a great way to confirm that things are operating as they should be. If you’re planning to send a large sum of money, it’s especially recommended to first complete a test transaction.
Some people might think that a test transaction is a waste of fees or time, but this is a simple action that could save you hundreds or even thousands in the big picture.
What can test transactions protect you from?
Despite the large volume of crypto scams and those trying to cheat you out of your cryptocurrency success, the majority of scams can be caught through test transactions. We’ve outlined a few common examples of things that test transactions can catch.
A honeypot is a token that cannot be sold. This is an example of a blockchain-based token contract that was designed purely to create chaos. One test transaction can confirm that you’ll be able to sell after purchasing if you so choose.
This is a technique used by scammers; they’ll send a $0 transaction to your wallet with an address that has the same first and last characters as yours. They are hopeful that you won’t check the details such as the address before sending funds and that you’ll copy and paste the address they used versus your own. If your transfer is properly received, you’ll know that you haven’t accidentally used a fake address.
Inputting the wrong address means that your funds could be permanently lost. Double-checking the address beforehand can make or break your transaction’s success.
For more peace of mind, contact Founder’s CPA
Working with a cryptocurrency CPA is another way to improve your cryptocurrency knowledge and improve your peace of mind. At Founder’s CPA, our team can help you with your accounting, tax, and CFO needs. Contact us and take advantage of our free 15-minute consultations today!