You access your crypto funds safely through your software wallet or perhaps you want additional security, and prefer to snuggle up with a Trezor or Ledger Nano. Your cryptocurrency wallet stores the private keys used to spend your coins to ensure that you don't get into a tangle by losing it. Now, you are ready to buy that Rolex.

The Rolex retailer sends you an address which you need in order to transfer the amount. In the case of Bitcoin, the address will look like a random string of lowercase letters, uppercase letters, and numbers.

You copy-paste or type the address and send the specified amount. Voilà, your wallet shows that coins are indeed transferred! The retailer’s wallet will store the transaction address which would have been recorded on the blockchain. The retailer then would use his private key to spend it.

To your horror, you suddenly realize you have made a mistake and entered the wrong address!

What Could Go Right?

Each address has a fixed format and can be validated. Bitcoin addresses have between 26 and 35 alphanumeric characters. It is possible that the address was so badly mangled that the transaction was rejected since the string of characters itself did not meet the criteria for a Bitcoin address. Breathe a huge sigh of relief and try again with the correct address!

What Could Go Semi-right?

This scenario is very unlikely, but it’s possible. The address could be valid and controlled by someone else. This is similar to an unintentional bank transfer, but in the world of crypto, your chances of getting your funds back is much lower in this case. Since the vast majority of Bitcoin addresses are not publicly tied to any real-world identity, it’s mostly impossible to contact the person behind the address. You will have to hope that whoever is on the other side of the transaction is an upstanding person and sends you back the funds.

What Could Go Horribly Wrong?

All possible Bitcoin addresses already exist, but the vast majority of them are not controlled by anyone and don’t contain any BTC. To put it simply – if the wrong address (string of alphanumeric characters) you sent your Bitcoin to fits the syntax criteria for an address on the Bitcoin network, your funds were sent to an address that is not controlled by anybody and most likely never will be. The reason for this is that there are a total of 2^160 total Bitcoin addresses.

The ledger records the transaction forever, and you can view it using a a blockchain explorer (say Blockchain.info).

But, without a private key, the transaction is unspendable. No one can create a new transaction to return your coins.

In this situation, you have basically lost the funds forever. Go grab a beer and drown your sorrows in case the unthinkable has happened. If it is any consolation, it has happened to lots of people in the past and will happen again in the future.

Did you know that the unspendable transaction mechanism (also called Proof of Burn) is sometimes used to deliberately burn crypto coins in order to increase the value of the ones remaining?

Article by @cryptomarks