In the crypto world, there are two key statements to remember: “It’s not about how much you make, it’s about how much you keep” and “Not your keys, not your coins.”
The past few years have been brutal, with plenty of project failures and collapses that left people with devastating losses and painful lessons learned. Keeping these sayings at the forefront of your thoughts while navigating the crypto world may be the difference between life-changing wealth and losing everything.
We’ve witnessed firsthand how quickly things can turn south. Whether we analyze the Anchor Protocol collapse, Celsius bankruptcy, FTX insolvency, Mt.Gox hack, the security breach of Binance, KuCoin, HTX (the list goes on and on, take your pick), we have literally hundreds of examples that highlight the simple fact that If you don’t hold your own keys or follow responsible cryptocurrency security hygiene, you could end up losing everything.
Despite the risks, many of us have managed to keep our assets safe and secure. If you want to learn how to protect your crypto, read until the end of this article.
How Safe is Cryptocurrency?
This is one of the top questions we get asked all the time, and for good reason. It seems that every other week there’s news of another hack, scam, or some fancy new exploit in the crypto world. It’s easy to get a bit nervous, right?
Let’s think of crypto security like this: Imagine owning a high-security house with top-notch locks and a state-of-the-art security system. You even have a gate, motion sensors, a moat with a drawbridge, and the whole 9 yards. But, if you leave the door and gate open, the drawbridge down, AND forget to arm the security system, all that security is useless. The same goes for crypto. Even with the best wallet and protection, if you’re careless with your keys and recovery phrase, or you are lax on your cyber security hygiene, you’re risking your crypto assets.
Cryptocurrency is as safe as you make it. Unfortunately, there is a trade-off between security and convenience. The more secure you make your crypto and your transaction processes, the more inconvenient it will be, so it’s all about finding the balance that works for you.
Imagine if you owned physical gold and you kept it in an underground bunker secured by an eye scanner, guard dogs, armed guards, had to cite secret passwords and pass secret handshakes with the guards then do some acrobatics to make it through one of those cool laser grids like you see in the movies. That might be worthwhile if you were storing millions in gold bars, but having to do all that to access a gold coin worth $25 bucks wouldn’t be worth the security measures. In the same line of thought, storing $500k worth of gold in your underwear drawer, while convenient and easy to access, isn’t exactly the most secure method and wouldn’t cut it.
Crypto is the same. You can lock it down tighter than Fort Knox or you can literally store your private keys in your underwear drawer and keep your life savings in a browser extension wallet (not recommended). That’s not very secure, but talk about easy access!
This article will explore both sides of the security spectrum to help you find the balance. Stick to solid cybersecurity practices, and you’ll be fine.
Now, most of the problems people run into with crypto tend to fall into a few key categories:
Scams: We’ve all heard the saying: if it sounds too good to be true, it probably is. That applies big time in the crypto world. Don’t get suckered into chasing crazy returns or trusting sketchy strangers online. Keep your greed in check, and you’ll already be ahead of the game.
Centralization: This one’s a classic. When you leave your digital assets sitting on an exchange, you’re essentially trusting someone else to hold your money. If that exchange gets hacked or goes under, well, there goes your crypto. That’s why self-custody is so important, it’s the only way you can truly have full control over your funds.
Lost Private Keys/Seed Phrase: This is the #1 golden rule of self-custody: Never lose your recovery phrase! Treat it like the treasure map to your fortune and store it somewhere safe, secret, and offline. If that phrase gets lost, no treasure hunter in the world can recover it for you. A big chunk of this article will focus on making sure you lock down that all-important phrase properly.
Viruses and Malware: If you’re storing your seed phrases on your computer or, even worse, in a cloud service like Google Drive or iCloud, you are asking for trouble. Hackers love nothing more than rummaging through your files, looking for those precious recovery phrases and private keys. There is an endless list of viruses and malware that can search the files on your computer, so storing private keys/seed phrases on a computer isn’t the safest option. Even if you have good anti-virus software, remember that hackers are almost always one step ahead of protection software.