As a crypto user who has made over 2,000 transactions across multiple blockchains over half a year, I believe I am well-suited to speak about crypto safety, particularly for non-entity, ordinary users. This article will share the most practical ways and valuable knowledge to safeguard your crypto assets.

Crypto Wallets

Let’s start with cryptocurrency wallets. On the micro level, there are two types of crypto wallets: custodial and non-custodial. The former is usually provided by centralized crypto exchanges, while the latter refers to various decentralized wallets such as browser, mobile, and hardware wallets. Both have their pros and cons. As we all know, the bankruptcy of FTX in 2022 made the biggest headline of the year; it is essential to note that using a custodial wallet from a centralized exchange can come with centralized risks, as you do not have access to the private key of your wallet and may not be able to withdraw your crypto assets at any time or place of your choosing. The good thing about storing your assets in crypto exchanges is the robust security measures to prevent hacking. When withdrawing funds from exchanges, an email verification code and the mobile authenticator’s access code are often required.

The golden rule in the blockchain world is “not your keys, not your crypto”. Using a decentralized wallet means you keep your private key and are responsible for safeguarding your assets. Still, there is no customer service to assist with requests or handle unauthorized transactions. Decentralized wallets also come with risks, such as potential fraud and attacks, so taking the best safety precautions is vital.

Multiple Wallets and Storage

It is important to spread your crypto assets across multiple wallets and use a combination of different wallets, including custodial and non-custodial wallets. This will help minimize concentration risk, but there is some takeaway, as doing so can also increase the number of mnemonic phrases, private keys, usernames, and accounts that need to be kept safe. It is essential to have a systematic way of storing these keys to mitigate this.

For example, I store my keys both physically and electronically. I write down the phrases and keys using digital documents such as Windows Notepad and Microsoft Word, then zip them into a password-protected archive file (.zip). Avoid uploading these documents to the cloud or online storage. Then, move the password-protected archive file onto a USB and an electronic device that I do not bring outside my premises. This method is a cheap version of a hardware wallet, but of course, you can simply use a hardware wallet. Hardware wallets are not the perfect solution as they have risks such as being stolen, misplaced, or damaged due to disasters such as fire, earthquakes, or tornadoes. It is essential to check and back up your keys regularly to ensure that they are safe and accessible.

Antivirus Software

Aside from our efforts to keep our assets safe, it is important to get all the help we can, if possible. One great assistant is computer antivirus software. It can help us to defend against cyber-attacks and harmful malware. Regardless of whether we use a desktop, laptop, or smartphone, we should avoid installing unverified and pirated software and applications at all costs. Unverified and pirated software may be infected with ransomware, spyware, and viruses. There is a type of hijacking malware that can secretly change crypto addresses while we are transferring funds. Additionally, be cautious of opening password-protected documents from unknown sources, as these encrypted documents can bypass antivirus detection. It is essential to sharpen our IT knowledge regarding crypto, a technology built on blockchain and the internet.

Keep Learning

Hackers are constantly learning and evolving, trying their best to scam hard-earned crypto from crypto users. Therefore, we need to keep learning to stay up-to-date with the latest tricks used by hackers. Reading the news and studying real-life cases are some of the best ways to gain knowledge about crypto. By doing so, we can gain insight into what happened behind the scenes and take note of mistakes to avoid in the future.

Ignore All DMs

One of the most common ways to lose crypto assets is by responding to direct messages (DMs) on various platforms like Twitter, Discord, Telegram, WhatsApp, etc. It may be easy to ignore and block messages from unknown people, but what if the message is from a friend or family member?

Social engineering hacks are one of the most common yet hardest-to-identify hacks. It can be challenging to tell if a DM is legitimate if it is sent by someone we know. In uncommon cases, the person we know may have been hacked and is being impersonated by the hacker. We may lower our sense of security when the message is sent by someone we know and fall for the hacker’s tricks. As mentioned, these hacks are the hardest to identify, so it is crucial to be extra cautious regarding monetary and suspicious requests, such as transferring funds, opening documents, or sending screenshots.

Do Your Own Research (DYOR)

Learning and researching when investing in cryptocurrency and its products is vital to avoid losing assets due to the lack of knowledge. If an offer seems too good to be true, it probably is. A prime example is LUNA, a cryptocurrency that enabled users to earn an unrealistic 20% APY via a staking protocol. This is significantly higher than financial products from traditional finance, which struggle to offer an 8% APY. Therefore, many people were skeptical of LUNA and even called it out when it first launched.

Verifying a product’s sustainability is important, whether centralized or decentralized. For example, a centralized exchange offering an 8% APY for staking the first $1000 within the exchange is considered reasonable as it is a common promotional campaign to attract users. Therefore, 8% can be used as a benchmark for crypto products. The higher the return rate a product offers, the higher the risk it implies. When staking in DeFi platforms, it is also crucial to learn how to check the platform’s total value locked (TVL). A platform with a higher TVL has higher liquidity and a lower possibility of causing a bank run.

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