Top 4 security tips for crypto newbies
The world of Bitcoin, Cryptocurrency, and DeFi is in the ascendency, and due to its open and distributed nature, has much to offer people from all backgrounds and nationalities.
But before you start piling all of your savings into crypto, remember that a little reading and research can go a long way, and can help show how to stay safe when buying Bitcoin and other cryptocurrencies.
But we’ve done the research so that you don’t have to! Here are our top 4 security tips for crypto newbies.
Crypto Security tip 1: Choose a respected exchange
To buy cryptocurrency, you’re going to need a crypto exchange. Some exchanges, especially the centralized ones which have private owners and are run as businesses, will help you exchange your fiat money (dollars, pounds, euro etc.) to cryptocurrency.
Decentralized exchanges, or DEXes, are built on blockchains like Ethereum, and allow anyone to trade from crypto - crypto, without needing to create an account, send ID, or expose any of your private information.
There have been moments in the past where the owners of centralized exchanges have simply closed shop and run away with investor’s funds, and moments where a flaw was exposed in the code of decentralized exchanges, and they have been hacked, or the developers have carried out a rug pull scam.
To avoid this, you’ll need to choose your exchange carefully. Have a look at the top 5 exchanges on this list, which shows the exchanges that have the highest trading volume in the space. They are popular because they have been around for a long time without any serious problems, and are generally well-trusted.
For a decentralized exchange, click on the DEX tab on this page, and check out the top 5 DEXes ranked by total value locked.
Crypto security tip 2: Check, then double-check
So let’s say that you’ve managed to buy some crypto on a centralized exchange, and now, to safeguard your coins against the possibility of hacks or other exploits, you want to send them to a non-custodial wallet like Exodus, where nobody else has access to your private keys.
Now you need to send your coins to your new wallet address, using a transaction. To guarantee the security of your crypto you should always double-check the BTC address you’re sending the coins to, and also make sure that you’re sending the right asset. Don’t (for example) send Bitcoin to a Bitcoin Cash address! They are two different currencies, and your funds may be lost.
Double-checking the destination address after you have pasted it into the “send” box will ensure that you catch any typos or malware that could potentially change the address from your clipboard.
It has happened that people have copied an address from their wallet and pasted it into a Bitcoin exchange. At least, that’s what they thought they did. Instead, the malware that their computer is infected with has pasted a different address into the Bitcoin exchange, the address of a hacker. If you don’t realize that a swap has taken place and the address is different, then your coins will go to the hacker instead.
Crypto security tip 3: Never store your seed phrase digitally
So you’ve generated your new, non-custodial wallet, and now nobody can stop you from accessing or sending your funds to wherever in the world you want to send them.
Upon creating the wallet, you will be given a secret recovery phrase that is usually a set of 12 or 24 words. These words are critically important since they can be used to restore a wallet if you lose access to your computer or phone.
Do not store these phrases digitally, which also means certainly not taking a screenshot of your secret phrase, as digital products and photos on your phone can easily be hacked. Therefore providing hackers total access to your funds.
By keeping a copy of your secret phrase offline, or better still, multiple copies that can’t all be destroyed by a fire or a flood, this ensures that even if a hacker does gain access to your computer, they still won’t be able to get to your crypto.
Crypto security tip 4: Learn how to keep your funds in cold storage
You’ve figured out that your digital assets only truly belong to you when kept in a decentralised wallet, as opposed to a centralised exchange. Now what? For extra security, especially if you’re holding a large number of funds that you don’t intend to move for a long time, you can use a hardware wallet to keep your funds in “cold storage”.
Two popular devices are the Ledger Hardware Wallet, which also comes in a lite version called the Ledger Nano S, and the Trezor.
The Ledger is just like a normal USB drive, except that it has a small screen upon which you can enter your password, and monitor the security of your funds. The Trezor has a larger, touchscreen display, which makes it easier to input codes and transaction amounts.
Once your coins are locked inside the hardware wallet, they are never exposed to the online world unless you choose to send your funds back into an exchange or desktop wallet. You can also interact with smart contract platforms such as Ethereum, using participating non-custodial wallets and decentralized exchanges such as Metamask.
One last thing to remember is to watch out for phishing emails! Ledger users have been the victim of phishing attacks in the past, where users were persuaded to enter their 24-word seed phrase onto a fake ‘ledger’ website or in reply to a fake ‘ledger’ email.
Your 24-word phrase is for your eyes only! No legitimate company will ever ask for it, and if you’re aware that these scams exist, you should be able to spot a phishing attempt quite easily.
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This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.