How To Keep Your Crypto Safe: Crypto Security Checklist

Can you lose crypto in a cold wallet? How to keep your crypto safe? A 10-step checklist answers these concerns. You can prevent your digital assets from being hacked or lost by following these best practices. Knowledge is the key to security.

Step 1: Choose the Right Cryptocurrency Storage

Cold storage is normally more secure than hot storage or crypto exchanges because your digital keys are offline. Therefore, cold storage is much more difficult to hack.

However, if you lose your digital key (your password or seed phrase), your cold wallet will not recover your funds, but a crypto exchange might. And even cold wallets can get hacked through social engineering attacks.

Step 2: Diversify Your Assets

Store your digital assets in more than one wallet. Never put all your eggs in one basket, that is, all of your assets into one wallet or all of your funds into the same crypto asset.

Do not invest a large amount in a single crypto asset other than Bitcoin. Bitcoin is the oldest and most reliable cryptocurrency, while the others carry a higher risk. In the past, some digital assets have failed. To lessen this risk, do not invest too much in one asset.

Step 3: Only Use Official Links

Use only official links found on the official websites of reputable companies.

Never click on any links shared on social media or sent to you by someone, even when the sender claims to represent a company.

Step 4: Look Before You Download

Before downloading a crypto app or browser extension, check how many times it has been downloaded by others. Fake apps have very few downloads.

Step 5: Use Reliable and Secure Platforms

Make sure you only use trustworthy cryptocurrency wallets, exchanges, etc. Crypto exchange rankings can be found on the Exchanges tab of CoinMarketCap.com, one of the most popular cryptocurrency aggregators.

Step 6: Keep Your Private Keys Secret

Your private keys are encoded in a phrase that contains 12, 18, or 24 English words. It is called a seed phrase, sometimes also referred to as a mnemonic phrase or a recovery phrase. Never store the seed phase on a phone or computer. Never photograph it or let cameras catch it. Only store it on paper or metal devices designed for this purpose.

Never enter your seed phrase online. Not even when a seemingly official website or an app asks you to. The official resources never ask for your secure phrase.

Step 7: Store Your Seed Phrase Safely

Keep your seed phrases and their backups in a place where they won’t be lost or damaged. Make sure your family members also know what this data is and how to keep it safe. Put it out of reach of kids or strangers.

Many people lost their digital assets just because they forgot the password, or had a child tear up the paper, or had a family member mistakenly throw the device away. 

Step 8: Always Review a Transaction

Always review any transaction before confirming it. Blockchain transactions cannot be reversed.

Use the same blockchain (network) to send and receive a transaction. For example, USDT exists on several blockchains. If you send USDT from one blockchain to an address that can only receive funds on a different blockchain, the funds might get lost. Different blockchains, like different networks, are independent. It is good practice to send a small amount as a test before sending a large amount.

When sending funds, check two things: the address and the blockchain. When sending to a private wallet on an exchange, there might be a third thing to check, called a memo. Instructions on using a memo would be available at your exchange if it requires it. 

Step 9: Understand the Risks of Smart Contracts

A Smart Contract is a piece of software that is executed on a blockchain. Most commonly, people use Smart Contracts to earn rewards with their crypto assets. However, some Smart Contracts may be fraudulent or may get hacked.

In an otherwise secure wallet, your funds can be accessed through a Smart Contract once you have authorized it.

Be sure that any Smart Contract you authorize has been security audited and comes from a reliable source.

Never authorize a transaction when a stranger asks you to. They may say that you will earn money if you do so. If you want to test a new way of earning, at least do this from a wallet that has no funds other than those you want to risk. If an offer seems too good to be true, it probably is.

Step 10: Understand How Cryptocurrencies Work

Increase your understanding of digital assets. This field is not as complex as it may seem. People just like you invented them. So they are within your power to understand. Knowledge is your best weapon and the most effective defense. When you know, you cannot be fooled or lied to.

Please share your thoughts in the comments: Did these steps make sense to you? Did you ever lose money in any of the ways mentioned? Do you know of any other ways to lose money that should be safeguarded against?