Don't Lose Your Crypto! How to keep it safe
And so ive made some of these mistakes in the past im. Seeing lots of other people do these types of things. So in this video i want to talk about how you can avoid some of these. Keep your funds safe and some strategies on how to properly store your cryptocurrency for the long term, because if we really are on this massive shift in how we interact with the world and blockchain technology truly is a part of that bigger story. Then the last thing you want to do is lose your ticket to that rocket ship by not keeping your funds safe. So im talking about that in this video as a blockchain developer, who works this technology on a daily basis and also a crypto holder myself. So before we get into that, you know if youre around here, hey im gregory and on this channel i turn into a blockchain master. So, if thats, that youre interested in this smash that, like button down below for the youtube algorithm and subscribe to this channel, and if you want to learn how to master blockchain step by step, start to finish, then head on over to dot com forward. Slash bootcamp. To get started today, all right so lets talk about how to keep your crypto funds safe, all right and how to avoid. You know losing life changing amounts of money in crypto by making some of these mistakes so im gon na break it down to some of the top things that people do wrong and what you can do instead all right.
So the first thing is that you should never ever ever ever ever give anyone else, the private keys to your personal wallets or the seed phrases to your wallets. So let me explain what i mean by that: if youre using a cryptocurrency wallet uh, you typically have two really sensitive pieces of information. You have a private key, which corresponds to like the password for any specific given address so lets just use ethereum as an example. So if you have an ethereum wallet, maybe a meta mask and you tell people hey. This is the address that i want you to send me funds to thats safe, to give to other people because thats a representation of your public key. All right, which is kind of like your username on the blockchain, but the password to that, is essentially like your private key, all right and so thats what you never want to give to anybody else. So similarly, whenever youre setting up an uh in a wall like this, you might maybe maybe meta mask. For example, you might have something called a seed phrase which is a bunch of like you know: human readable words that you can string together and maybe even memorize thats like the password to your entire wallet and that can generate a bunch of different accounts. Okay – and you especially dont, want to give that to anybody else, because then that controls you know the password to all the wallets associated with that account.
So how are the really common ways that people are are losing money this way or what are the really common ways? Well, you see a lot of scams out there, where maybe somebody tells you that theyre part of a support team for maybe meta mask or some other uh decentralized finance application. Theres they say hey, you know we need your seed phrase or your private key in order to help you know you do something. Well, you should never ever ever give that to anybody. No one whos reputable will ever ask for that information. Well, you might see a situation where something comes up. That looks like the application that you would normally put your private key or um. You know seed phrase into maybe some spoofs, the metamask ui, or maybe they spoof it, and they ask for your password now they can control your wallet, so youll be very careful of any website that is trying to maybe spoof the ui. In this way, all right and another way is that people maybe write down this uh seed phrase, or you know, uh private key in a place where they should never store this information, maybe its some sort of like a dropbox, or maybe your apple notes, app or Whatever it is right, a place where you should never be storing this private key in plain text, because anybody who can hack the server or get access to that server could now have access to your cryptocurrency wallets as well, and one thing in particular for developers out There who are watching this channel, which is mostly who im making these videos for, is the actual private keys that they store inside their blockchain projects where theyre developing smart contracts.
So one really critical piece of advice here. Is you never want to use a wallet that youre using for developing purposes that youre actually storing real amounts of cryptocurrency in so like, if youre making smart contracts and deploying the network – and you have big gas fees in order to do that? Dont ever do that with a metamask seed phrase that you store other, you know crypto funds in or a private key that you hold. You know to actually store real funds in because theres a couple problems here. If someone gains access to your computer thats sitting there in plain text or hey, maybe you accidentally commit that private key or seed phrase to source code. Then anybody with access to that github repository will completely train your account and theres bots. Looking for the type of thing all the time so now lets talk about how people are actually storing their cryptocurrency, that has significant vulnerabilities to it and theyre losing money this way and what you can do to avoid it. So the number one thing is that theyre, leaving all their money on a cryptocurrency exchange, a centralized cryptocurrency exchange, usually just like one cryptocurrency exchange. So let me talk about what some of the downside risks here are. Well, basically, any anybody who has access to this. Could you know just completely withdraw money from your account and to their wallet and completely, you know, wipe you clean, and so how could you prevent this type of thing um? Well, ideally, you want to be withdrawing a significant amount of your funds, if not all, of your funds off of a cryptocurrency exchange, but lets just say you dont even go down that route.
All right, maybe lets say you want it all in a cryptocurrency exchange. Well, one theres, some several things you can do to actually protect this number one is to actually add some sort of two factor. Authentication to that exchange account uh. Something actually gains access to. Your account. Just has your password and they dont have the second device where they can. You know prove that theyre you and and perform actions based on your behalf, okay. So what you dont want to do, though, is have text message based two factor authentication because theres an additional risk here. Okay, one of those common risks here is sim swapping. This is basically where somebody uh calls your cell phone provider and pretends to be you and basically gets access to your sim information and pretends to be you, and now they have your password and also your two factor, authentication ability and they can do whatever they want To on your behalf, okay, so what are some other things that you can do uh to basically improve this problem? Well, you can use other two factor, authentication methods you can use like a google authenticator app or something similar that you install on your phone that actually changes a random uh authentication code like every minute or something like that or you can actually use an external hardware. Authentication device that you have to physically plug into your computer in order to authenticate that way. So in addition to that, you know, you could also spread your funds across multiple exchanges and, if youre gon na do this, then you definitely want to have different passwords.
So, even if somebody is able to you know crack your password on one exchange, they cant necessarily crack the same password on a different exchange. So that being said, all right. So if youre not going to store your funds on exchange – and i definitely recommend not storing all your funds on an exchange – maybe you want to keep some on there just for liquidity, thats fine. So what this looks like is basically withdrawing uh to a different wallet, and so this would be a wallet that you can control. So this is whats called. You know self custody where youre taking care of your own cryptocurrency, and this, of course, has the risks associated with it too, but my opinion, the risks of just leaving all your money on a centralized exchange has much bigger risks. I dont even even talk about the risks of that exchange like closing down becoming insolvent, or you know something worse, but if youre gon na take care of your own cryptocurrency and self custody, how can you do that safely? Because what you dont want to do here is just keep your entire cryptocurrency stack inside of one uh. You know hot wallet like metamask, for example, so you can kind of break down uh. You know crypto storage strategies into two camps: hot wallets and cold storage. Okay, so a lot of people want to keep funds inside of a metamask account so that they can do things like trade tokens on unisop and actually be an active participant in crypto, its okay, to keep a certain amount of money in here that you could comfortably Lose just directly inside metamask, but whats the risk here.
Basically, you could click a button. Someone could have malicious code on a website that uh, you know basically maybe have a packaged installed computer that can somehow compromise your metamask account, because all it takes is a click of a button in order to drain funds. Out of your account, okay or gain access to a private, key or a seed phrase, or something like that lets say youre putting it into the wrong ui, et cetera, et cetera. So how can you basically improve on this problem? Well, you can buy a hardware wallet. You can look at like trezor or ledger, or something like that and actually plug a physical device in your computer, that you have to have access to in order to make transactions and connect that with metamask. Okay, so that someone cant just compromise your metamask account and then drain your funds. Basically, the whole idea is removing that central point of failure, just like on a centralized exchange. You want to have you know more points of failure or upset a different way. You have to control more points in order to produce failure. You have to have two different pieces here, its the same type of situation. You have to have access to a metamask and also access to this hardware wallet in order to initiate a transaction that you didnt really want to authorize. So you know you can even take this up to the next level and create sort of complex multi signature wallets.
Where lets say, you want to custody a very large amount of cryptocurrency. Well, you can use something called a multi signature wallet that basically requires uh, multiple parties to sign it, okay, in order to to get a transaction to happen. Okay – and so you could do this with uh, where you know you have a hardware wallet, thats, a signer, you have a metamask multi designer. Maybe you have a third party thats, not on site thats, a signer to help dispense these funds. Okay. The whole idea here is just adding more points of failure, and this is this is a way you can do that for funds that you want to access on a somewhat regular basis. Okay, so what about funds that you dont want to touch for a long time? Maybe youre just like on a set and forget it type thing where you just want to send some cryptocurrency to a wallet and you dont even want to touch it well, you can do like. I was talking about before with a hardware wallet you could do with the multi signature wallet, but one way to do it is also to have complete cold storage, wallets and um. You know there are certain risks with you know the hardware wallets for sure, and you know maybe a multi signature wallet. Even so, you know with the hardware wallets, we did have some issues in the past, where people who issued hardware wallets had like a data leak on the customer information.
Now the wallets themselves – werent necessarily compromised, but they were collecting user data and that data was breached, and so, if you want to remain as anonymous as possible and also you know, keep your funds completely away from any potentially malicious code. One strategy for doing this is sending your cryptocurrency to cold storage, uh, buy a wallet or two to a wallet that has been generated. Thats, never, you know, touched a compute touched the internet before okay. This is complete cold storage, so whats one strategy for doing this. Well, you could use some sort of uh, you know software that actually generates private keys, or even you know, just new wallets, basically for cryptocurrency uh and install that onto a brand new, fresh computer. That has never touched the internet. Basically, what you could do is you could order a linux laptop like that or some other computer do a complete, fresh, install of the system which you have full control over. You know basically ensure this is going kind of like the paranoid camp, but some of this is actually worth it. If youre talking about large amounts of money but anyways, you control the entire process from start to finish, you make sure the operating system completely clean. You install a tool to generate private keys on the computer. You can actually like, take those private keys and like etch them into metal or store them in some other, really secure method. You know with that new system.
Okay and then you can actually send cryptocurrency funds to this particular wallet that was completely generated offline with the intent that its kind of a single purpose. You know one time use wallet that all thats going to happen is the one transaction to go in to deposit the cryptocurrency and the only time that youre actually going to make transactions from that particular wallet is when you send that cryptocurrency out of that wallet to Go sell it, you know, make a purchase whatever. It is, then, its just a one time: m1 timeout and the only time that wallet ever hits a hot wallet like metamask to actually sign a transaction and move the funds out is when youre ready to clean it out, and so the last thing ill say about This right so thats that last strategy is how you can like go to complete cold storage. You know with the computers totally offline, the last thing ill say with this: there are pros and cons to each of these strategies holding funds on a centralized, cryptocurrency exchange holding them in a hot wallet using a hardware wallet using cold storage. All right, so, i think the best compromise – and this is all something you have to figure out for yourself. What that compromise is based upon the amount of risk that youre willing to assume based upon the amount of money you have in crypto and compared to your own net worth yeah. I think the best compromise is finding a variety of strategies.
Okay, because the end of the day, the worst strategy really is to have a single point of failure for any of these things, and so what could that look like? Well, it could look like you know. Maybe you want to have some money on a centralized, cryptocurrency exchange, because maybe you want you know 10 25 of your portfolio to be liquid in case you know, prices crash and you want to sell it or maybe you want to just use it to pay for Things well, you can hold that on a centralized, cryptocurrency exchange, but you definitely want to have two factor authentication. Maybe you want to use multiple cryptocurrency exchanges with different passwords to try to, like you know, reduce some of that risk. That can also be beneficial if youre trying to get liquidity and you need different liquidity depths on different exchanges and then maybe you break the rest of the funds up into different places. Maybe you keep some of it with a hardware wallet, maybe use two different hardware. Wallets, maybe use a treasure, maybe use a ledger, and then you know associate those with different wallets. Maybe if you havent met a mask, you use different private keys, same thing: if youre going for cold storage, if youre talking about a significant amount of money in crypto – and you do it on a computer thats offline, then maybe you create multiple different wallets and you Store those private keys with different strategies, you know, if youre doing a physical, private keys, maybe you use different materials, you store them in different locations, all kinds of ways where you can break this up to where the whole idea is, if somebody accesses any one of These things they dont cant wipe you out completely because the last thing you want to do like i said if crypto is really taking off and we you know, are on a cusp of a massive generational shift and uh in wealth.
Last thing you want to do is lose your ticket on that rocket ship all right, so i hope you like this video, as always smash that, like button down below for the youtube algorithm subscribe to this channel, if you havent already that really helps these videos out. So that more people can learn about blockchain and if youre as fast as technology as i am, you want to get your hands dirty. How can you get started today? You know my youtube home page. You find my free courses. There theyll, like you to me courses but theyre, totally free and if you like those and you went to the next step or hey, maybe you want to take a massive shortcut entirely. I can show you how my blockchain master step by step start finish over at dap university dot com forward, slash boot camp. All right, you not to be an expert to get started today.