How you choose to store your assets is one of the most important decisions you’ll make when you step into the Web3 world. Pick right, and you’ll be able to grow your wealth, interact with blockchain services, and transact with other people without feeling like it’s a total gamble. You’ll also gain something pretty rare to come by in the blockchain space: peace of mind.
However, if you rush the process, get complacent, or simply don’t put any thought into your storage strategy, then you’re lining yourself up for being one of the next cautionary tales people tell on Reddit. Don’t let that be you.
In this quick guide, we will share what a secure setup really looks like when securing your digital assets, as well as some classic mistakes to watch out for.
Start With a Safe Environment
First things first, you need to take a closer look at the device you use every day. If that’s not safe, then nothing else will be either. If your phone or laptop is compromised, perhaps by malware or a keylogger, your wallet will be indirectly compromised too.
The same goes for any operating system you use, or even an application that’s become outdated. If you’re actively accessing your crypto assets on a device, you absolutely need to ensure the environment is safe and that you aren’t unknowingly putting your security at risk.
The safest play is to thoroughly clean up the environment, such as removing any unwanted apps, keeping your OS and software updated, and removing any browser extensions that track or manipulate activity in the background. Of course, this also means you should never access your crypto accounts while using public Wi-Fi.
Pick a Wallet Setup That Matches Your Risk Level
The crypto wallet you decide to use has huge ramifications on how much risk you’re exposed to when storing, managing, or transferring your coins. If you use a hot wallet (one that’s always connected to the internet), you are naturally more exposed to hacking attempts as your assets are online.
Cold wallets offer much greater protection because your keys are kept offline, but they aren’t foolproof either. Aside from the extra verification steps you need to complete every time you interact with the blockchain, you also need the discipline to keep your device safe, up to date, and your recovery details secure.
There’s long been a debate over hot vs cold wallets, but the best strategy isn’t one or the other. It’s a mixture of both. Most Web3 veterans keep a small amount in a hot wallet for convenience, but the bulk of their holdings are locked away in a cold setup for long-term storage.
The real danger isn’t choosing the wrong wallet, but in treating all your assets the same, no matter how much you hold or how often you move them.
Protect Your Keys the Smart Way
Your recovery phrase controls everything. Whoever holds it has full access to your account and can send your assets wherever they please. It’s absolutely paramount that this stays protected, which is why you should never store it digitally.
Many newcomers make the mistake of taking a screenshot of their phrase, writing it down in a note-taking app, or saving it on a file-sharing platform like Google Drive.
Instead, it’s a good idea to write down your phrase physically, either on a piece of paper or on thin metal. Doing a backup like this means the only way you can be exposed is if someone ends up with the physical document, which is why many people choose to store them in a safe or a deposit box.
However you decide to store it, just make sure it’s reachable in an emergency. You may also want to keep multiple physical backups in different locations, just in case of an event like a fire that would likely destroy your backups.
Safe Habits Every Transaction Needs
Your crypto assets are never more at risk than when you’re making a transaction. Not only are you logging in and accessing your wallet, but you’re also signing and authorizing a transaction for funds to leave your account. Just one mistake here, and it could spell disaster.
As you would expect, most losses here occur for two main reasons. Rushing and complacency. Maybe you’ve seen a big trading opportunity, and you want to send your funds to a DEX to capitalize on it. Or perhaps you’re so used to interacting with your wallet that you get careless. Both of these scenarios create situations where mistakes and excessive risk-taking can occur.
The rule of thumb when sending transactions is always to take your time. Double and triple-check the receiving address before you confirm anything. Don’t ever assume that the details are correct. Make sure.
Also, make sure you bookmark any site you’re interacting with and always send to legitimate accounts. People go to great lengths to create fake websites, and they can fool even the most seasoned crypto pros. If something feels off, pause. Hesitation is one of the simplest security tools.
Know When to Update Your Security Setup
Your security strategy shouldn’t be something that you just set up once and then forget about. Web3 moves quickly, and new threats and vulnerabilities pop up every day. If you sit still, you make yourself more vulnerable to these new attack vectors.
With this in mind, make it a habit to review your security setup regularly. This doesn’t mean you need to overhaul everything each week, but a couple of times per year will give you a solid foundation.
Ask yourself whether the wallet you’re using is still the best fit for your holdings. Do you need to move more assets to your cold storage? Have you done all the software updates for your devices? Even something as simple as changing your passwords on exchanges can make a big difference.
You should also stay informed about what’s happening in the space. The more you know about what’s going on in Web3 and what threats are out there, the better you can protect yourself and avoid falling victim to them.
Final Word
Protecting your digital assets doesn’t need to be complex. All you need to do is put a little thought into it and stick to a routine. You can easily fall into the trap of getting caught up in how fast and exciting the whole web3 experience is. However, before you begin creating wealth in Web3, you need to establish basic security processes.
Start by cleaning your environment, choosing the best wallet setup for your requirements, protecting your recovery phrase as if your entire financial future depended upon it, and developing the everyday habits that will help you stay secure even as new threats arise.
(Photo by Shubham Dhage on Unsplash)