Crypto Security Best Practices

Why Crypto Security Matters

Cryptocurrency security is fundamentally different from traditional banking. When your bank account is compromised, you can often recover funds. With crypto, transactions are irreversible. Once stolen, your crypto is gone forever.

In 2024 alone, billions of dollars in cryptocurrency were stolen through hacks, scams, and phishing attacks. The good news? Most losses are preventable with proper security practices.

The Security Mindset

Assume You’re a Target

Everyone with crypto is a potential target:

• Hackers scan for vulnerable accounts
• Scammers constantly create new schemes
• Even small holdings attract criminals
• Automated attacks target everyone

Trust No One

In crypto, verify everything:

• No legitimate service asks for your private keys
• Double-check all wallet addresses
• Verify website URLs character by character
• Be skeptical of “too good to be true” offers

Account Security Fundamentals

Strong, Unique Passwords

Your password is your first line of defense:

Requirements for a strong password:

• Minimum 16 characters (longer is better)
• Mix of uppercase, lowercase, numbers, symbols
• No dictionary words or personal information
• Completely unique for each account

Password Examples:

• Bad: Crypto2024!
• Bad: MyBitcoin123
• Good: X7#mK9@vLp2$nR4&wQ8

Using a Password Manager:

• Recommended: 1Password, Bitwarden, KeePassXC
• Generates strong random passwords
• Stores all passwords securely
• Only need to remember one master password

Two-Factor Authentication (2FA)

2FA is essential - it protects you even if your password is compromised.

Types of 2FA (best to worst):

Type	Security	Convenience
Hardware Key (YubiKey)	Excellent	Low
Authenticator App	Very Good	Good
SMS	Moderate	High
Email	Low	High

Recommended authenticator apps:

• Authy (cloud backup)
• Google Authenticator
• Microsoft Authenticator

Critical: Backup your 2FA recovery codes securely offline.

Email Security

Your email is often the gateway to all your accounts:

Email security checklist:

• Use unique email for crypto only
• Enable 2FA on email account
• Use strong, unique password
• Check for breaches (haveibeenpwned.com)
• Disable email forwarding
• Review connected apps regularly

Protecting Your Exchange Accounts

Withdrawal Whitelist

Most exchanges offer withdrawal whitelisting:

• Only allow withdrawals to pre-approved addresses
• Requires 2FA or waiting period to add new addresses
• Prevents theft even if account is compromised

Enable this feature immediately on all exchanges.

Anti-Phishing Measures

Exchanges offer various anti-phishing features:

• Anti-phishing code: Custom phrase shown in emails
• Login notifications: Alerts for new logins
• Device management: See/remove authorized devices
• Login history: Review access patterns

API Key Security

If you use trading bots or portfolio trackers:

• Enable IP whitelisting
• Set minimal required permissions
• Never enable withdrawals for tracking apps
• Delete unused API keys
• Regularly rotate keys

Wallet Security

Understanding Wallet Types

Type	Convenience	Security	Best For
Exchange	High	Lower	Active trading
Hot wallet (app)	High	Medium	Daily use
Cold wallet (hardware)	Lower	High	Long-term holding
Paper wallet	Very Low	Very High	Cold storage

Hot Wallet Security

For software wallets (MetaMask, Trust Wallet):

• Download only from official sources
• Verify app signatures/hashes
• Keep software updated
• Use device with minimal other apps
• Consider dedicated device for crypto

Cold Storage Best Practices

For hardware wallets (Ledger, Trezor):

• Buy only from official manufacturers
• Verify device is sealed and untampered
• Set up in secure, private location
• Never enter seed phrase digitally
• Store seed phrase in multiple secure locations

Seed Phrase Protection

Your seed phrase is everything. Protect it:

Do:

• Write on paper or metal backup
• Store in multiple secure locations
• Consider splitting between locations
• Use fireproof/waterproof storage

Never:

• Take a photo of your seed phrase
• Store in cloud or password manager
• Enter on any website
• Share with anyone, ever
• Keep only one copy

Recognizing and Avoiding Scams

Common Scam Types

Phishing:

• Fake emails impersonating exchanges
• Fake websites with similar URLs
• Social media impersonators
• Fake support agents

Investment scams:

• Guaranteed returns promises
• “Double your crypto” schemes
• Celebrity endorsement scams
• Fake trading platforms

Social engineering:

• Romance scams
• Fake job offers
• Impersonating friends/family
• Technical support scams

Red Flags

Immediately suspicious if:

• Promises guaranteed high returns
• Creates urgency to act now
• Asks for private keys or seed phrase
• Requires upfront payment
• Contact is unsolicited
• Communication has errors/oddities
• Can’t verify identity or company

Verifying Legitimacy

Before interacting with any crypto service:

1. Check the URL: Character by character
2. Search for reviews: Multiple sources
3. Verify social media: Check official accounts
4. Contact support: Through official channels
5. Research team: Are they real people?
6. Start small: Test with minimal amount

Device Security

Computer Security

Essential measures:

• Keep operating system updated
• Use reputable antivirus software
• Enable firewall
• Don’t install unnecessary software
• Avoid pirated software
• Regular security scans

For high-value holdings:

• Consider dedicated crypto computer
• Use Linux or secure OS
• Air-gapped computer for signing

Mobile Security

Phone protection:

• Keep OS and apps updated
• Only install from official stores
• Review app permissions
• Enable screen lock (biometric + PIN)
• Enable remote wipe capability
• Don’t root/jailbreak devices

SIM swap prevention:

• Use PIN on carrier account
• Consider port freeze
• Use authenticator apps, not SMS
• Keep phone number private

Network Security

Safe practices:

• Use VPN on public networks
• Avoid public WiFi for crypto transactions
• Secure home router
• Change default passwords
• Keep router firmware updated

Operational Security (OpSec)

Privacy Considerations

What to keep private:

• Your holdings amount
• Exchange accounts used
• Wallet addresses (when possible)
• Trading strategies
• Physical location
• Personal information

Why privacy matters:

• Reduces targeting by criminals
• Protects against physical threats
• Maintains negotiating position
• Prevents social engineering

Physical Security

For significant holdings:

• Don’t discuss crypto in public
• Be cautious about home security
• Consider safe deposit box for backups
• Have emergency protocols
• Be careful at crypto events

Emergency Procedures

If You Suspect Compromise

Immediate actions:

1. Change passwords from clean device
2. Enable/reset 2FA
3. Revoke all API keys
4. Check withdrawal history
5. Contact exchange support
6. Move funds to secure wallet

If Funds Are Stolen

Steps to take:

1. Document everything (screenshots, transactions)
2. Report to exchange immediately
3. File police report
4. Report to relevant authorities (FBI IC3 in US)
5. Report to blockchain analytics firms
6. Consult legal advice for large amounts

Recovery Planning

Prepare in advance:

• Keep emergency contact list
• Document account recovery procedures
• Maintain backup 2FA codes
• Have trusted emergency contact
• Know your exchange’s support channels

Security Checklist

Basic Security (Everyone)

• Strong, unique password for each account
• 2FA enabled (authenticator app)
• Withdrawal whitelist enabled
• Anti-phishing code set
• Email secured with 2FA
• Seed phrase backed up offline
• Device security updated

Intermediate Security (Regular Traders)

• Hardware wallet for savings
• Dedicated email for crypto
• Password manager in use
• VPN for transactions
• Regular security audits
• API keys reviewed and minimal

Advanced Security (Large Holdings)

• Hardware security key (YubiKey)
• Dedicated device for crypto
• Multiple wallet distribution
• Geographic backup distribution
• Corporate structure consideration
• Professional security audit

Building Security Habits

Daily Habits

• Verify URLs before entering credentials
• Check transaction details before confirming
• Review notifications and alerts
• Be skeptical of unsolicited messages

Weekly Habits

• Review account activity
• Check connected applications
• Verify backups are accessible
• Update software and apps

Monthly Habits

• Review security settings
• Rotate passwords if needed
• Check for data breaches
• Update emergency procedures

Next Steps

1. Set Up 2FA Properly: Detailed guide
2. Choose the Right Wallet: Hot vs cold storage
3. Understand Exchange Security: Compare platforms
4. Start Trading Safely: Put knowledge into practice

Final Thoughts

Security isn’t a one-time setup - it’s an ongoing practice. The crypto space constantly evolves, and so do threats. Stay informed, stay vigilant, and never become complacent.

The time you invest in security now protects your financial future. Your future self will thank you.

Remember: In crypto, you are your own bank. Act accordingly.