You are a cryptocurrency trader. It is equally crucial to Securely Store Your Cryptocurrency and safeguard your profits as much as you work to earn them. Most traders store their funds on centralized exchanges (CEXs) for convenience, but the past has demonstrated that there are colossal risks in using such platforms—hacks, insolvency, and regulatory seizure.
The Collapse of FTX, a former leading crypto exchange, fell apart in 2022 as a result of mismanagement and abuse of customer funds. Billions were lost by customers when withdrawals were halted overnight. This is an attestation of the value of self-custody.
The most appropriate method of having complete ownership of your trading gains is to transfer them from centralized exchanges to self-custodial products like using Ledger or MetaMask and the TradeSta Perpetual Trading DEX.
Utilize a Non-Custodial Wallet
A non-custodial wallet provides you complete ownership of the private keys so that only you can access your funds. It has two general types:
Hot Wallets (Software Wallets): MetaMask, Trust Wallet, and Rabby wallets enable you to hold your funds while being connected with DeFi platforms. These are convenient but can be hacked.
Cold Wallets (Hardware Wallets): Hardware wallets like Ledger, Trezor, and BitBox2 hold your crypto offline and provide the best possible safeguard against being hacked.
Diversify Across Wallets
Do not place all your profits in a single wallet. Consider placing different wallets for different purposes:
Trading Wallet: Small balance in a hot wallet for immediate trading needs.
Savings Wallet: Cold wallet for long-term holding.
Yield Farming Wallet: When DeFi-ing, keep a different wallet for yield farming and staking to reduce risk.
Utilize Multi-Signature Wallets
Multi-signature (multi-sig) wallets such as Gnosis Safe need more than one approval to carry out transactions. It's particularly helpful for traders who deal with large amounts or trade in teams, as it eliminates the single point of failure risk.
Tesla's Bitcoin Holdings which has Bitcoin in its treasury, is said to use multi-signature wallets to additionally secure and make it harder for one individual to access its funds.
Use Decentralized Storage for Backup
Always safely back up your seed phrases. Substitute cloud storage or unencrypted files with:
Steel backups (e.g., Billfodl, Cryptosteel)
Offline encrypted USB drives
Shamir's Secret Sharing to divide keys securely
Utilize Decentralized Finance (DeFi) for Yield & Security
Rather than leaving assets dormant, utilize DeFi protocols to increase holdings while maintaining custody:
Liquidity Pools & Staking: Providers such as Lido, Aave, or Uniswap enable yield earning while maintaining self-custody.
Decentralized Lending Protocols: In place of CEX lending, utilize on-chain alternatives such as Compound and MakerDAO.
On-chain Trading DEX's: Rather than use a centralized trading platform, utilize decentralized solutions like TradeSta.
Lock Down Your Internet & Devices
Your crypto security is as good as the devices you're using:
Use a VPN when accessing your wallets.
Activate two-factor authentication (2FA) or multi-sig for all crypto accounts.
Keep your devices updated and don't download unfamiliar files or extensions.
Stay Informed & Avoid Scams
Phishing and scams continue to evolve. Keep yourself informed with best security practices:
Check URLs before linking your wallet.
Never disclose your seed phrase to anyone.
Check smart contracts before interacting with them.
Uniswap users phishing attack where hackers fooled users in 2022 into connecting to a counterfeit Uniswap interface, emptying their wallets. Check website URLs and only use reputable sources.
In crypto, security is freedom—don't take it lightly.
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