Security when working with crypto. How to invest in crypto assets without putting all your funds at stake?
Why is the crypto market considered very dangerous?
The crypto industry is one of the most dangerous financial areas for inexperienced users. First off, specific hazards are posed by scammers who can virtually wait for you at every action or operation related to crypto assets. Second, interacting with many crypto services an prove unusual for a first-time user. Incorrect actions when working with wallets, vaults, exchanges can lead to the loss of funds just because the user does not know the correct algorithm for a specific operation.
All this happens primarily because beginners do not follow the basic security rules and do not understand how the crypto industry operates.
If you are just getting started with cryptocurrencies, be prepared to make mistakes, and lose your money, but you will gain valuable experience in return.
However, there is a way to minimize the number of errors and the number of lost funds, respectively. Experienced market users have long been aware of all its tricks, subtleties, and hidden features. Therefore, in this article, the Simba Storage team will drive you through the basic security rules in the crypto field, following which will help you better understand the way the cryptocurrency works and feel more confident when performing certain actions and also save a large amount of your funds.
General safety rules
We’ll start with the general security rules that every user should follow to avoid unnecessary losses.
- Check addresses carefully before transferring your funds. The simplest and most basic safety tip is staying mindful. Avoid being in a hurry when dealing with cryptocurrencies. Double-check wallet numbers while sending. For instance, the market features different blockchains, each having its own transfer network, and wallet addresses may differ from each other. Scammers using malware can further change the wallet address right while you copy and paste it for sending. Then you will send funds to a third-party address by mistake. With that in mind, you can save thousands of dollars of your capital. This is the basis of crypto security.
- You should work preferably from your PC only. Avoid downloading applications on your phone to work with cryptocurrency. Experienced traders have long identified that, for a number of reasons, PCs are the most secure devices for trading and working with wallets. Ideally, these are laptops and computers with the IOS operating system installed. Try to avoid any active work even with popular exchanges on your phone.
Most importantly, avoid interacting with wallets like Metamask on your smartphones. First, it’s less secure. Second, it does not work correctly with all crypto platforms. This can lead to unnecessary losses caused by negligence or system failure.
- Check websites for possible phishing. Phishing is a trick used by scammers to create an exact visual copy of any website. The only way to distinguish it from the original is to look at the address bar. For example, the original Simba Storage domain is “simba.storage”. And phishing services can use “slmba.storage” by changing just one letter.
You should therefore always check every character in the site name in the address bar. Do not rush to enter your data and log in to your account, for example, on the stock exchange. If the site is phishing (fake), your data will be stolen, and you can say farewell to your funds.
- Do not tell relatives how your cryptocurrency can be accessed. You should not trust even your closest ones and give away all passwords and access to your assets. In case an unforeseen situation happens, you might risk being left completely without your funds. There is plenty of such examples. The best you can share is data from wallets where 5–10% of all your Bitcoins are stored.
Storing cryptocurrency, passwords, and access data
The second conditional and probably the most important area of security for your funds is the getting your cryptocurrency properly stored. Protecting wallets and storing passwords correctly is a complete security science. Here are the basic tips:
- Get your passwords properly stored. All your data and passwords from different crypto-accounts, wallets, exchanges, and emails should be stored in electronic documents that do not have access to the Internet, as well as on paper sheets.
First off, buy yourself 2 or 3 new flash drives Create a document and store all passwords for all your important services in there. Put each flash drive in a different and most secure place. You can even use safe-deposit boxes in different countries.
Second, print or handwrite several copies of the passwords on plain A4 sheets. In this case, you will be sure that intruders will never get access to these data. Most importantly, you will always have multiple backups in case something happens to one of these.
- Use different passwords all times and in all places. Invent an algorithm for creating passwords. Never use passwords that have already been used.
- Don’t post passwords online. Your task is to ensure that your SID phrases from crypto wallets and passwords from vaults or exchanges never make it on the Internet. Do not take pictures of your access keys on your phone, do not write them on your phone in notes, do not leave them in messages on social networks or instant messengers. If an attacker gets access to your account, he can easily get your data and passwords.
- Secure email. Always create new mails for working with crypto and do not add your data (first name, last name, date of birth) to the mail address. There should be no association with you or the host country. To protect yourself to the extent possible, you can use the Protonmail mail service. Use different mails on different exchanges.
- General Bitcoin protection. Do not keep a large amount of Bitcoins at home (for example, on a hardware wallet). Avoid showing off how many Bitcoins you have or tell anyone the exact number of those you have.
- Diversify Bitcoins and cryptocurrencies. Another important and basic safety tip is getting your funds diversified. In other words, dividing your funds. You need to use at least 4 places to store your entire cryptocurrency deposit, and ideally more than 20 places. Use different decentralized platforms, banks and, of course, custodial storages such as Simba Storage.
It is worth keeping one of the parts of the funds in Simba, since the vault has an official license for storing cryptocurrency from the UAE regulator, offers the most reliable protection system, location in one of the safest jurisdictions (UAE, Switzerland, and Liechtenstein), as well as restoring access to your cryptocurrency from using the user verification procedure, even in the event of losing all access.
Be sure to choose a lot of locations in multiple countries. Keep in mind the events going on in the world. After all, if access to a certain country is closed, you can lose all your funds. You should also store your cryptocurrency only on licensed exchanges.
You need to purchase crypto first to start working with it. You also need to buy digital assets correctly. You may get scammed, and your money stolen, or you may be prosecuted in the future for buying cryptocurrencies illegally (based on the country you are in). Follow these simple tips to avoid this:
- Don’t buy Bitcoins from regular banks. You should not buy cryptocurrency and Bitcoin in services and classic banks that were not intended for this purpose originally. This may lead to your deanonymization and problems with the law further on. Unless, of course, the country you are in treats crypto with caution.
- Be vigilant in exchangers and P2P. The most basic and popular ways to buy or sell cryptocurrencies are purpose-created and personal P2P exchanges.
Illegal exchange services offer you to send your fiat currency to a specific address, and you will receive cryptocurrency in your crypto wallet in return. P2P bars extreme similarity in its functionality, except that here the exchange takes place with the person directly, and not with the service. You can find a user who needs fiat in exchange for cryptocurrency, negotiate with him and exchange directly. Perhaps even in person for cash.
Both methods are quite risky (the second one in particular). Never trust anyone and never send crypto or fiat to a stranger first. Always be careful about exchange offers from people in Telegram and work only with trusted partners.
- Legal exchangers. Where to buy cryptocurrency, then? The answer is simple! You can buy it in legal exchange services or platforms that can sell you crypto. Buy the majority of bitcoins through regulator-approved exchanges.
For example, Simba Storage offers the option of buying Bitcoin straight from a bank card on the site. The repository is fully legal, registered in three jurisdictions and has a license to perform its activities. This method is suitable for any person. You can buy Bitcoin with a bank card starting from $1000.
Another option to buy Bitcoin and cryptocurrency legally is TRES OTC. The company focuses on over-the-counter cryptocurrency exchange. It is located in the UAE and has the first license to conduct cryptocurrency transactions in this jurisdiction on a legal basis. Please note, however, that transactions are made from €100.000.
First of all, you protect yourself from deception by the exchanger or another user. Second, you can always prove the purity of your cryptocurrencies, as well as the legal ground behind their purchase. After all, the funds were exchanged through licensed companies.
Your computer security
Most of the work with cryptocurrency takes place on the computer. In this regard, the most important thing to do is to take care of its safety. So that no fraudster can hack it and steal your data and funds. What should be done?
- Don’t store anything on your PC. Your computer should be protected from viruses to the extent possible. To do this, you should use it only for its intended purpose. Avoid downloading unnecessary programs, games, or photos. Do not visit suspicious sites since these may contain be virus programs. Working with cryptocurrency requires a new separate computer that will be used only for this business. The top and safest options are Apple-produced Mac computers and laptops.
- Do not click on links in the mail, they may be scammers. Fraudsters often send out so-called phishing emails. They copy the administration appeal of the exchange or storage and ask you to submit your passwords. Doing this is strictly prohibited.
They may also leave a link to follow, for example, your account, since it “has been hacked” and your funds “are at risk”. This link contains a virus. After you follow this link, a scammer can take over your PC and steal all your confidential data. This includes SID phrases and wallet passwords.
You only should follow the links if you are sure that the letter came from the exchange/service as a result of your actions: withdrawing funds, logging into your account, etc.
- Never download crypto apps to your work computer. Downloading any desktop wallets and storing access from them on your PC is dangerous. If your device gets a strong virus, hackers can access everything that is stored on your computer. They can also log into your crypto wallet installed on your PC and take funds from there. You should therefore work only with cold and hardware wallets or be very careful with hot wallets (such as Metamask) without downloading them to your computer.
- Get a regular virus check on your computer. That’s a simple but essential tip. Use a free one or buy a paid antivirus program and check your computer regularly.
- Do not connect to public Wi-Fi. An attacker can connect to a public network, for example, in a cafe. This will enter your device through a shared connection point and may steal your sensitive data. Use only mobile Internet or password-secured home Wi-Fi connection.
- Always use 2FA wherever possible, even on Telegram. 2FA or two-factor authentication is the main tool for protecting your personal accounts. These can be a crypto exchange, storage, email, or Telegram account. You can use Google Authenticator and connect it to every service you use. From now on, every time you re-enter your password and log in, for example, to Simba Storage, a special application on your phone will have a code that is updated every 30 seconds. You need to enter it when logging into your account. It is used as an additional measure of protection against hacking. And it proves quite efficient. It is extremely difficult for fraudsters to bypass such protection.
- Write down full data for Google Authenticator recovery. If you lose access to the Google Authenticator application with all the codes on your phone (for example, change your device), it may take 1–4 months to restore your accounts on exchanges and other platforms. You can download Google Authenticator on a second phone that you don’t use all the time as an added security measure. This will serve as a backup means for you.
Crypto wallet security
In addition to the storing assets security, do not forget about one of the most popular crypto wallets — Metamask. Every novice user will work with it, so it is important to understand how to do it exactly.
- Do not authorize your Metamask on unverified sites. You should not connect to smart contracts of unverified websites and crypto platforms with your main wallet. A smart contract can prove fraudulent and will charge off all available funds from your wallet. If you want to explore new services, create a separate wallet where no funds will be stored. Otherwise, there will be a minimum number of these.
- Use multiple addresses in Metamask for different purposes. Establish a hierarchy of all your wallets. Create more than 10 or even 20 different addresses. Think about cases when to use each of them and think of a name for these. Write down the secret key from each of the addresses and get it properly stored!
Always use the tips for storing accesses, passwords and SID phrases from the previous points.
Tips for advanced users with big capital
There is also security tips and tricks for advanced users opting for maximum protection for their funds and anonymity. These tips have been elaborated on by a group of professional and experienced traders. Therefore, they most often can be useful to users with really large capitals.
- Try not to use the phone number of the CIS countries. These numbers are vulnerable to hacking and recovery by scammers. It is best to buy and use a SIM card from countries such as Switzerland or the UAE, for example. If your phone supports the e-sim function, this will be much easier.
If you are unable to purchase a SIM card abroad, buy a new SIM card and never call, text, or surf the Internet from it. Use it only to receive SMS on those resources that require 2FA or receive a code to enter your account from your phone.
- Do not text or call Whatsapp about cryptocurrencies. Whatsapp is not the messenger that offers most trust. Calls can be listened to, and messages can get “merged”. You can use Telegram, but it’s best to use signal or threema services. All your exchanges may wind up being illegal now or further on based on your jurisdiction. Do not write the addresses of your accounts on exchanges or anywhere else. It is better to work through Protonmail mail.
- Do not accept Bitcoins without verifying their source address. If you need to accept a large amount of bitcoins, it is best to order an additional check of their transparency. If they turn out to be “dirty” later on, you can be held accountable in the first place. Second, many storage services like Simba Storage or popular crypto exchanges will not accept Bitcoins involved in illegal fraud.
- Pro tips for diversifying and storing lots of bitcoins. Create one or more MEW/MetaMask addresses and a Bitcoin Wallet (decentralized), overwrite the address for manual replenishment. Do not copy, paste into notes, do not forward it anywhere. Next, buy Bitcoin through different exchanges in parts, or through exchangers (better for cash/p2p). Send 10–25% Bitcoin and Ether to these addresses. These addresses will not be associated with your other accounts. Print the passwords for these wallets on paper in two copies, laminate these and put them a Swiss bank, or under the baseboard, under the tiles, in the walls. You can engrave them on a plate and hide under metal pipes in the ground. Any of these means will have your bitcoins secured.
Do not check access to these Bitcoins until you intend to sell them. These Bitcoins can wait 20 to 30 years. You can replenish them to the address that you wrote down on paper. Do not fund this address from an account that has completed KYC. Don’t associate it with yourself.
What conclusion can be made?
All the security tips that we have run through in this article can be useful both for inexperienced users who have little capital and for professional traders with hundreds of thousands or millions of dollars of capital.
Follow the recommendations from the article, and then you can avoid many unnecessary mistakes that will cost you a lot of money. The more tips you follow, the better it will be for you and your funds. However, even if you cannot complete every item, the most basic ones will be enough to protect yourself from losing funds almost to the extent possible.
Just remember: the most important thing is getting your funds diversified and find reliable places for their storage. To minimize losses, you can store Bitcoins in Simba Storage and the storage will do all the work of keeping the funds safe for you.
Just keep in mind that you all your funds should not be stored in one place. Look for similar, alternative storage options in different countries and jurisdictions, coupled with with licenses for conducting legal activities. In this case, your Bitcoins can remain secured for many years to come.