Security in web3: how to keep crypto safe
by Maryna Trifonova, Head of Content at Jax.Network
Since Bitcoin hit a new all-time high back in November 2021, security hacks and thefts have drastically increased. With the total market capitalization sitting around $1.26 trillion at the moment of writing, crypto funds can’t help but lure all types of malicious actors. Thus, we would like to remind everyone of the basic security measures for keeping your money safe.
Types of wallets
It’s no secret that the majority of attacks are targeted at wallets, where cryptocurrencies are stored. There are several types of wallets currently available to users, including custodial, cold, and hot. Let’s see which one grants users higher security and what tradeoffs are involved.
- Custodial wallets are typically those, where your crypto is controlled and stored by a third party (custodian) via cold or hot storage. A typical example of a custodial wallet is any crypto exchange that you use for buying and selling coins, i.e. Binance, Coinbase, Huobi, etc. Major benefits of such wallets include easy access to trading and the possibility to restore a password, however, there is a tradeoff on security, as you need to trust third party’s precautionary measures so that it won’t lose your funds or block your account.
- Cold wallets allow users to store cryptos offline on a piece of hardware. Such devices can be connected to a computer and the Internet when users need to perform a transaction. For the rest of the time, crypto wallets remain offline and far away from potential crypto heists. The only way to lose funds stored in a cold wallet is to forget a recovery phrase. It makes a cold wallet the most secure way of storing cryptos, as long as you don’t forget or lose a recovery phrase. However, it’s not always convenient to use it every time you need to make a transaction.
- Hot wallets are web-based applications that offer users a way to store cryptos online, as a rule, they are available in the form of desktop and mobile apps. Such wallets also come with a recovery phrase, meaning they let users stay in charge of their cryptos. On top of that, they are convenient and easy to use. However, these advantages come at the cost of security, as they are more prone to various kinds of hacker attacks.
Safety tips for MetaMask
With the rise of web3, more people start to dive into a vivid world of DeFi, GameFi, etc, where users need to connect their wallets in order to access products and services. One of the most popular wallets at the moment is MetaMask, so we would like to share a list of tips to keep your cryptos safe.
- Store your secret recovery phrase in a safe place and never share it with anyone.
- If you have large amounts of tokens that you don’t use often, consider storing them in a separate cold wallet.
- Stay away from fake airdrops and websites.
- Create multiple addresses for different purposes.
- Don’t download apps from suspicious websites. Always use official channels.
- Don’t fall for phishing emails asking to provide your recovery phrase.
- Keep your security software up to date.
If you follow these simple security tips when using a MetaMask wallet, your cryptocurrencies should be safe and sound. In general, users lose funds due to human error and their own carelessness more often than because of a scam or hack. Therefore, just be attentive and remember that there is no such thing as too much safety.
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