How do I keep my crypto wallet safe?

With traditional finance, people rely on their banks to do most of the heavy lifting in keeping their funds safe. With blockchain, there are two options when it comes to security:

  1. Custodial products and wallets use a similar model as banks, storing and safekeeping your assets.

  2. Self-custody products and wallets give you total control over your assets, along with the responsibility to keep your wallets and funds secure.

Every self-custody wallet also has a Recovery Phrase (sometimes also known as a private key or mnemonic/seed phrase). No matter what it’s called, these all refer to the same thing: the master password to your wallet. As a personal message from us to you, please never, ever, ever share your Recovery Phrase with anyone. This phrase is the key to move crypto in and out of your wallet.

Anyone who has a wallet’s Recovery Phrase has complete control over that wallet. So whoever gets ahold of your Recovery Phrase can operate your account as easily as you can. And chances are they won’t take this opportunity to add funds to your account balance.

Your Recovery Phrase is a random string of words in a specific order that’s automatically generated when you create your wallet. If you get locked out of your wallet, your Recovery Phrase (the right words in the correct order) will get you back in. Even if you lose the device your wallet lives on, if you have your Recovery Phrase, you can use it to restore––that is, get back into––that wallet on another device and regain access to your crypto.

Misplacing your Recovery Phrase is a BIG DEAL. If you lose it, there is no ‘Reset your Recovery Phrase’ option.

So, you probably understand now that it’s essential to keep your Recovery Phrase safe. Although it might seem like a good idea, don’t put your Recovery Phrase in your phone’s notes app, don’t email or text it to yourself, and don’t screenshot it. If anyone got access to your notes, messages, or files, they would get the master key to your crypto. 

It’s a better idea to keep your Recovery Phrase in a protected space like a password manager, write it down on a piece of paper (or several pieces), and store it somewhere safe in case your phone gets lost, stolen, hacked, or it breaks. It’s a low-fi solution for high-fi security, but it could save your ass(ets).

It might seem like we’re overstating things here, but if you lose your Recovery Phrase, you lose your crypto. So keeping your wallet safe is your first priority.

Next Lesson: What are smart contracts?
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