Your Handbook for Everyday Security

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This series of articles is based on a handbook used as an outline for cybersecurity courses, viewed from a user perspective. The handbook, or these articles, is copyrighted by Vasco F. Gonçalves, working for SDNC sàrl.

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Understanding Crypto Wallets and Protection

Software Wallets vs. Hardware Wallets

1. Software Wallets:
   • Definition: Software wallets are applications or digital platforms that store cryptocurrency keys on devices like smartphones, computers, or online services.
   • Example: Coinbase Wallet, Exodus, or MyEtherWallet are software-based options.
   • Accessibility: Convenient for frequent transactions but might be more susceptible to online security threats.
2. Hardware Wallets:
   • Definition: Hardware wallets are physical devices specifically designed to store cryptocurrency keys offline, offering enhanced security.
   • Example: Ledger Nano S, Trezor, or KeepKey are popular hardware wallet choices.
   • Security Emphasis: Designed to keep keys isolated from internet-connected devices, providing enhanced protection against online threats.

Setup Steps for Wallets

Software Wallet Setup:

• Download and Installation: Install the wallet application on your device from a trusted source.
• Create a Wallet: Generate a new wallet within the application, following the setup prompts to create keys and backup phrases.

Hardware Wallet Setup*:

• Device Initialization: Unbox and initialize the hardware wallet according to the manufacturer’s instructions.
• Generate Backup Seed: Create a backup seed phrase (recovery phrase) during the setup process. This phrase is critical for recovering the wallet if the device is lost or damaged.

Backup Phrases and Recovery

• Seed Phrase Importance: The backup seed phrase generated during wallet setup is crucial. It serves as the master key to restore access to the wallet if the device is lost, stolen, or damaged.
• Secure Backup: Safeguard the seed phrase offline in multiple secure locations, ensuring it’s not accessible to unauthorized individuals.

Best Practices

Regular Updates and Security: Keep software wallets updated and practice caution while interacting with cryptocurrency-related services or platforms.

Offline Storage: Store backup phrases or recovery seeds securely offline, away from digital threats like hacking or malware.

Exchange Security Measures

Two-Factor Authentication (2FA)

• 2FA Implementation: Enable two-factor authentication on cryptocurrency exchange platforms for an additional layer of security.
  • Example: Use authenticator apps like Google Authenticator or hardware keys for 2FA setup on exchanges.

Whitelisting Addresses

• Address Whitelisting: Some exchanges offer the option to whitelist withdrawal addresses.
  • Setup Process: Register specific cryptocurrency wallet addresses where funds can be withdrawn. Any other withdrawal attempt to an unlisted address gets rejected.

Avoiding Scams and Phishing

• Scam Awareness: Be cautious of phishing attempts, fraudulent schemes, and fake exchanges impersonating legitimate platforms.
  • Vigilance: Double-check website URLs, avoid clicking suspicious links, and verify the authenticity of communication from exchanges.

Self-Custody Options

• Cold Storage and Hardware Wallets: Consider moving cryptocurrency assets from exchanges to self-custody solutions for added security.
  • Cold Storage: Transfer funds to hardware wallets or offline storage solutions for enhanced protection against online threats.

Best Practices for Exchange Security

• Regular Security Audits: Periodically review security settings, account activities, and access permissions on exchange platforms.
• Education and Research: Stay informed about the latest security practices, potential scams, and evolving threats within the cryptocurrency space.

Risk Mitigation and Self-Custody

• Risk Diversification: Spread cryptocurrency holdings across different wallets or platforms to mitigate potential risks associated with a single point of failure.
• Security Hygiene: Practice robust security measures, such as strong passwords, device security updates, and cautious engagement with unknown or suspicious entities.

Anti-Malware and Patching

Anti-Malware Protection

• Antivirus and Anti-Malware Software: Install reputable antivirus and anti-malware software on devices used for cryptocurrency transactions.
  • Routine Scans: Schedule regular scans to detect and remove potential threats from the system.

Operating System and Application Updates

Never forget to do updates – everyday, even if the system does it automatically, check them if it was done.