Security implications for self-custody of crypto

Self-custody of cryptocurrencies gives users complete control over their assets, but it comes with significant responsibilities and challenges. Let's explore the key security issues people face.

1. Private Key Management

Private keys are essential for accessing crypto holdings. If lost or stolen, recovery is nearly impossible. Poorly managed keys expose users to significant risks and are responsible for the majority of lost crypto. For physical storage of seed phrases or private keys, physical theft or destruction also poses a significant risk. Even a simple oversight, like forgetting a password, can result in permanent loss. A perfect example is James Howells from the UK who threw away his hard drive with crypto that is now worth millions: BBC News.

2. Phishing Attacks

Phishing is a common cyber threat where attackers trick users into revealing their keys or passwords. Fake websites and email scams are prevalent in the crypto space. Please never give up your private key or seed phrase to any company or group other than your cold wallet provider.

3. Device Vulnerabilities

Using infected or compromised devices for crypto transactions can lead to key theft. Malware, keyloggers, and other cyber threats are constant risks. Ensure that your apps and software are always kept up to date.

4. Lack of Backup Plans

Without proper backups, recovery becomes impossible if primary access methods fail. As mentioned, failing to securely store seed phrases or backup keys is a common oversight.

Mitigating Risks

In summary, some simple steps can be taken to safeguard your crypto:

• Use secure devices: Ensure your hardware and software are updated.
• Beware of phishing: Double-check URLs and avoid clicking on unsolicited links.
• Backup and encrypt: Store backups in multiple secure locations.

Taking a proactive approach to security can protect your assets and provide peace of mind.