Basics of Crypto Security
Learn about how the risks of holding cryptocurrency are different than those of traditional investments, and how to move ahead with confidence and safety.
May 13 2021
Excited to launch 🚀 a new universal resource - all about cryptocurrency security.
Welcome to the exciting journey of owning Cryptocurrency. Start here to learn the basics about risks in the crypto landscape, and where to turn to learn more about how to keep your cryptocurrency secure.
Vault12: Keep Your Cryptocurrency Secure | Wasim Ahmad, Chief Crypto Officer youtu.be
Crypto wallets are very easy to start using in an insecure fashion.
You need to understand what a seed phrase is.
You need to understand why your seed phrase backup is the most important part of keeping your crypto safe.
The right choices about crypto security are personal and unique to each individual.
Vault12 "Learn" articles offer you understanding and insights no matter your level of experience with crypto.
What can I expect to find here?
We created this site for our friends and family who are new to cryptocurrency, and who want to learn more about how to secure their crypto funds. We hope that the next 500 million future crypto investors will also use the information presented here to make the right choices to protect their digital assets.
The world of crypto is very different from that of traditional finance - the risks of loss, theft, accidents, or even simply forgetting your access information can result in an irrecoverable loss of funds. We want to arm people with the knowledge to make the right decisions to protect themselves.
Crypto wallets are essential to have, and surprisingly easy to use - they allow you to start buying crypto quickly. BUT in order to get you to the buying stage, many "how-to" websites and wallet vendors gloss over options that you have for how to make secure choices along the way. Our guides offer the right security advice at the right time as you set up your wallet.
There are a couple of core concepts that you will need to understand about your crypto wallet along the way: What is a seed phrase? And what are the ways to back it up? (Paper is only one way, and not the most robust - yet it is often the default or the only option described).
If you are an experienced crypto enthusiast, and you want pointers on some advanced approaches to security, you may find that definitive guides simply don't exist on the internet - at least not in an accessible way. Technical tidbits from a mish-mash of timeframes and sources can be found buried deep inside forums, but it is challenging to string them together in a meaningful or reliable way. Our optional advanced articles point the way forward to explore complex topics like how to generate a seed phrase using a pair of 20-sided dice.
In publishing both introductory and advanced articles, we've brought the foundations of crypto security together as an easily-digestible collection so that you can be confident and ready to participate in this brave new world.
How do I learn enough to make responsible choices?
If you lose your keys, you can call a locksmith to open your door or car. (There are about 26,000 locksmiths in the U.S., so clearly, there is a need for this type of service!) However, if you lose the private keys or seed phrase associated with your crypto wallet, you are out of luck. Bitcoin, as well as all other major cryptocurrencies that came after it, is built upon public-key cryptography, a cryptographic system that uses pairs of keys. Public keys are used to identify blockchain addresses, which are publicly viewable, and private keys are kept secret and used for authentication and encryption. This encryption is so effective that if you lose your private keys, you would not be able to authenticate that you are the owner of the funds stored at the blockchain address, and you wouldn't be able to move or sell your cryptocurrency - your funds would effectively be "gone."
The biggest difference between the traditional financial system and the world of cryptocurrency is that with crypto, you are responsible for controlling the security of your funds - not the bank, and not the government. Because of individual variation in assets, preferences, and risks, there is no single set of security options that is right for everyone. This means that you need to choose the right layers of security to use for your situation. This site will give you the practical knowledge about security essentials that you need and will explain some of the tradeoffs that exist so that you can make the best choices for yourself.
We discuss the risks associated with holding cryptocurrency in our article "Why should I care about Security?" These risks include:
What else do I need to understand about wallets?
There are a couple of basic concepts about wallets that you will need to know or learn, especially those related to seed phrases and how to back them up. Nine out of ten crypto wallets will tell you, or strongly imply, that you should write down your seed phrase on paper. As convenient as this is, it's not the most robust approach for protecting such critical information.
With seed phrase backups and other wallet setup choices, only you can decide the right approach for choosing and setting up your crypto wallet and other digital assets, but usually the right answer lies in using multiple layers of security. The right answer for you will come from understanding the options and making informed choices.
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