A cryptocurrency wallet is an app or a physical wallet like a USB stick, that stores your wallet private keys, thus keeping your crypto safe and secure. These keys are strings of complicated letters and numbers allowing you to encrypt and decrypt whenever you’re making crypto transactions.
With the increasing usage of crypto wallets and cryptocurrency, the risks of hacks and bad actors stealing your funds are also increasing. Only in July this year, Crypto traders lost $303 million worth of digital assets in exploits and hacker attacks. Due to a rise in hacking attempts, crypto users should start taking extra safety precautions.
Diversify Your Assets
Don't put all your eggs in one basket and diversify your assets. Even an innocent mistake can cause a loss of thousands of dollars. Use multiple wallets for multiple services:
• Investments
• NFTs
• Savings
• DeFi
• Hot Wallet
• Cold Wallet
The more you diversify your assets, the lower your overall risk ratio becomes.
Always Scan Smart Contracts
Before interacting with any new smart contract, scan it to find its vulnerabilities. Many such tools are available which allow you to look deeply through a smart contract. One such tool is the Scanner by De.Fi.
It only takes a few minutes to check if the contract has a blacklist or it's missing liquidity, has transfer limits, high buy and sell fees or non open-course contracts. To do that, simple go to De.Fi ❯ Scanner ❯ Input the contract address ❯ See the result.
Use Multi-Signature Wallets
One of the best option to secure your assets is to use a cold hardware wallet like a Ledger. If you are a newbie or for some reason you can't afford a hardware wallet, then you can always use a smart contract multi-sig wallet like Safe.
Multi-sig wallets are growing in reputation as they allow you to add multiple signers. So whenever you try to do any transaction from your smart contract wallet, you will need the permission from your attached wallets to execute the transaction, thus adding an extra layer of security to protect your assets.
Limit Permissions
Granting maximum or unlimited permissions can leave you vulnerable to hacks. If you provide unlimited permission to any smart contract to use your assets, the people behind the smart contract can always rug pull or hackers can steal your assets. It's crucial to provide only the minimum necessary permissions to smart contracts.
Always input the amount manually instead of choosing maximum or default.
Revoke Permissions
Make the process of revoking permissions a part of your weekly or a monthly routine. Revoking permissions means you are restricting a smart contract from using your assets without your permission. Use great tools like Revoke.Cash or De.Fi to revoke permissions.
It costs some gas to revoke permissions but your security costs much more.
Remember, while DeFi presents many incredible financial opportunities, it also requires individual responsibility. Stay vigilant, do your due diligence, and enjoy the decentralized financial revolution securely.
