Author: Botanix

In fact, the most difficult part of holding and managing Bitcoin is not "earning Bitcoin" but "keeping Bitcoin". If security protection is not done well from the beginning, the longer the storage time, the greater the risk of being hacked or lost. Even if you use a hardware wallet or cold wallet, it cannot guarantee 100% security, especially in the case of human error. Therefore, we have summarized as many security rules as possible in this article to help you better protect your assets.

Even for users who have been working in the Web3 field for many years, it is worth reading this material carefully. Rich experience sometimes leads to overconfidence and neglect of security details - this is a common pattern in human psychology. For novice users who are using an intuitive and friendly wallet like xVerse for the first time, just transferring money from one address to another can be a huge psychological pressure. For experienced users or developers who are accustomed to performing complex multi-asset operations, most operations will become "too simple" and thus be automated. But even the most experienced users may make seemingly trivial mistakes, such as carelessly sending funds to the wrong address. Therefore, it actually makes sense to regularly review those "seemingly insignificant" basic matters - ignoring them may lead to serious asset losses.

Avoiding Human Error with Key Rules

Some of the Bitcoin losses are not caused by hacker attacks, but by human errors: forgotten passwords, discarded hard drives, wrong addresses, etc. Such mistakes can happen even to experienced users. For example, a character is missed when pasting an address simply because of fatigue and lack of concentration, and the user may fill it in "from memory" without checking the original address. In the end, such small mistakes can lead to permanent loss of funds.

To avoid these risks, follow these simple rules:

● Be sure to check the information repeatedly for each transaction : including address, amount, etc.

● Develop and verify your mnemonic backup plan : Make sure it is not only safe and reliable, but also that you can successfully restore it in practice.

● If you feel unsure, don’t rush into it : the blockchain is open 24 hours a day, and you can verify it before sending the transaction.

● Pay attention to the compatibility of the Bitcoin address format : modern wallets generally use Bech32 addresses starting with bc1, but if someone gives you the old format (starting with 1 or 3), you can still transfer money. Just make sure your wallet supports it (the vast majority of them do).

● Reserve transaction fees : Do not transfer your entire wallet balance without leaving room for transaction fees, otherwise the transaction may not be sent (most wallets will automatically adjust the transfer amount to cover the transaction fee).

● Multi-signature is recommended for large-scale fund operations : Especially when it comes to organizational funds, the use of a multi-signature mechanism can reduce the risk of single-point private key leakage.

● Be wary of full-chain risks : If an attacker breaks into your network and you cannot confirm the attack path, your entire funds may be at risk when using software wallets or browser plug-in wallets for multi-chain assets.

● Use a “clean” device for cryptographic operations : Even if performance is lower, it is best to separate cryptographic asset operations from daily devices. Even a MacBook may have its bootloader tampered with, and even a reset cannot completely eliminate the risk.

● If the device is infected by malicious programs, it is best to replace the entire device : Even if you are a network security expert, it is difficult to be 100% sure that the device is safe after reinstalling the system.

● If you notice that the mouse cursor is shaking or jumping abnormally, do not perform any encryption-related operations on the device until you find out the cause : this may be a touchpad failure or a sign of remote control.

These seemingly simple rules and actions are actually the basic operations for every user, whether a novice or an experienced user, to avoid risks. They are worth reminding yourself from time to time, rather than ignoring them because they are "too basic". In the crypto field, there is no fund recovery mechanism like traditional banks; although users have full control over their assets, the irreversible blockchain mechanism also requires us to have extremely high concentration and self-discipline.

Social Engineering Attacks: Inducing Users to Make Mistakes and Countermeasures

Another important and common source of human error is social engineering attacks . This is a broad field that covers human error, targeted deception attacks, psychological manipulation, and many other aspects. In fact, if a multi-signature mechanism (multisig) is used, most of the problems caused by social engineering attacks can be avoided.

However, in organizational scenarios, the establishment of multi-signature operation principles is a standardized and vital security measure; but for individual users, such measures may seem too cumbersome. For example, sometimes users need to quickly purchase a certain token or Rune. In this case, if you must rely on multi-signatures and multi-signatures to confirm the transaction, it will be impractical - even if there are only two people involved in the multi-signature, if one of them is temporarily unable to operate the wallet, it will affect the entire process.

When one person manages assets alone, it actually becomes a single point of failure , even if he uses a hardware wallet. This is because social engineering attacks are very dangerous and efficient. In many cases, even if the assets have been stolen, the user may not notice it for a long time. For example: the attacker may pretend to be an acquaintance and contact you through a chat software. The other party's account looks normal, but in fact it just uses a similar nickname (for example, replacing the lowercase letter "l" with an uppercase "I" or other similar characters) to deceive the user into actively transferring money. In this case, even a hardware wallet cannot protect you-because the user personally authorized the transfer operation .

Therefore, when a friend asks you to transfer money , you should verify the other party's identity through other communication methods : such as using different chat software, making phone calls, video calls or sending text messages. Scammers are always active and continue to optimize their social engineering skills. With the development of large language models (LLM), it is no longer difficult to imitate a person's speaking style and tone, and even their voice can be easily cloned.

Impersonating a team member or organization: Another effective attack vector

Another way that social engineering attacks have a high success rate is for attackers to pretend to be members of a project team or representatives of investment institutions. These people often have carefully packaged social media accounts, and you may even find that you have many "common followers" with them. The "projects" they represent may be equipped with professional white papers, websites, Twitter accounts, and even have active Discord or Slack communities. However, all of this may be fake. With LLM and automated robots, attackers can generate content that looks professional and highly technical, and the interactions between community members may also be simulated.

In this case, the attack method may be to guide you to download files, install test browser plug-ins or extensions, or even let you log in to a system for "test purposes". This may seem reasonable in real development projects, but attackers may gain control of your device through these means. Once you run an executable file (such as .exe, .dmg) with malicious code, the attacker may continue to remotely control the device even if you reinstall the system.

Fake login prompt: taking advantage of user's operation habits

Sometimes you will find that tools like Slack frequently require you to re-login to your account through the browser, or regularly require the use of OTP secondary verification like the Atlassian platform. This situation itself is not uncommon, so users may not be alert. However, on pages involving user information submission (such as passwords, mnemonics, etc.), be sure to carefully check the browser address bar to ensure that you are accessing the official domain name.

What to do if your device is hacked?

Even if you discover that your assets have been stolen without running any malicious programs, do not continue to perform any operations on the device. When a user panics or encounters a social engineering attack, they may forget that they have authorized a program to remotely access the system, copy files or clipboard, etc. These permissions may allow attackers to indirectly obtain private keys or mnemonics. Therefore, when suspicious situations are discovered, the safest practice is to completely stop using the infected device to handle crypto assets.

Self-management and security principles

Setting up a non-custodial wallet means you become your own bank . While this is exciting because you have full control, it also means you are solely responsible for security . Here are some key principles and best practices for Bitcoin self-custody:

1. Protect your secret key (mnemonic) with your life

The mnemonic is the master key to your Bitcoin assets . If you lose it, you will no longer be able to access your assets. If someone else obtains it, they will have full control over all your funds. Please never share your mnemonic , and do not enter it on a website or app that you do not actively visit (scammers often use fake wallet pages to induce input).

When backing up, do it completely offline . Many people keep multiple copies of their mnemonics in different locations (e.g. one in a safe at home and one at a trusted relative's home) to protect against theft or fire. If you store your keys digitally, your mnemonics could be stolen if your computer is compromised - so physical offline backups are safer. Remember: no legitimate customer service or organization will ask you for your mnemonics, and any that do are scams.

2. Ensure the safety of the equipment used

If you use a mobile or computer wallet, be sure to strengthen the security of the device: enable complex passwords, keep the operating system and wallet applications updated (new versions often come with security patches), and enable disk encryption for the device. For any account or platform related to crypto assets (such as exchange logins, password managers, etc.), please enable two-step verification (2FA). Try to avoid clicking on suspicious links or downloading unidentified software. Treat the device like the door to the vault.

3. Start small and get familiar with the process

If you are a novice user, it is recommended to conduct a small trial operation first . For example, buy a small amount of Bitcoin, withdraw it to a wallet, and then try to transfer from one wallet to another to familiarize yourself with the whole process. This can help you verify whether the settings are correct and avoid losing all your funds if you are not familiar with the operation. You can also practice using mnemonics to restore your wallet (simulate with an empty wallet) to improve your self-recovery ability.

4. “Not Your Keys, Not Your Coins”: Why Self-Custody Is So Important

Although already mentioned, this principle is so important that it bears repeating. If you store your Bitcoin on an exchange or custodian, you are exposed to counterparty risk . There have been many cases in history where exchanges have been hacked, closed down, or even misappropriated customer assets. Once such incidents occur, users often find that their accounts are frozen, unable to withdraw their coins, or even lose all their funds.

When you hold your own private keys , you can completely avoid this risk. Even if all exchanges shut down tomorrow, your Bitcoin will still exist intact in the global Bitcoin network, and your wallet will still be accessible. Self-custody is the core of Bitcoin's free spirit, but it also requires you to take due security responsibilities - Bitcoin has no "forgot password" option and no customer service phone number. You are your own bank. Some investors will choose a hybrid strategy (for example, putting a portion of their assets on a large, compliant, and insured platform), but in the long run, learning and mastering self-custody is strongly encouraged by the Bitcoin community.

5. Prepare for the unexpected: backup and succession plans

In addition to daily security, you also need to consider asset backup and inheritance plans . Backup: Make sure that even if the main wallet is lost (phone is stolen, hardware wallet is damaged), you can still restore your assets through the mnemonic phrase. It is recommended to test the backup regularly to see if it is effective.

Inheritance: If you suddenly die or lose consciousness, will your family know how to retrieve your Bitcoin? This is tricky - you can't just give them the mnemonic in advance (if they don't understand its importance, they may leak or lose it). Many people use sealed letters or specify access methods and processes in their wills. The key is to leave clear instructions to avoid permanent loss of Bitcoin (millions of BTC have been permanently lost simply because the holder died or lost the key). You can consider appointing a trusted relative or using a multi-signature mechanism to develop a response plan.

Operational Security (OpSec) Best Practices

Keep private information stored offline

Your private keys and mnemonics should be stored offline whenever possible (this is why hardware wallets and paper backups are highly recommended). If you only keep them on connected devices, you greatly increase the risk of being hacked. A simple best practice is to keep large amounts of funds in cold wallets , that is, wallets that are not continuously connected to the Internet (such as hardware wallets, or a software wallet device that remains offline for a long time). Cold storage can significantly reduce the risk of remote attacks. If you perform transactions on connected devices, please be sure to pay attention to the security of the environment (for example, do not operate on public Wi-Fi unless you have additional protection measures, etc.).

Device and network security

Make your computer and phone security a top priority . Use strong, unique passwords for your devices and all crypto-related accounts , and keep all software up to date (updates often fix vulnerabilities). Use reputable antivirus/anti-malware tools, but don’t rely on them. Be wary of phishing attacks (more on that later) and never install software or browser plugins from unidentified sources , especially those claiming to be “encryption tools” — many of them are malicious. It’s recommended to use a dedicated device or system partition for crypto to isolate as much of the threat as possible.

Enable Two-Factor Authentication (2FA)

For all important Bitcoin-related accounts or trading platforms, please enable 2FA (two-factor authentication) and use an authenticator app (such as Google Authenticator, Authy, etc.). Although SMS verification codes are better than nothing, they are easily cracked by SIM card transfer attacks (SIM-swap). Authenticator apps or hardware devices (such as YubiKey) provide stronger protection. This is a critical line of defense in the event of a stolen password.

At the same time, it is recommended to use a password manager to generate and store complex passwords to avoid reusing old passwords and being hacked by hackers.

Backup and Redundancy

Although it has been mentioned before, it bears repeating: make multiple backups of your mnemonics (or private keys) and store them in different secure locations . If you use a hardware wallet, it is recommended to have a backup device in case the main wallet is damaged (the same mnemonics can be restored to a new device). You should also regularly test whether your backups are usable : for example, restore the wallet on a backup device, confirm that the balance is correct, and then erase it. Only backups that can be successfully restored when they are really needed are qualified backups.

Also pay attention to the durability of the backup : paper is easy to age and burn, many users will use stainless steel backup plates (mnemonics can be stamped or engraved) to achieve fire and water resistance, these tools can be purchased from Bitcoin security equipment vendors. Backups must be kept confidential - treat them as high-value assets .

Multisig wallet for advanced security

If you hold a large amount of Bitcoin, it is recommended to use a multi-signature wallet . This type of wallet requires multiple keys to sign together to use the funds, such as the "2-of-3" mode, which means that any two of the three keys are required to transfer funds. This means that even if one of the keys is stolen or lost, the attacker still cannot use the funds.

The multi-signature mechanism can prevent single points of failure , including the situation where the user accidentally deletes the key. You can manage multi-signature wallets through some platforms (such as Unchained Capital, Casa) or build your own solutions with Electrum and Bitcoin Core. Although multi-signature does increase the complexity of operation, it is worth it for users who hold a large amount of Bitcoin for a long time.

However, for most beginners, multi-signature may not be used for the time being, but it is very important to understand its existence and significance . If you choose to use multi-signature, please make sure that the backup process of each key is very clear, and formulate an emergency recovery plan when a key fails.

Trust the tools, but verify them

Try to use open source wallet software with a good reputation . Bitcoin culture prefers open source software because the code can be publicly reviewed and it is easier to find loopholes or backdoors. Bitcoin Core, Electrum, Sparrow, BlueWallet, etc. are all open source wallets that have been verified by time.

If you use a closed-source wallet or a niche wallet, you implicitly trust the developer not to steal your keys or data - this does not mean that there is a problem with closed-source wallets, but you should be aware of this. Similarly, when downloading wallet software or updated versions, be sure to obtain it from the official website and verify the signature (if you know how) to prevent downloading a tampered version.

The simplest way is to confirm that the official website domain name is correct and verify it from multiple sources . If you use the official app of a hardware wallet such as Trezor or Ledger, they are not as flexible as pure software wallets, but they are generally more stable and secure.

Conclusion: Security is not a one-time configuration, but a continuous habit

In the world of Bitcoin and DeFi, security is never a "set it once and forget it" thing, but a discipline that requires continuous practice. As shown in this article, the real threat to your assets is not only external hackers or high-end malware, but more often human error, overconfidence in security, or being exploited by social engineering attacks . Even experienced users may become victims of attacks due to negligence.

**True "self-custody" brings financial sovereignty, but also means higher personal responsibility. **From protecting mnemonics, ensuring device security, understanding phishing attack paths, to managing large assets with multi-signature mechanisms, every action comes with consequences. No matter how strong the technical defense is, it cannot make up for bad usage habits or lax vigilance.

Whether you are a new user or an old player who has been deeply involved in DeFi, the core concept remains unchanged: security is not a list, but a mentality. Review the basics regularly, question old assumptions, and never underestimate the imagination of attackers. In this world where transactions are irreversible and trust is minimized, the best defense strategy is rational suspicion + good operating habits + awe of responsibility .

Finally, don’t forget: smart contracts may also have vulnerabilities . So always pay attention to whether the protocol has passed a credible audit. At the same time, it is recommended that you test it with a small amount before operation, and practice in advance to be prepared .

Stay alert. Take the initiative. Defend sovereignty.