Security when purchasing crypto

There is a lack of information on crypto.  And for those who are disconnected from the traditional banking system, the information is sparse. Our focus on financial inclusion and making sure we’re putting information into the public domain that is accessible for populations that have been traditionally left out of the wealth management industry is very important for us. When we talk about wealth management, we are referencing stock and bond markets, and other forms of wealth creation vehicles that have been used in the industry. 

Q: So with that introduction, let’s delve into the first line of questioning–– how can one invest in crypto without getting hacked?

A: There are two possible ways to invest in quick crypto without getting hacked. One way is to go the custodial route. That means you keep the coins yourself, some other entity who is much more experienced keeps it on your behalf and you benefit from the price increase. These types of services offered by providers like GBTC, PayPal, and CashApp. It just means that you don’t keep the crypto. You create an account on those platforms, which are already used for digital money transfers,  and just get an account balance, telling you how much crypto you have and anytime. And maybe sell it in time. You tell the platform to sell the cryptocurrency for you and you get your money. And then the other option is self-custody. This case, for example, to have a secure way of storing the cryptocurrency once purchased. One very easy way is to use the Apple iPhone. Why the iPhone, why not Android? Well, it’s about security and Apple, tightly controls, everything that enters the iPhone.  When you have the iPhone, every app in there has been vetted and held to a high standard. They’re not going to steal crypto because unlike, for example, Android, where you have an app in there that says what, it’s a recorder, but it’s also recording your passwords and we’ll use that password to steal your crypto. Nobody’s going to catch it and you’re in trouble, but with Apple, they’ll catch it. Oh, you said your voice recorder, how come you’re recording passwords? You cannot do that. Try again. So the iPhone is safe in that sense for crypto storage is a very, it’s a much cheaper option for that. Most people have it already. So that works. The other option is to use cold storage. What is cold storage? Cold storage is basically any solution that is disconnected from the internet and is unable or designed to not be able to connect to the internet.

So typically it’s like a phone, but it doesn’t have wifi. It doesn’t have Bluetooth, no infrared, no USB, no connection whatsoever to a computer, which means nobody can hack you because to be hacked, you first need to be connected to the internet and it’s off the internet. So you can’t be hacked. So those are the possible options.  To review, the two options are the custodial route where you leverage established applications like Cashapp, PayPal, or GBTC to purchase and store your crypto. The other option is to go the self-custody route.  That means you download a virtual wallet onto your iPhone or store the cryptocurrency in a cold storage. Examples of cold storage would be devices like Ledger or the Kobo Vault.

Q: Okay. So that’s a really good sort of like intro to how to be thinking about security. I think what we’ll have to do is really take a deeper dive in another blog post about how to really think about security and the steps you need to take when you’re buying and selling on an exchange. So with that said here’s another question for you. I heard someone lost their password and lost half a billion dollars. How can I prevent that from happening to me?

A: Okay. In all those cases, it’s typically because the person doesn’t have a backup. One of the cool things about crypto is it allows you to, make a backup copy of your crypto keys and then store them somewhere. So, we have what we call paper wallets. You can print out your backup onto a piece of paper and put that into a bank vault or into a safe place, a diary somewhere where, you know, it’s safe or you can use the iPhone solution I talked about and lock it with your fingerprint that way, you know, you’re never going to forget your fingerprint. Never. You just need to put your finger on it or unlock it for you, and you’re good to go. So those are the two solutions. Of course, people do things like putting it on cold storage and then storing away the cold storage that also works. 

The information on this website and all associated literature are for educational and informational purposes. It does not constitute a fiduciary duty or obligation between Uncut Lab and you. Please consult your financial and investment professional for your specific situation.

author

Lucas

I am the Uncut Lab resident cloud computing junkie. I help curate the written content in our Education Corner, providing engaging articles on foundational concepts in cloud computing, data analytics, machine learning, and blockchain technology. Feel free to reach out to me with questions or topics that you would like us to cover. Thanks!

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