Hey ladies and gents. I’ve been off the boards for a long time but I’ve still been mining. My friend just made a couple of errors with some crypto she had despite me verbally explaining things to her before, so I thought I would write some general guidelines for all those new to using cryptocurrency. This is general advice and applies more or less to every single cryptocurrency out there including Bitcoin, Ethereum, Litecoin and so forth.
• Whenever possible, try to be the only person who has access to your private keys (ie own your private keys). Having a public address is like knowing the shipping address for Amazon, you know there’s a lot of money there but you don’t have the keys to enter the building. The private keys are the access to your coins, if you give out that information anywhere on the internet your coins are as good as gone.
• As private keys are the things that control access to your money, only you should control your coins. Don’t leave them on an exchange unless actively trading. It’s very unlikely that even a lawsuit will be able to recoup the value of lost/stolen coins.
• Going back to the idea that your private keys are the keys to unlocking your coins, make sure they are backup up somewhere. Many people think their coins are actually located inside the wallet.dat file that many conventional wallets use – but the wallet.dat file just keeps the private keys. Sometimes you can encrypt the file with a password, but it is still better to keep a backup copy as you would with childhood pictures or any other important document. There are numerous threads on the forums showing a variety of ways to keep backups – everything from printing out a single copy which you keep in a safe to super paranoid distribution of encrypted files spread around the world.
• Since most hackers know that private keys are the key (pardon the pun) to getting access to your coins, they will often employ keyloggers and other malware to learn what passwords you enter. Some malware even log clipboard content and take screenshots intermittently so even using onscreen keyboards and password managers might not be safe. The most prudent course of action is just avoid clicking any link you’re not sure is 100% safe. If you can afford it, it’s wise to dedicate a separate machine for handling your wallet synchronizations that doesn’t do anything unsafe like downloading questionable torrents and surfing new websites.
• Hardware wallets are a good option if you’re willing to spend some money and like to access your wallets somewhat frequently but worry about residential theft. A hardware wallet, if fallen into the wrong hands, prevents thieves from accessing your coins as would a safe. It does not keep a backup of your private keys, however, so again make sure you can access those even if your hardware wallet is stolen.
• If you do choose to buy a hardware wallet only buy from reputable sources – preferably the vendor itself. Amazon used to be a safe place to buy from but they have been mixing their inventory recently and many people are receiving Nano and Trezor wallets that have been used or at least the box was open. Understand how seeds and wallets work before dumping all your coins into one.
• If you have any intention of sharing your coins with others in the event of injury or demise, make sure those involved know how to access the public and private keys. Making a convoluted 97 letter password is not a good idea if you’re the only one who will ever know the password.
• Blockchain transactions are for all intents and purposes irreversible. If you send money to the wrong address or put the wrong amount you’re at the mercy of the receiver to send the balance back to you. If you send to an unknown address you might as well kiss the coins goodbye.
• If you are making a purchase of an item or traded good on the forums, please check out the user’s Trust rating. If the value of the item is significant you should consider using an established escrow service. Spending just 0.5% of the cost of the transaction can save you from a world of headache. Remember that blockchain transactions are not reversible so sending to any party you are not familiar with before receiving an item is blindly trusting that person.
If you have any further suggestions or tips please recommend them and I’ll append them to my list. Hopefully this helps a few people avoid a few mistakes.