Custodial Comforts in Crypto Can Be Dangerous

in LeoFinance3 years ago

Hey Jessavers

Having been around these here parts for going on five years, I've made my fair share of fuck ups and mistakes. I lost a tonne of money and will continue to do so as I learn how to be my own bank.

  • No one said it was going to be easy,
  • No one said it was going to be fun
  • No one said you're not going to lose money

Taking this level of personal responsibility means you have to be vigilant, and you cannot take anything for granted. You need to constantly learn about new ways your security can be improved, constantly check your keys are in order and manage everything yourself.

Sure, you can start to find investment services like Unchained Capital and Casa that can help you safely store your keys, but not everyone has that much Bitcoin or that much money to put into Bitcoin yet. So those services may be a stretch for many.

I can totally see the reason for not wanting to manage your money because you're a paper handed noob that's going to get rekt, but some people are not technically ready to handle it. It comes with time; as I said, it took me five years to get my security together, and I still have additional layers to add.

custody-dangers.png

Custodial services for saving

We've all been lulled into a false sense of security as we use the fiat banking system. We are used to 3rd parties assuming liability and for us to never have to consider our security. This leads to us never developing the skills to secure our own assets and become slaves to these services.

Having been hacked and losing 0.1 BTC on an exchange, I know painfully well how little these companies care about you or your funds. They hide behind a grey area where they are not banks but want to custody your crypto; it's a grey area you don't want to play in, especially as the value you hold on these service increases.

As you give over responsibility, you reduce scepticism, you lower your guard, and you leave yourself open to attacks. I recently received an SMS from a phishing scam; somehow, they got my data and figured out that I use a certain exchange, and then SMS'd me.

The moment I saw the text, I laughed and took a screen shot before deleting it, but others who don't have a well-calibrated bullshit detector can easily fall for these scams.

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Luno phishing scam

Take ownership of your assets

Bitcoin is the first time anyone can take custody of their bearer assets; it's a powerful statement and worth the cost, in my opinion. If you still have a fiat mindset, I get it you want to sell for more fiat, keep it on an exchange and shit coin if you want.

I am not talking to those people; I am talking to those who actually want to see Bitcoin amplify their wealth and give them a chance at building their future. Those with a low time preference and are open to the journey Bitcoin provides.

To those I say,

  • start looking at cold storage,
  • start learning how to set up custodial wallets
  • start looking into setting up an Xpub
  • start looking into securing your seed phrases correctly
  • start looking at splitting your Bitcoin across multiple wallets

This is your time, your labour and your future purchasing power you're putting on the line, so why spare an expense on making sure you have the best security you can find.

Don't say you weren't warned! Leave your money on exchanges, and you leave an opportunity for your future self to enjoy being poor!

Have your say

What do you good people of HIVE think?

So have at it, my Jessies! If you don't have something to comment, "I am a Jessie."

Let's connect

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All about the 2FA - SIM swaps are also a silent attack vector but like you say, custody of corn was never going to be easy.

I've been looking at ways to upgrade my cold storage Coin Bureau style. But he does insist on pen and paper still, those titanium plate crypto tags are probably the best bet in case of a fire or flood!

Will be diving in next week to this and naturally do a blog about it!

As I secure more bags I do want to lock them up into multi sigs and then do the cold bits steel storage but my forever HODL isn’t that big yet! But I need to make plans for once I do get there!

I also set a custodial lightning wallet was an absolute bloody nightmare but now that is running I want to use that as my every day BTC wallet since you can do on and off chain with it

And with exchanges supporting lightning and LIFI rolling out it’s going to be vital

Exchanges are going to need to up their it interest rates if they want to keep liquidity because if your coins are appreciating at higher than 4% for example then 4% isn’t exactly enough to take the risk of leaving a lot of liquidity with them

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I'm making plans already for the cold storage so I'm fully prepped to dump the forever HODL stash away for 10 years.

Loving the sound of those lightning wallets, hopefully they can make them a lot easier to navigate but I imagine once you get set up, you are over the worst of it and the rest is plain sailing.

Agree about the exchanges, 4%-6% on BTC doesn't seem like it's worth it if the asset has been going up 200% on average each year and you have other faucets that you can use to increase your sats holdings anyway which you can then lump in to your self-custodied wallet...

All of those tips are great. I haven't really started using cold storage yet since most of my funds are currently not in crypto. Its to be expected that leaving your crypto in the hands of an exchange is dangerous because they don't even insure your loses. I will definitely have to look more into it so I have a better idea in the future.

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I think its a mindset shift so companies have already realised how profitable data is but the average consumer has not since crypto is just data they treat it as they would files on a google drive instead of like a bearer asset that holds value.

I treated it the same when I got in because it wasn't worth that much but since then BTC has more than 10x's since I got in and those same 0.01's are now worth a lot more and it gets you thinking hmmm perhaps I need more security since people are going to want this thing I own

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Only advice is to never connect to links from any SMS or email, go in directly and check for yourself if no cold wallet has been set up.

Scams notices like you reveal, I have on more than one occasion forwarded to the exchange directly onsite for their more qualified people to look into and been thanked for notification.

It's a wild world in crypto has been since it started up, also have been burned but through different methods.

@tipu curate

I don’t want people to get burned but like we have you become a quick learner and your bullshit detector is pretty quick to flare up which I think is something we should constantly have when using crypto!

I always make sure my crypto is in order that I never need prompts and I’ll go in when I want to not when you tell me too! Best is to keep small amounts there if you are keen on a quick exchange

What I have been doing now is loading up a lightning wallet with Sats so I can ping it to exchanges like Bittrex should I need to make a trade other than that funds stay with me

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Layer upon layer of security is required, perhaps tutorials. Imprinted old ways, when new technology needs new applications. Positive outcome is you control your asset in best way one is able.

thank you for your advice, have a nice day

Never click a link from an SMS has to be taught everywhere. Same applies to QR code links from untrustworthy sources. Someone less tech savvy would likely fall for that.

That was the 3rd SMS I got in the space of a week so they were really milking it and impretty sure there are people without 2FA set up that fell for it the rule of large numbers is always in your favour with scams like this

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Most of us would have been tried to be tricked with these tactics.
I received a call someone claiming to be from Visa and asked me to confirm my details so that they and enable extra security otherwise my card will be blocked.
I asked them to block it and told them I will talk to my local branch if I have any issue instead of talking to strangers on the phone.
They are so smart that they can even hack the bank’s phone number and you will see a call being coming form the actual bank number.
That’s scary 😟

WOw that is really scary and well done on calling them out on their bullshit. I am the same, I also got a call like that and they like we dont do this stuff in the branch because of COVID and I was like okay thats fine, then i'm going to go into the branch and cancel my account and close it thank you have a nice day but I dont give my info out over the phone

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thank you very much for sharing, have a good day and good mood

Take ownership of your assets

I think this is the things that we have to invest into. Not by letting someone else managing our own asset. eventought those project seems solid, most of the times they can destroy our asset in a blink of an eye

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Eduction is key I get this still nee and people still like the custodial model becuse it’s something they used to but keeping large amounts on an exchange is just dumb especially when you holding long term

I think that people are going to get hurt and then blame the company or blame Bitcoin instead of themselves! Taking personal responsibility is a mindshift few are ready for and they just have to learn the hard way

Sorry to say it but there best ways to learn is to get burned

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That phising message looks horrible, newbies in crypto would fall for it. There should be an option to punish the sender, may be report him to cybercrime. Imagine if he send that message to 1 million people and he would get at least 1% of the people and loot all of that bitcoin money.

Totally man that's exactly what I told my mom this is a numbers game it's about spending a few 1000 bucks sending out SMS's and then waiting for 1% to fall for it and you make your money back so many times over

Too many people would rather trust third parties with their money then trust themsleves and they pay the price for that trust

And unfortunately even anyone in the world can get USA number remotely by laying couple of bucks. It's that easy.

Exactly and no one checks this stuff you can just keep getting numbers and abusing that list of phone numbers you have and spam them until that number gets shut down and then repeat it with another number

My one concern is HOW they get the numbers of customers 😱 that to me is the scary part! Your data is just never safe with 3rd parties

Oh god yeah, same with emails. I often get randomly emails and sometimes phising links. We never know who is selling our data if we signup on amy website with our email id :/

Oh for sure, I wish we didn’t have to pass data on like if we could just have like a meta mask hive keychain for everything it would make lofe so much easier abs less spammy but now you got to force my email or phone number in everywhere

I am constantly unsubscribing from mails I never signed up to or getting calls abs SMS’s from companies I don’t care about and have never used

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