Crypto Hygiene: Tips and Best Practices for Clean Crypto

Cryptocurrencies have revolutionized the financial landscape, offering individuals unprecedented control over their money. However, as the popularity of crypto continues to grow, so does the need for ensuring safe and secure handling of digital assets.

In May 2023, Nigerian cryptocurrency company Patricia suffered a security breach on its cryptocurrency processing platform, causing a sizeable loss of funds. Growing incidents like these underscore why crypto firms and regulators are so concerned about security. And one of the most important steps is to remind end users about crypto hygiene.

In this article, our partner covers some essential guidelines your clients should follow to use crypto safely, such as choosing the right wallet and understanding the risks associated with scams and hacks.

Which crypto wallets should your users choose?

Well, it depends on their needs. 

Users can consider a centralized exchange (CEX). These have played a key role in driving crypto adoption over the past decade—allowing anyone, anywhere to purchase crypto with a good old banking card. CEXs usually have great UX and clear guidelines, making it easy to buy, sell, and exchange crypto, especially for a beginner.

However, users technically don’t have full control over their crypto at a CEX. Instead, their assets are stored on the CEX’s wallet, which is then “owed” to them by the exchange. This is called a custodial wallet. And while this type of wallet can offer greater convenience, users could end up losing their funds if the CEX is hacked. That’s what happened to KuCoin users when it was hacked to the tune of $150M in 2020.

Suggested read: AML Cryptocurrency Regulations Around the World

Therefore, a custodial CEX could be a good choice for buying, selling, and exchanging, but when it comes to holding crypto, there are risks. Longer-term holders could consider non-custodial wallets, like Solana’s Phantom or ERC20-compatible MetaMask, which give the end user ultimate control over their wallet keys. 

Suggested read: The Future of Exchanges during Crypto Winter

In order to keep their reputation flawless, crypto exchanges should remember to comply with anti-money laundering (AML) regulations and avoid hacks. Virtual asset service providers (VASPs) should think of a reliable AML/KYC solution, anti-fraud and Travel Rule solutions.

Common mistakes to avoid

Remind your clients of the following dangers: 

1. Phishing: This is one of the most prevalent threats in the crypto world. Fraudsters often impersonate legitimate websites or services to trick users into revealing sensitive information. Therefore, users should always double-check URLs sent to them, use bookmarked links, and never share private keys or passwords with anyone. No legitimate organization will ever demand them.
2. 24-word passcodes: Many wallets generate a 12-word mnemonic phrase to serve as a backup. It’s crucial to keep this phrase secure and private. Users should avoid storing them digitally, especially in cloud storage or email accounts, as they are vulnerable to hacking.
3. Choosing the right wallet: Users should research different wallet options and choose the one that’s most reputable. This means reading community reviews, ensuring that they’ve gone through security audits, and taking other measures to ensure the wallet’s reliability.
4. Software updates: Users should regularly update their wallet software to ensure they have the latest security patches. Outdated software can expose users to vulnerabilities that malicious actors could exploit.
5. NFTs and dApps: Before interacting with NFTs and dApps, users need to first verify the authenticity of the project, the legitimacy of the creators, and exercise due diligence before making any purchases. Additionally, connecting wallets to unknown decentralized applications (dApps) can pose risks, so users should ensure that dApps have been thoroughly vetted and have a solid reputation to minimize potential security threats.

Suggested read: How to Ensure Security When Using Blockchain

Crypto offers exciting opportunities for financial freedom, but it’s essential to prioritize safety and security. By choosing the right wallet, avoiding common mistakes, being vigilant about scams, and staying informed about global crypto security trends, your clients can safeguard their assets and navigate the crypto world with confidence. In the meantime, your crypto exchange will be able to avoid hacks and regulatory fines, while keeping its reputation flawless.

Remember, taking proactive steps today will go a long way in protecting your digital wealth tomorrow.