Level 4: Risk & Safety
Wallet Mistakes
Critical errors that lead to permanent loss of funds.
5 min read
Self-Custody Responsibility
When you control your own wallet, you are 100% responsible for its security. There's no customer support to call, no password reset option. The security practices you follow directly determine whether your funds are safe.
Critical Mistakes
Storing Seed Phrase Digitally
Why it's dangerous:
Screenshots, notes apps, email drafts, and cloud storage can all be hacked or synced to compromised devices.
How to fix:
Write seed phrase on paper (or metal) and store offline in a secure location.
Not Testing Recovery
Why it's dangerous:
Many discover their backup doesn't work only when they desperately need it.
How to fix:
Test recovering your wallet on a separate device before storing significant funds.
Single Point of Failure
Why it's dangerous:
One backup in one location can be destroyed by fire, flood, theft, or loss.
How to fix:
Keep multiple backups in geographically separate secure locations.
Approving Unknown Contracts
Why it's dangerous:
Malicious smart contracts can drain your wallet with a single approval.
How to fix:
Only interact with verified contracts. Revoke unused approvals regularly.
Using Hot Wallet for Large Amounts
Why it's dangerous:
Software wallets connected to the internet are vulnerable to malware and hacks.
How to fix:
Use hardware wallets (cold storage) for significant holdings.
Ignoring Address Verification
Why it's dangerous:
Clipboard malware can replace copied addresses with attacker addresses.
How to fix:
Always verify the full address before sending, especially first/last characters.
Seed Phrase Security
Your seed phrase is the master key to all your funds. Anyone with these words can steal everything.
- NEVER type it into any website
- NEVER share it with "support"
- NEVER store it digitally
- NEVER take a photo of it
Wallet Types
Cold Wallet (Recommended)
Hardware devices that store keys offline. Best for long-term storage.
Examples: Ledger, Trezor, Coldcard
Hot Wallet (Use Carefully)
Software wallets connected to internet. Convenient but less secure.
Examples: MetaMask, Trust Wallet, Phantom
Wallet Security Checklist
Seed phrase written on paper/metal, stored offline
Multiple backup copies in separate secure locations
Recovery tested on separate device
Hardware wallet used for significant holdings
Addresses verified before every transaction
Contract approvals reviewed and revoked when unused
Separate wallets for different purposes (trading vs holding)
Family members know how to access in emergency
What Beginners Should Remember
- Start with small amounts until you're confident with wallet security
- Test every process (sending, receiving, recovery) before using real funds
- Hardware wallets are worth the investment for any significant amount
- Paranoia is appropriate — assume anything digital can be compromised