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Keeping your crypto secure is nobody's job but yours. Here's how to do it.

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by COINS NEWS 16 Views

I've seen a few posts recently about people either losing their seed phrase, or an unauthorized user gaining access to their seed phrase. Here is my method for keeping my seed phrase secure:

First, you need a Ledger. If you're not keeping self-custody of your coins, you're missing the point of crypto. Crypto was born out of the distrust of banking and traditional financial systems after the 2008 financial crisis and subsequent bailout. If you're letting a bank or exchange have custody of your crypto, you're giving away all of the unique properties of crypto that give it so much potential and value. Get a Ledger.

Next, your ledger will have a 24-word seed phrase. Obviously, this phrase should never be entered into any digital device, period. It should be written down on paper, in pencil (ink from a pen will run if it gets wet).

BUT, what if someone breaks into your house and steals the piece of paper with your seed phrase written on it? What if your house burns down? These concerns (and others) are why you don't write your entire seed phrase on one piece of paper. You write parts of your seed phrase on three separate pieces of paper. Here's what you do:

  • Paper slip #1 = words 1-16
  • Paper slip #2 = words 9-24
  • Paper slip #3 = words 1-8 and 17-24

Now, the complete seed phrase is readable with any two of these pieces. So for example, if paper #1 burns up in a fire, you can recreate it with the data written on papers #2 and #3. If paper #3 is stolen, the thief only has 16 of your 24 words. They will not be able to gain access to your wallet with only 16 words.

You might ask, "what if all three pieces are stolen, or burn up in a fire?" That's why you keep all three pieces in different locations. I keep my Paper #1 stored safely on my property. Papers #2 and #3 I've given to two different people whom I trust with my life. They keep the paper I gave to each of them in their own secure locations.

If one of the papers is ever lost or destroyed, I can simply rebuild it using the other two papers. The two people I gave the papers to also know who has the other paper, so even if I get hit by a bus tomorrow, they could get together and recover my crypto, and figure out what to do with it. It wouldn't be lost forever just because I've been smooshed by a bus.

True, the other two people could conspire against me and recreate my seed phrase using the papers I gave them and steal my crypto. That's why you need to give them to people that you TRUST. Not only trust in terms that you don't think they would rip you off, but also trustworthy in the sense that you trust them to store your paper responsibly and not lose it.

Before I started investing in crypto, I researched all this stuff. To me, crypto was never going to "go mainstream" if a flood, theft, or fire could wipe out someone's entire holdings. I wasn't interested in crypto unless I could solve the problem of redundant and secure self-custody. To me, this "three-paper strategy" solves the issue of secure self-custody reliably enough that I'm confident that my crypto is as safe as the fiat in my bank (maybe moreso).

Don't lose your hard-earned money because of lazy security practices. Crypto is for the big kids. There's nobody babysitting your crypto and making sure bad people don't take it. There's nobody keeping track of it to make sure you don't lose it. You need to take responsibility for your own crypto, and the three-paper strategy is a great way to achieve that.

submitted by /u/neocamel
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