For the 19th episode of Schooled by Breach, Adetomiwa recaps some of the best crypto safety advice she has gotten from talking to experts and writing this series.
When I say “keep your crypto safe”, I don’t just mean keeping your wallet safe from hackers. I mean ensuring that your crypto investments aren’t keeping you up at night. It’s also being confident in your decisions of what tokens to buy and having a fair understanding of what your goals are, so you’re not buying tokens blindly.
Beyond a hacker-proof wallet, crypto safety — to me — is also about knowing what type of investor you are and allowing your personality and financial goals to guide your investment decisions.
In the past 19(!) weeks, I have had some really insightful conversations with crypto industry experts and long-term enthusiasts. So, I decided that before we hit 20 episodes, it would be great to do a recap of previous episodes that double as a simple guide to help me and other crypto newbies outline ways to safeguard our crypto.
Read along for what I’ve learnt so far. I hope you find them as helpful as I have.
1. Determine what kind of crypto investor you are
My conversation with crypto content creator, Adeniyi Olowoporoku, in the first episode of Schooled by Breach revealed to me that crypto does not have to be a risky asset. Adeniyi told me that there are various use cases for crypto and determining my goals could help me decide what tokens to choose.
He noted that if my goal is to use crypto to offset currencies with high inflation rates, investing in relatively stable currencies, or in assets with low volatility (asset-backed stablecoins) might be the best starting point. Stablecoins are a type of cryptocurrency backed by a physical, stable asset, so they are not as volatile as regular cryptocurrencies. Popular ones include USDC (backed by the US dollar) and Paxos Gold (backed by gold).
Read more about Adeniyi’s tips on how to dip your foot into crypto.
+ Check out Nestcoin CEO, Yele Bademosi’s insights on why asset-backed stablecoins are best to avoid high volatility.
2. Choose the right strategy for your risk appetite
Are you a low-risk investor or a high-risk investor? Do you have enough disposable income to “try out” newer cryptocurrencies and still be okay if the market does not move in the way you were hoping? Are you at the right age (and financial stability) to be taking high-risk investments? What are my investment goals (long-term and retirement funds or fast money investments)?
These are some of the questions Manasseh Egedegbe, the Co-founder and Chief Investment Officer at Kudy Financials, advises me to ask myself before deciding where I fall on the crypto investment scale. He noted that my answers should determine how much of my investment goes into high volatility crypto investments or stablecoins.
Ultimately, Manasseh also advises that whichever way I choose, I should ensure that I research everything I put my money in — crypto, stocks and everything in between.
Read the full conversation with Manasseh here
+ Key questions to ask when doing your investment research from Finance educator, Solafunmi Sosanya.
3. Choose the right type of wallet for your needs
Once you sort out your crypto investment style, the next concern is where to store all these funds!
I spoke to Oluchi Enebeli, the founder of Web3 ladies, about some crypto storage best practices, particularly how to ensure you don’t lose access to your wallet or your crypto — which is frustrating.
Oluchi shared with me that there are two types of wallets: Cold wallets and hot wallets.
Cold wallets are similar to hard drives because you store your crypto in a physical device and can connect it to a computer application whenever you need to use it. When using a cold wallet, you absolutely need to remember your private keys because it is not connected to the internet and there is no “forgot password” option. As a solution, Oluchi suggests writing your private keys down in a safe place like a journal, or a piece of paper you can keep safe.
In contrast, hot wallets are opened and used online. They come in two types: non-custodial or custodial. Non-custodial wallets — like Metamask — are similar to cold wallets in that you have 100% autonomy and are completely in charge of your private keys. If you lose them, you have forever lost access to your wallet. However, custodial wallets manage your private keys for you. They “either encrypt it or set up some security on the backend to ensure that attackers cannot get to it”, says Oluchi. What this means is that all you need is a password and a username.
