Catching Up to Crypto

CHAPTER 19Crypto Warnings: Hackers, Scammers, and Contagion

Behind the FUD, there are legitimate concerns in this industry that you should be aware of. Aside from user error, the most serious dangers that users face on the blockchain are hackers and scammers – and these dangers are everywhere.

Hackers

Hackers are a major threat because they can compromise trusted exchanges or smart contracts even without you giving them any access to your account. If you have your money on a centralized exchange or locked up in a yield farm, staking service, or other smart contract, it will be lost if a hacker compromises that platform. This is a risk that you need to consider whenever you're storing funds on a third‐party service or locking up tokens in a smart contract. Even wallets have attack vectors that can be compromised by hackers, so keeping your funds in a cold storage hardware wallet is the best first step to improving your crypto security. A hardware wallet is a USB device that holds your keys so they are never stored anywhere online, while a hot wallet is your average mobile or browser extension wallet. Hot wallets are less secure because your keys are stored in the application, so if a hacker gains control of your computer, that hacker could also gain access to your keys.¹

If you're holding onto a significant amount of crypto, it is essential for you to learn how to use a hardware wallet. This is important because it allows you to keep the keys for your wallet in a device that ...