Why Bitcoin Security Matters
Bitcoin gives you complete control over your money—no bank, no intermediary, no one who can reverse transactions or freeze your account. This is incredibly powerful, but it also means you are fully responsible for security.
Unlike a bank account where you can call customer service if something goes wrong, Bitcoin transactions are irreversible. If someone gets your private keys or tricks you into sending Bitcoin, it's gone forever.
⚠️ The Reality of Bitcoin Losses
Over $3.8 billion worth of Bitcoin was stolen in 2022 through hacks, scams, and social engineering. An estimated 20% of all Bitcoin is lost forever due to lost private keys.
This module will teach you how to avoid becoming a statistic.
Understanding Private Keys
A private key is a 256-bit number that proves ownership of Bitcoin. Think of it as the master password to your Bitcoin.
How Private Keys Work
- Private key → generates → Public key → generates → Bitcoin address
- Anyone can see your public address (like an email address)
- Only you should know your private key (like a password)
- You sign transactions with your private key to prove ownership
Private Key Example (256-bit hex):
E9873D79C6D87DC0FB6A5778633389F4453213303DA61F20BD67FC233AA33262
⚠️ This is just an example - NEVER share your real private key with anyone!
Seed Phrases: Human-Readable Private Keys
Because raw private keys are impossible to remember, wallets use seed phrases (also called recovery phrases or mnemonic phrases). These are typically 12 or 24 words.
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Example 12-word seed phrase (DO NOT USE - for illustration only)
Critical: Seed Phrase = Full Control
- Anyone with your seed phrase can steal all your Bitcoin
- There is NO customer service to call if it's compromised
- If you lose it, your Bitcoin is gone forever
- No one legitimate will EVER ask for your seed phrase
Common Attack Vectors (How You Can Lose Bitcoin)
1. Phishing Attacks
Attackers create fake websites or apps that look identical to legitimate services. When you enter your seed phrase or private key, they steal it.
How to protect yourself: Never enter your seed phrase on any website. Bookmark legitimate sites. Double-check URLs.
2. Social Engineering / Customer Support Scams
Scammers impersonate customer support and claim there's a problem with your account. They ask for your seed phrase to "verify" or "restore" your wallet.
How to protect yourself: Hang up and contact official support channels directly.
3. Malware & Keyloggers
Malicious software on your computer records your keystrokes or screenshots when you access your wallet, stealing your seed phrase or private keys.
How to protect yourself: Only download wallets from official sources. Keep antivirus updated. Use hardware wallets for large amounts.
4. SIM Swap Attacks
Attackers convince your phone carrier to transfer your number to their SIM card. They then bypass 2FA to access exchange accounts.
How to protect yourself: Use authenticator apps (not SMS) for 2FA. Enable PIN/password protection with your carrier. Use non-custodial wallets.
5. Fake Wallet Apps
Scammers publish fake wallet apps on app stores that look legitimate but are designed to steal your seed phrase when you "create" or "restore" a wallet.
How to protect yourself: Verify app developer. Check reviews carefully. Download from official website links, not search results.
Security Dojo: Spot the Scam
Test your security skills! For each scenario, identify whether it's legitimate or a scam.
Scenario 1: Email from "MetaMask Support"
You receive an email: "Your wallet has been flagged for suspicious activity. Click here and enter your seed phrase within 24 hours to verify your identity and prevent account suspension."
Scenario 2: App Store Download
You search "Bitcoin wallet" in the App Store. The top result is called "Bitcoin Wallet Pro" with 4.8 stars and 10,000 downloads. It was published 2 months ago by "Crypto Solutions LLC."
Scenario 3: Telegram Message
Someone messages you on Telegram: "Hey! I'm a moderator for Ledger. I noticed you posted about having trouble with your device. DM me your seed phrase and I'll help you troubleshoot!"
Security Skills Test
Complete all 3 activities to prove your security knowledge.
Phishing Email Detective
You receive this email. Tap each suspicious element to identify the red flags:
Your account has been suspended due to suspicious activity. To restore access, please verify your identity by clicking below:
[Verify Account Now]
Please provide your 12-word recovery phrase to confirm ownership.
Thank you,
Coinbase Security Team
Seed Phrase Security Test
Someone you trust asks to see your seed phrase. What do you say?
⚔️ Attack Defense Matching
Match each attack to its best defense:
Attacks
Best Defense
Key Takeaways
- Your seed phrase = complete control of your Bitcoin. Protect it like your life depends on it.
- No legitimate service will EVER ask for your seed phrase or private keys
- Bitcoin transactions are irreversible - there's no "customer support" to reverse theft
- Common attacks: phishing, social engineering, malware, SIM swaps, fake apps
- Write seed phrases on paper, never digitally. Store in a secure physical location.
- Always verify website URLs before entering sensitive information
- Use authenticator apps for 2FA, not SMS (which can be SIM-swapped)
- When in doubt, assume it's a scam. Legitimate services won't pressure you.