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Security & Best Practices

30 minutes Difficulty: Intermediate 20 Knowledge Points

Bitcoin Security: Your Responsibility

With Bitcoin, you are your own bank. This brings incredible freedom, but also responsibility. There's no customer service to call if you lose your keys or fall for a scam.

⚠️ Critical Reality:

Bitcoin transactions are irreversible. If you send Bitcoin to the wrong address, it's gone. If someone steals your private keys, your Bitcoin is gone. There are no chargebacks, no account recovery, no password resets.

The good news? Following proven security practices makes Bitcoin extremely safe. This module will teach you how.

Security Levels for Different Amounts

Match your security measures to your Bitcoin holdings:

🟡
Beginner Level
$0 - $1,000
  • ✅ Use a reputable mobile wallet (BlueWallet, Muun)
  • ✅ Write down seed phrase on paper
  • ✅ Use PIN/biometric lock on phone
  • ✅ Back up seed phrase in safe place
  • ⚠️ Don't store large amounts on exchanges
🟠
Intermediate Level
$1,000 - $10,000
  • ✅ Use desktop wallet (Electrum, Sparrow)
  • ✅ Multiple seed phrase backups (different locations)
  • ✅ Strong computer security (antivirus, firewall)
  • ✅ Consider BIP39 passphrase (25th word)
  • ✅ Test recovery process
  • ⚠️ Never store seed phrase digitally
🟢
Advanced Level
$10,000+
  • ✅ Hardware wallet (Ledger, Trezor, Coldcard)
  • ✅ Multi-signature setup (2-of-3 or 3-of-5)
  • ✅ Metal backup plates for seed phrases
  • ✅ Geographic distribution of backups
  • ✅ Inheritance planning
  • ✅ Consider professional custody solutions
  • ⚠️ NEVER enter seed phrase on any computer

Common Threats & How to Avoid Them

🎣 Phishing Scams

Fake websites, emails, or messages trying to steal your credentials or seed phrase.

Protection:

  • Bookmark official wallet/exchange sites
  • Double-check URLs (metamask.io ≠ metamask.com)
  • Never click links in unsolicited emails
  • No legitimate service will EVER ask for your seed phrase
🦠 Malware & Keyloggers

Malicious software that steals passwords, seed phrases, or Bitcoin directly.

Protection:

  • Keep operating system and software updated
  • Use reputable antivirus software
  • Only download wallets from official sources
  • Use hardware wallet for large amounts
  • Never enter seed phrase on computer (use hardware wallet)
📱 SIM Swap Attacks

Attackers port your phone number to gain access to 2FA codes.

Protection:

  • NEVER use SMS for 2FA on Bitcoin/crypto accounts
  • Use authenticator apps (Google Authenticator, Authy)
  • Use hardware security keys (YubiKey)
  • Add PIN protection to mobile carrier account
📋 Clipboard Hijacking

Malware that replaces Bitcoin addresses you copy with attacker's address.

Protection:

  • ALWAYS verify first and last characters of address before sending
  • Use QR codes when possible
  • Send small test transaction first for large amounts
  • Keep devices clean of malware

✅ Security Best Practices Checklist

Essential Security Measures

Seed Phrase Security
  • Write on paper/metal, never digital
  • Store in multiple secure locations
  • Never share with anyone
  • Test recovery process
  • Consider passphrase (25th word)
Transaction Safety
  • Verify addresses character by character
  • Send test transaction first
  • Double-check amount before sending
  • Wait for confirmations
  • Use appropriate fee level
Device Security
  • Keep OS and apps updated
  • Use strong passwords/biometrics
  • Enable device encryption
  • Install only from official sources
  • Regular malware scans
Privacy
  • Don't post holdings publicly
  • Use new address for each transaction
  • Be careful with KYC information
  • Consider CoinJoin for privacy
  • Use VPN/Tor when possible

Emergency Scenarios & Recovery

Lost Phone/Computer

✅ If you have your seed phrase, you can recover your wallet on a new device. This is why backup is critical!

Lost Seed Phrase

⚠️ If you still have access to your wallet, immediately send Bitcoin to a new wallet with properly backed up seed phrase.

Sent to Wrong Address

❌ Bitcoin transactions are irreversible. If you sent to wrong address, funds are likely lost forever. Always verify addresses!

Hardware Wallet Broken

✅ Buy new hardware wallet, restore using seed phrase. Your Bitcoin is on the blockchain, not the device!

👨‍👩‍👧‍👦 Inheritance Planning

If something happens to you, will your family be able to access your Bitcoin?

Plan Ahead:

  • Consider using a multisig wallet (requires multiple keys to spend)
  • Store instructions with your seed phrase backups
  • Educate trusted family members on Bitcoin basics
  • Consider professional inheritance solutions (Casa, Unchained)
  • Update your will to include Bitcoin holdings
  • Don't make it too complex - balance security with recoverability

Final Security Wisdom

Remember:

  • You are the bank - No one can help you if you lose your keys
  • Start small - Practice with small amounts first
  • Trust but verify - Verify everything yourself
  • Privacy matters - Don't advertise your holdings
  • Stay humble - Even experts make mistakes
  • Keep learning - Security practices evolve

"Not your keys, not your Bitcoin"

But with great power comes great responsibility.

Final Knowledge Check

Final Security Check

1. What is the most important security practice for Bitcoin?

Select the most critical practice:

2. What should you NEVER do with your seed phrase?

Identify the dangerous practice:

3. What's the best wallet type for storing large amounts ($10,000+)?

Choose the safest option:

4. Before sending a large Bitcoin transaction, you should:

Select the best practice:

Answer all quiz questions correctly to complete the Pragmatist!