In this article, we want to address a critically important topic that concerns everyone interacting with crypto. As practice shows, over time, attacks aimed at seizing users’ funds are becoming increasingly sophisticated, which is why security deserves to be treated as a standalone subject. The most important and challenging part is not earning or acquiring BTC, but keeping it safe. If you don’t take care of security from the very beginning, the longer you store your bitcoin, the higher the risk of compromise and loss. Even the use of hardware or cold wallets doesn’t always guarantee perfect security—especially considering the possibility of human error. That’s why in this section, we’ve collected as many rules as possible to help you protect your assets.

This material is also worth reading for users who have been working in web3 for a long time. Extensive experience can lead to overconfidence and a tendency to take things less seriously. This is just one of the working principles of human psychology. For a user who is interacting for the first time even with a wallet as intuitive and user-friendly as xVerse, a simple transaction of transferring assets from one address to another can be very stressful. But for a power user who is used to doing complex multi-asset actions, or for example is even a developer, most things start to feel overly simple and are performed automatically. And even the most experienced users can sometimes make seemingly trivial mistakes. For example, funds might be sent to the wrong address due to carelessness. That’s why it’s sometimes helpful to revisit things that may seem too simple to warrant attention. Ignoring them, however, can sometimes lead to the loss of funds.

Avoiding Human Mistakes and Critical Rules

Some BTC losses happen not from hacks, but from mistakes: forgetting a password, throwing away a hard drive with coins, sending to the wrong address, etc. This is the type of error that even experienced users can encounter. For example, simple fatigue can lead to inattention, where a single character in an address might be missed due to improper selection and pasting. A user might just add the missing character “from memory,” without verifying it against the original source. As a result, funds can be permanently lost due to a very simple mistake.

To avoid this, use a few simple rules:

• Double-check everything when transacting (addresses, amounts).

• Come up with a solid backup plan for storing your seed phrase, and test it in practice to make sure it’s reliable and that you remember the recovery steps from experience.

• If you ever feel unsure, don’t rush – the blockchain is open 24/7, you can always send later after verifying.

• Be careful with address formats – Bitcoin now has a newer address format (bech32 starting with bc1), which all modern wallets support, but if someone gives you an older format address (starting with 1 or 3), you can still send to it; just ensure your wallet supports it (most do).

• Keep a small cushion for fees – don’t completely empty a wallet without accounting for the transaction fee, or the transaction might not send (most wallets handle this automatically by adjusting the amount down slightly to pay the fee).

• If you are operating with large volumes of funds, especially those belonging to an organization, it is best to perform all transactions using multisig to eliminate the risk of a single key being compromised.

• Keep in mind that if an attacker gains access to any particular network, and you don’t know the exact attack vector, there is always a risk that funds across any chains may be compromised (especially when using software wallets or browser extension wallets).

• Try to use “clean” devices (smartphones, PCs) for crypto, even if their specs are significantly worse than those of second-hand ones. The ideal setup is to have separate devices for crypto and for daily use or work. In today’s world, even a MacBook can have modifications in the bootloader that persist even after a full wipe, leaving the device compromised.

• If your device has been compromised via any installation files, it’s better to replace the device entirely. Even if you are a cybersecurity specialist and somehow allowed such a breach, there’s a risk you won’t be able to ensure 100% security of the device even after a full reset and cleanup.

• If you notice strange cursor behavior on the screen—twitching, or it randomly jumping to another location—it’s best not to interact with the device for crypto purposes until the exact cause is identified. In addition to potential touchpad or mouse malfunction, this can be a sign of remote access to your device.

These are simple, foundational rules and actions that help mitigate risks any user—from beginner to professional—might face. These are the kinds of things worth reminding yourself of from time to time, rather than skipping them just because it’s faster. In crypto, no one can return funds the way a traditional bank system or legal compensation might. On the one hand, users have full control and ownership of their assets. On the other hand, the irreversible nature of blockchain technology demands a high level of attention and self-discipline.

Social engineering - pushing for mistakes and how to counter it

Another very important category of errors that can be attributed to the human factor is social engineering. This is a vast area that encompasses human errors, targeted attacks, psychological manipulation, and much more. Most of these issues can be avoided if multisig is used.

However, while in an organizational context establishing principles for working with multisig is a standard and a critical aspect of security, for an individual user such measures may be excessive. For example, a user may need to quickly purchase a certain coin or rune. In this case, using multisig with transaction signatures from multiple people is completely impractical, if only because even in a 2-party multisig setup, one of the participants might be busy or lack access to their wallet.

When a person manages funds alone, they effectively become a single point of failure—even when using hardware wallets. This happens because social engineering is, in fact, a very dangerous and effective tactic. A user may remain confident that everything is fine even long after losing funds. For example, someone familiar might message the user through a messenger app from an account that doesn’t raise suspicion. The problem is that an attacker can create a similar nickname, for instance by replacing a lowercase “l”(L) with an uppercase “I” (i) or swapping out other visually similar characters. And no hardware wallet can help in a situation where the user consciously authorizes the transfer of funds.

So, for example, when a friend asks you to send them funds—contact that person through a different messenger, make a video call, call them via mobile, or send an SMS. Scammers are always active; they constantly improve their social engineering skills, and with the advent of advanced large LLMs, mimicking a specific communication style is no longer a problem. Moreover, modern technology makes it easy to clone even a person’s voice.

Another successfully used attack vector in the realm of social engineering involves scammers posing as team members of projects or VCs. They may have well-developed social media profiles, and you might have many mutual followers. The projects may have well-written documentation, whitepapers, Twitter accounts, websites—and even an active community in Discord or Slack. But all of this can be artificial. LLMs and bots make it possible to generate content that, at a glance, appears deep and technical. And community members can simulate conversations with each other. In this case, the attack vector might involve asking the user to download a file, install a test browser extension, a plugin, or simply log in to a workspace using their credentials. Moreover, investors might sometimes be asked to test something—which is a normal occurrence for a developing product. And any executable file can embed itself so deeply into your device that even after reinstalling the operating system, the attacker may still retain remote access to the device.

Sometimes it also happens that, for example, Slack requires you to log into your account through the browser multiple times. Or, for instance, in Atlassian, you might get logged out and need to log in again periodically using an OTP key. So usually there’s nothing suspicious about occasionally being asked to re-enter your login and password. To avoid losing your login credentials, it's important to carefully check the browser’s address bar in places where user data is being requested.

Even if you discover that your funds were stolen without the installation of executable files, it’s still best not to take risks and to limit interaction with the compromised device. Users can be disoriented during a panic or a social engineering attack and forget that they granted some unusual permission to the operating system. This could be anything—from granting remote access to simply allowing file or clipboard copying, which might contain private keys or seed phrases.

Self-Custody and Security Principles 

Setting up a non-custodial wallet means you are now the bank. This is empowering – you have full control – but it also means you are responsible for security. Here are essential principles and best practices for self-custody of your Bitcoin:

• Guard Your Keys (Seed Phrase) With Your Life: The seed phrase is the master key to your Bitcoin. If you lose it, you lose access. If someone else finds it, they gain access to all your funds. Never share it, never enter it into any website or app that you didn’t intentionally choose (scammers might trick you via fake “wallet” sites). When backing it up, do so offline. Many people keep multiple copies in separate secure locations (for example, one at home in a safe, one at a trusted relative’s house, etc.) to hedge against loss from fire or theft. If you store it digitally, be aware that if your computer gets hacked, that file could be discovered – so physical offline backups are safer. No legitimate support or authority will ever ask for your seed phrase – if someone does, it’s a scam.

• Use Strong Security on Devices: If you use a mobile or desktop wallet, secure that device. Use a strong passcode on your phone, keep your operating system and wallet app updated (updates often include security fixes). Consider using encryption on your device. Enable two-factor authentication (2FA) on any services or accounts associated with your crypto (for example, your exchange login, your password manager, etc.). Basically, make it as hard as possible for an attacker to compromise your environment. Avoid clicking suspicious links or downloading unknown software that could contain malware aiming to steal wallet information. Treat your devices like they are vault doors.

• Start Small and Learn: If you’re brand new, try sending a small test transaction first – e.g., buy a small amount of Bitcoin, withdraw it to your wallet, send it between wallets – to get comfortable with how it works and to ensure you’ve set things up correctly. It’s better to make a mistake with $10 than with your entire savings. Familiarize yourself with how to restore a wallet from seed (maybe practice with an empty wallet) so you’re confident you can recover if needed.

• Not Your Keys, Not Your Coins (Why Self-Custody Matters): We mentioned this, but it’s worth reinforcing. Keeping your Bitcoin on an exchange or custodial service means you are exposed to counterparty risk. Unfortunately, there are many cautionary tales: exchanges have been hacked, gone bust, or even fraudulently misused customer funds. When these bad things happen, users often have withdrawals frozen and end up losing their Bitcoin. By holding your own keys, you eliminate that risk. You become immune to an exchange’s failure. Even if all crypto exchanges shut down tomorrow, your self-custodied Bitcoin would remain 100% yours and accessible (since it lives on the global Bitcoin network, not any one company’s database). Self-custody is a core ethos of Bitcoin precisely because it enables financial freedom and resilience. However, self-custody also means you must be serious about security – there’s no “forgot my password” option in Bitcoin. The trade-off of being your own bank is that there’s no FDIC insurance or bank manager to call for help. Some investors opt for a blended approach (e.g., keeping a portion on a very reputable exchange or using insured custodial services) especially if they’re not confident in self-security, but broadly speaking, learning to self-custody is highly encouraged in the Bitcoin community.

• Plan for the Unexpected: Beyond everyday security, consider backup and inheritance planning. For backups: ensure if something happens to your primary wallet (phone lost, hardware wallet breaks), you have your seed phrase to restore the funds. Test your backups occasionally. For inheritance: if you were to pass away or become incapacitated, would your loved ones know how to retrieve your Bitcoin? This is tricky – you don’t want to just give them the seed phrase in advance (if they don’t understand its importance, it could leak). Many people use sealed letters or include the information in a will with instructions. The idea is to leave a plan so your Bitcoin isn’t lost forever (there are millions of BTC that are inaccessible because holders died or lost keys without backups). Think about a trustworthy family member or a multi-signature setup (covered briefly below) to handle this.

Operational Security (OpSec) Best Practices 

Keep Your Secrets Offline: Your private keys and seed phrases should be kept offline whenever possible (hence the emphasis on hardware wallets and paper backups). If you have them only on an internet-connected device, you are more vulnerable to hackers. A simple best practice is to use cold storage for significant amounts: that means storing your Bitcoin in a wallet that’s not regularly connected to the internet (e.g., a hardware wallet or an offline software wallet on a device that is kept offline). Cold storage greatly reduces the risk of remote compromise. When you bring a device online to make a transaction, be mindful of your environment (don’t do it on public Wi-Fi without precautions, etc.).

Device and Network Security: Treat your computer and smartphone security as top priority. Use strong, unique passwords for your devices and any crypto-related accounts. Keep software up to date (updates patch vulnerabilities). Consider using a reputable antivirus or anti-malware solution, but don’t rely solely on it. Be careful of phishing (discussed below) and never install software or browser extensions from unverified sources, especially if they purport to be crypto tools – many are malicious. It’s not a bad idea to have a dedicated device or partition for handling your crypto, to minimize exposure to day-to-day internet threats.

Enable 2FA: For any exchange accounts or important logins related to Bitcoin, enable two-factor authentication (2FA) using an authenticator app (like Google Authenticator or Authy). SMS-based 2FA is better than nothing but can be vulnerable to SIM-swaps; authenticator apps or hardware 2FA (like YubiKey) are stronger. This adds an extra layer if your password is stolen. Also, use a password manager to generate and store complex passwords, so you’re not reusing any login credentials that a hacker could exploit.

Backups and Redundancy: We’ve hit this point, but to reiterate: have multiple backups of your wallet’s seed phrase (or private key), in secure locations. If you use a hardware wallet, perhaps keep an extra hardware wallet as a duplicate backup (you can input your same seed into a new device if one fails). Test your backups occasionally by restoring on a new wallet (you can use a spare device and ensure it shows the correct balance, then wipe it). A backup is only good if it actually works when needed! Also, consider the longevity of your backup: paper can degrade; you might use stainless steel backups (there are products where you can punch or engrave your seed into metal plates to make them fireproof and waterproof). These tools can be found via Bitcoin security retailers. Always keep backups secret – treat them like high-value assets.

Multisig (Multi-Signature) for Advanced Security: For those storing very large amounts of Bitcoin, you might consider a multisignature wallet. Multisig means that to move funds, more than one key is required – for example, a “2-of-3” multisig where you have 3 keys distributed in different places and any 2 of them are needed to spend. This way, even if one key is stolen or lost, the coins are not accessible with just that one. Multisig can protect against a single point of failure (including yourself losing one key). There are services and software (like Unchained Capital, Casa, or DIY setups with Electrum/Bitcoin Core) that help coordinate multisig. While multisig adds complexity, it can significantly bolster security for HODLers (long-term holders) with substantial Bitcoin, essentially like diversifying your keys across vaults. For most beginners, multisig might be overkill, but it’s good to know it exists as you progress. If you go the multisig route, make sure to practice and follow all the backup procedures (you’d need to back up each key’s seed, etc., and have a plan if one key/device fails).

Trust but Verify Tools: Use open-source, well-reviewed wallet software when possible. The Bitcoin ethos leans towards open-source software because the code can be inspected for bugs or malicious bits. Wallets like Bitcoin Core, Electrum, Sparrow, BlueWallet, etc. are open-source and time-tested. If you use a closed-source wallet or a small unknown app, you’re implicitly trusting the developer with possibly your keys or transactions. That’s not to say all closed-source apps are bad, but be aware. Similarly, when you download wallet software or updates, do so from official sources and verify signatures if you know how. This guards against downloading a tampered version.

The easiest thing you can do without signature verification is to carefully check the address of the site from which you are downloading the app against multiple sources. Or just use the apps provided by Trezor and Ledger. They are not as convenient as software wallets, but they are the most reliable.

Conclusion

Thus, in the world of Bitcoin and DeFi, in any ecosystem, security is not a one-time setup but a continuous discipline. As shown in this article, the greatest threat to your funds comes not only from external attackers or sophisticated malware but also from simple human errors, overconfidence in security, or social engineering traps. Even experienced users can fall victim to mistakes or elaborate manipulation.

True self-custody provides financial sovereignty, but it also requires personal responsibility. From protecting seed phrases and using secure devices to understanding phishing vectors and applying multisig for managing large sums—every action has its outcomes and consequences. No matter how secure the technology is, it won’t protect you on its own if your habits are weak or your awareness has dulled.

Whether you are just beginning your journey in Bitcoin or are an experienced participant in the DeFi space, the core idea remains unchanged: security is a mindset, not a checklist. Revisit the fundamentals, challenge assumptions, and never underestimate the creativity of attackers. In a space where transactions are irreversible and trust is minimized by design, your best defense is a combination of healthy skepticism, good operational hygiene, and a deep respect for the responsibility that comes with owning your own keys.

And don't forget that smart contracts can contain bugs and vulnerabilities, so it's worth paying attention to the audits passed by the protocol. Dangers can be on every corner. But if the user foresees actions one step ahead, for example, test work with small amounts - this significantly reduces the risks.

Stay alert. Stay in control. Stay sovereign.