How to Secure Your Crypto and NFTs
If You Do Not Have a Hot Wallet and a Cold Wallet, You Risk Losing All of Your Crypto and NFTs. Here is how to protect yourself.
You heard of so many cases of someone clicking on a scam link that drains their wallet of crypto and NFTs.
Here is how to protect yourself with a hot and cold wallet.
What are Hot and Cold Wallets?
A hot wallet is used for buying and minting NFTs only. Don’t keep a large amount of money in a hot wallet. Hot wallets are usually software wallets such as Metamask, Phantom, TrustWallet, or Coinbase Wallet.
A cold wallet is used for storage only. Never use it for minting or connecting to a website. The cold wallet transacts only with your hot wallet. Cold wallets are usually hardware wallets like Ledger or Trezor. Cold wallets are safer for storing larger amounts of money and valuable NFTs.
Why is Seed Phrase Security Important?
A Seed Phrase is a set of words that serves as a password to access your wallet. Seed Phrases need to be stored securely and not in an electronic format. If the Seed Phrase is on a computer, and the computer is hacked, then the Seed Phrase is compromised.
Hot Wallet vs. Cold Wallet
What makes a wallet hot or cold is not the hardware but whether it has previously signed a transaction or connected to a website. Even if you have a hardware wallet like Ledger or Trezor, it does not mean it is a cold wallet.
The Flow of Assets Between the Wallets
Have You bought an NFT and want a role on Discord, or do you need to show proof of ownership on the project’s website?
The first step is to buy or mint the NFT using your hot wallet. Afterward, connect to Discord or the project website to get your role, then move the NFT to your cold wallet.
If you already have an NFT in your cold wallet, you can use a service such as delegate.cash, warm.xyz, tokenproof.xyz, or others where the NFT stays secure in the cold wallet. Another solution would be to transfer it temporarily to your hot wallet, get the role you want, and then move the NFT back to the cold wallet.
The guide was prepared by Ayman Itani, Web3 Founder, and Content Creator, after he was this close to becoming a scam victim and could not easily find information on how to protect himself from future scams.
Disclaimer: This is meant to be a guide. There is no liability. Do your own research.
