February 2026 Newsletter:
Crypto Security
Q: What’s better than making profits in crypto?
A: Keeping them
For anyone who wants to be involved in crypto, a price must be paid in order to participate. The cost I’m referring to is not just investment money but also the time and energy required to manage and keep it.
Luke 14:28 – For which of you, desiring to build a tower, does not first sit down and count the cost, whether he has enough to complete it?
We live in a day where bad actors want to steal your crypto. This threat needs to be taken seriously so we don’t lose what we own. We do our best to manage what we steward but at the end of the day, we entrust God to protect the assets.
The truth is that crypto is not easy to learn. It takes time, practice, and maybe even mistakes to get good with it. Some people find it easier than others to learn so you’ll have to decide what works best for you.
There are three primary routes you can take when it comes to owning crypto.
All of what I share is my opinion and is not meant to be financial advice. It is up to you to do your due diligence. Pray and ask God for help when deciding. Whatever you decide, you are taking full ownership of the risk associated with each of these potential options.
1. Keeping your crypto at the crypto exchange.
- If you struggle with crypto/finance or you want to do the minimum required to participate, this is a permissible option BUT not ideal.
- The risk with this decision is that you are not in full control of your crypto.
- When you open an account at the exchange, they open a custodial wallet for you. They own the private keys to this wallet.
- This means you have access to the crypto purchased and stored at the exchange but it’s under their control. If they decide that you cannot buy, sell, or withdraw your crypto funds, they have the right to do that. Most of the time this is not a problem but during times of heightened volatility, they may restrict these rights over your crypto.
- The exchange manages the security of the funds. Although rare, exchanges are not immune to breaches where user funds can get drained.
- Exchanges have gone bankrupt. The most recent being FTX in 2022 and customers who left their crypto on the exchange lost their crypto during bankruptcy. It took 3 years to get paid in dollars, not crypto if their claims were $50K or less. They lost all the profits with it had they just held the crypto on their own.
- It is for these reasons that it is not recommended to maintain ownership long-term at the exchange, especially for large amounts. Moving or keeping crypto short term at an exchange to be ready to sell is much safer.
Whether you choose to keep crypto at the exchange, I recommend this for everyone:
- I recommend purchasing 2 or 3 Yubikeys to protect your account and purchasing direct from the manufacturer (see purchase link below, DON’T use Amazon!). After it’s setup for use on your exchange account, this physical device is a digital key to give you two-factor authentication (2FA) access to your exchange account. Watch for more info: https://www.youtube.com/watch?v=z7EM5WtLvxo
- The reason why I suggest owning at least two is if you lose one key, you have a backup key to store in a secure location. Would you only own one key to a house or car? Customer service at crypto exchanges tends not to be helpful if you get locked out. If you only have one key and you lose it, good luck trying to regain access to your account.
- After you have setup your key for use, you’ll need both your username, password, and physical keys for access.
- To learn more on how to set up the key for use, watch this video on Yubikeys and pay attention in particular on how to setup the hardware key:
- To purchase, order straight from the manufacturer to avoid tampering of the keys. Order the one that has the right connector type. If you want short-range wireless capability to use with your phone, buy one with NFC too. https://www.yubico.com/product/yubikey-5-series/yubikey-5c-nfc/
2. Taking self-custody of crypto off of the exchange.
- For most people, I think the best solution is to store crypto in a hardware wallet giving you full control.
- Think of the hardware device as your key to your crypto wallet. If you don’t have it, you can’t move your funds.
- With the software that operates with your hardware device, you are able to open your own wallets and manage your various cryptocurrencies.
- There are multiple manufacturers. The most popular among them are probably Ledger and Trezor.
- I have concerns about Ledger’s hardware but it’s a personal preference. It’s 95% open source meaning that portion of the code is available for independent audits to check for backdoors, exploits, etc. The remaining 5% is not open source due to a deal with a chip manufacturing company that contains intellectual property. They claim that not releasing the code is important for hardware level security. However, there are rumors that Ledger might have a backdoor with the remaining 5%.
- Millions of users are using Ledger and if it got out that funds were being stolen or confiscated through the backdoor, their credibility would crumble. Lots of people trust Ledger and it’s ease of use. It’s a matter of personal preference as to whether or not that’s an issue with you.
- Trezor on the other hand is 100% open source. There are no surprises. Their newest model Safe 7 is quantum ready against upcoming quantum computing risks.
- No matter who you choose, always buy direct from the manufacturer to avoid tampering!!!
- Trezor: https://trezor.io/
- Ledger: https://www.ledger.com/
- There are stories of people who bought from places like third parties on Amazon and they lost their crypto because the hardware had been tampered with.
The Price To Pay For Self-Custody:
- Keep in mind that there is a learning curve to managing this properly.
- You’ll need to know the basics of how to transfer crypto safely without losing your funds.
- Knowing how to transfer crypto is critical to self-custody of assets. Risks of transfer loss can be safely mitigated with SMALL TEST TRANSFERS. I can’t stress this enough. If $0.50 worth of crypto gets lost from a test transfer, that’s OK and it’s how learning happens. Once a transfer is successful and you’ve verified that the receiving wallet has your transferred amount, you can increase the amount sent based on your comfort level. There’s nothing wrong with sending the total amount in 2-5 total transfers. The key is to move slow when you are first sending to grow in your confidence. Also keep in mind that when you send crypto, you will pay a fee in the form of crypto to send and process the transaction. (The fees on the ETH network can be very expensive if the network is busy. That only relates to our SHIB position.)
- Many cryptocurrencies have their own networks and some use other networks. XRP runs on the XRP network. SHIB runs on the ETH network. This is important to know because the type of wallet you store it in depends on the network you use. XRP can only be stored on an XRP wallet. If you send XRP to a non-XRP wallet, you’ve lost your funds. SHIB uses an ETH wallet since it runs on the ETH network. Whatever network the crypto runs on is the wallet that’s required for storage. Always double-check which network wallet you need to store your crypto.
- Some crypto cannot be stored on a hardware wallet. XDC is the only one in our portfolio like that. For now, you must store your assets on a wallet through this website: https://wallet.xinfin.network/#/ (FYI – There was one time I got stuck and was not able to access my XDC from this website. After praying, God helped me figure out what was wrong. It’s possible to get the crypto stuck in these software wallets. Prayer helps a lot!)
- Another major consideration is securing your hardware device and your seed words.
- If someone gains access to your hardware device, they have to know the pin. If they discover the pin, they have access to your crypto from any PC. In case of theft, most manufacturers protect the consumer by giving a maximum number of tries (10-15) to get the pin correct. If not, the device will wipe itself, protecting the crypto to it’s owner.
- Your seed words are the backup word list that allows you to recover your crypto in the event you lose your hardware device or can’t gain access for some reason. If someone gains access to your words, they can recover your wallets tied to that account and drain your funds.
3. Sending your crypto to an institution (like a bank) to maintain your crypto for you.
- This will be an increasingly popular option as time goes forward. For now, options remain limited.
- What I can say is that management of assets will be easier with an institution but how much will you trust others to manage it for you? If you use them, it might come at the cost of giving up some freedoms. Cash withdrawal limits are currently in place for people who use a bank and large transactions need to be reported to “fight” money laundering and tax evasion. It wouldn’t surprise me if crypto banks do the same.
- It will be harder to steal crypto if it’s stored outside the home.
- With crypto, people can become the bank if they are comfortable with the risk of self-custody.
This was meant to be an introduction to give you an idea of what it takes to properly store your crypto. I currently do not have any instructional guides available on how secure it. It may be something I do in the future.
Be blessed,
Ron
