Staying safe with bitcoin

Seed phrase, keys and addresses

A modern wallet turns a list of 12 or 24 dictionary words into a master secret, and derives every private key and address from it. That word list is defined by BIP-39; the tree of keys derived from it is defined by BIP-32.

Consequence: the words are the money. Anyone who reads them, in any order, in any medium, once, can spend everything you hold now and everything you receive later, on any device, in any country, without your permission and without warning.

• A wallet app can be reinstalled. Lost words cannot be reissued by anyone.
• There is no password reset, no bank fraud department, no chargeback and no support ticket that restores stolen bitcoin.
• Because keys are derived deterministically, a leaked phrase also exposes future addresses, not just today's balance.

Sources[7][8][30]

How to store the backup properly

Vendor documentation and Bitcoin Core's own custody guidance agree on the same basics: keep the secret offline, redundant, and geographically separated.

• Write on paper for a first backup; stamp or engrave steel for a long-term one. Ink fades, thermal paper dies, SD cards rot.
• Two or three copies, at least two locations. One house fire should never be a total loss.
• Never store the words as a photo, screenshot, cloud note, e-mail, chat message or password-manager entry that syncs.
• Never type the words into a computer or phone except while restoring a wallet you trust, on a device you trust.
• Consider an optional BIP-39 passphrase (sometimes called a 25th word), but only if you can back that passphrase up as reliably as the words. Forget it and the coins are gone.
• Write down which wallet software and which derivation type you used. Your heirs will need that, and so will you in five years.

Sources[31][32][33][30]

Rehearse the recovery, not just the backup

The most common self-custody loss is not theft: it is a backup that never worked. Rehearse it while the amount is small.

• Fund the wallet with an amount you would shrug at.
• Reset the device or delete the app, then restore only from the written words.
• Confirm the same addresses and balance reappear, then send the test amount out to prove you can spend.
• Repeat the rehearsal after any change: new device, new passphrase, new wallet software.

Sources[30][34]

Custodial: someone else holds the keys

On an exchange your balance is a claim on a company's books. That model removes key-loss risk and adds counterparty risk: freezes, hacks, insolvency, or misuse of customer deposits.

This is not theoretical. The FTX estate's own interim report documents commingling and misuse of customer funds, and the SEC charged Celsius and its founder with fraud in July 2023. Both were popular, well-marketed platforms.

• Reasonable use: small balances, active buying, or people who honestly know they will lose a paper backup.
• Reduce the damage: withdraw amounts you would hate to lose, enable app-based or hardware two-factor, use a unique e-mail, and lock down the e-mail account first.
• Never trust a platform because it advertises heavily, pays yield, or sponsors sport. Yield means your coins are lent out.

Sources[52][51]

Self-custody with one signing device

A hardware wallet keeps the private keys inside the device, so a compromised computer can display a lie but cannot silently sign for you, provided you actually read the device screen before confirming.

Buy from the manufacturer or an official reseller. Never buy second-hand, never accept an unexpected replacement device by post, and never use a device that arrived with a recovery phrase already printed. A genuine device generates its secret in front of you.

• Set your own PIN, verify firmware through the vendor's app, and record the words yourself.
• A device that 'came pre-configured for convenience' is an attack, full stop.
• Keep the device and the paper backup in different places, so one break-in is not both.

Sources[31][33][30]

Watch-only and offline signing

You can monitor balances without any spending ability by importing only public keys. Bitcoin Core documents this workflow: a watch-only wallet builds an unsigned transaction, an offline signer signs it, and the online machine broadcasts it. The format for passing that transaction around is BIP-174, the PSBT.

This is the pattern that lets you check your holdings on an everyday laptop or phone while the keys never touch an internet-connected machine.

Sources[34][35]

Multisig for larger amounts and inheritance

Multisig requires several keys to sign, for example 2 of 3. One lost or stolen key is then no longer fatal, and no single location holds enough to spend. Bitcoin Core ships a step-by-step multisig tutorial.

The trade-off is complexity: more backups, more documentation, more ways to confuse your future self. Practise a full recovery, and write down the setup, quorum, key locations, wallet software and descriptors, for whoever inherits it.

Sources[36][34]

What 'connect wallet' does and does not do

Connecting via WalletConnect or a browser extension pairs a site with your wallet and lets it read your address and ask you for signatures. The pairing itself does not move funds.

The danger is the next step: what you approve after connecting. A malicious site cannot take your coins, but it can present a request that, once approved, lets it take them at any later moment.

• Connecting reveals your address and full transaction history to the site.
• A connected site can spam you with signature requests until one is approved by accident.
• Disconnecting a session does not remove approvals you already granted. Those live on-chain until revoked.

Sources[38][39]

The four requests that drain wallets

Almost every drainer boils down to one of these. Learn to recognise them by name before you ever click confirm.

• Unlimited token approval: an 'approve' with a maximum amount lets a contract move that token from your wallet forever, without another confirmation.
• Permit or permit2 signature: a gasless off-chain signature under EIP-712 that grants the same spending right. It looks like harmless 'signing a message' and costs no fee, which is exactly why it works.
• setApprovalForAll: hands over an entire NFT collection in one click.
• Blind signing of raw calldata: a request your wallet cannot decode into readable words. If the wallet cannot explain it, you cannot consent to it.

Sources[37][39][40]

Reading a request before you approve it

Treat every popup as a contract you are signing without a lawyer. Slow down and check, in this order:

• The domain in the address bar, reached from your own bookmark, not from a DM, ad, search result or QR code.
• Which contract is being granted power, and whether it is the protocol's documented address.
• The amount: a specific number, not unlimited, and never more than the position you are opening.
• The action word: approve, permit, setApprovalForAll and increaseAllowance all mean 'you may take this later'.
• The device screen on a hardware wallet, character by character, not the browser popup.
• If any of the five is unclear: reject. Rejecting costs nothing.

Sources[37][39]

Clean up: revoke what you no longer use

Old approvals are a standing liability. A protocol you used once, that is later exploited, can still reach the tokens you approved years ago. Review and revoke approvals periodically using the block explorer's own token-approval checker or a dedicated revocation tool, and revoke outstanding permit signatures too.

Better still, keep a separate 'hot' wallet with only what a session needs, and never connect the wallet that holds your savings.

Sources[39][40]

The front-end you trust can be swapped under you

On 14 December 2023 an attacker phished a former Ledger employee's npm token and published a malicious version of the Connect Kit library. Dozens of well-known DeFi front-ends loaded it automatically and started showing wallet-drainer prompts to their real users; Ledger's own incident report and contemporaneous reporting put the loss at roughly USD 484,000.

Lesson: 'the site was legitimate yesterday' is not a security control. Signature discipline is, because a drainer still needs your approval. A hardware wallet plus reading the request is what stops a compromised front-end.

Sources[49]

Bitcoin's version of this risk

Bitcoin has no allowances, so there is nothing to revoke, but the same social attack exists in a different costume. Fake 'node validation', 'wallet migration', 'ordinal claim' or 'unlock your funds' pages ask you to paste a seed phrase, import a wallet file, or run a script.

The rule is simple and absolute: on Bitcoin, a website never needs your keys, your seed, or a wallet file. Signing happens in your wallet, on your device, for a transaction you initiated and can read.

• This site never asks you to connect a wallet, and never asks for keys or seed words. Our labs run in your browser and use throwaway educational keys only.
• Be extra careful with 'sign this message to prove ownership' flows on Bitcoin too: only sign messages you wrote or fully understand.

Sources[30][34]

Phishing and fake support

The standard flow: an urgent message about your wallet, exchange or a 'security migration', a link to a convincing clone, and a form asking for words, a file or a signature. Real support never initiates a chat about your seed phrase.

Targeting is often precise because customer lists leak. Ledger's 2020 e-commerce breach exposed customer e-mails and roughly 270,000 postal addresses, which produced years of tailored phishing mail and even fake replacement devices sent by post.

• Reach services only via your own bookmark; never via search ads or links in messages.
• Nobody legitimate needs remote access to your screen to 'help you secure your wallet'.
• Report phishing rather than just deleting it, so others get blocked faster.

Sources[50][47][44]

Address poisoning and clipboard malware

Address poisoning sends you a tiny or zero-value transaction from an address that looks like one you already use, same first and last characters, hoping you copy it out of your history next time. Wallet vendors now flag this pattern explicitly.

Clipboard malware is the older cousin: software on your machine silently replaces a copied address with the attacker's. Both attacks defeat 'checking the first four characters' and are defeated by verifying on a signing device.

• Never copy a receiving address from transaction history; always take it fresh from the recipient or your own wallet.
• Verify the full address on the hardware wallet screen before confirming.
• For a first payment to anyone, send a small test amount.

Sources[41][42][43]

Dusting and privacy leaks

A dusting attack sends a very small amount to many addresses and then watches whether those tiny outputs get combined with your other coins, which links your addresses together. It does not steal anything by itself; it maps you, and mapping is often the first step to targeting.

• Do not spend unexplained dust. Wallets with coin control let you mark and freeze it.
• Avoid reusing a single address for everything; a fresh address per payment is standard behaviour.

Sources[53][30]

Investment and romance fraud (pig butchering)

A stranger builds a friendship or a relationship over weeks, then introduces a platform that shows profits. Withdrawals work at first, then require 'taxes' or 'fees'. The US Treasury's FinCEN issued a dedicated alert on this pattern in September 2023, and the FTC states plainly that unexpected social-media messages about investing are almost always scams.

• A trading dashboard showing gains is a web page, not proof of anything.
• Anyone who cannot be met, video-called spontaneously, or verified independently is not a mentor.
• 'Recovery services' that promise to retrieve stolen crypto for an upfront fee are a second robbery of the same victim.

Sources[45][46][44]

Account takeover: SIM swap and e-mail

Custodial accounts are usually lost through the e-mail account and the phone number, not through the exchange. SMS codes can be redirected by porting your number, so prefer an authenticator app or a hardware security key, and secure the e-mail account with the same strength.

• Unique password per service, stored in a password manager.
• App-based or hardware two-factor everywhere it is offered; remove SMS as a fallback where possible.
• Add a carrier port-out PIN, and never confirm a code you did not request.

Sources[47]

Platform failure and theft at scale

Even competent services get robbed. Chainalysis recorded more than USD 2.17 billion stolen from crypto services in the first half of 2025 alone, exceeding all of 2024, including the roughly USD 1.5 billion Bybit hack of February 2025.

That figure is the argument for withdrawing to self-custody once an amount matters to you, and for the discipline in the rest of this page, because self-custody moves the risk onto your habits.

Sources[48]

Monthly

• Confirm you can still physically find every backup copy.
• Check balances with a watch-only wallet, not by importing keys anywhere.
• If you use smart-contract chains: review and revoke unused token approvals.

Sources[34][40]

Twice a year

• Do a full restore rehearsal from the written words on a wiped device.
• Update firmware and wallet software from official sources only.
• Reread your inheritance note: does someone you trust know what exists, and how to reach it, without the note itself being a theft risk?

Sources[32][30]

Before every transaction

• Fresh address from the recipient, never from history.
• Verify address and amount on the signing device screen.
• For a new counterparty or a large amount: small test payment first.
• Sanity-check the fee, and never rush a transaction because someone is waiting.

Sources[41][30]

If you think you have been compromised

Speed matters, but panic is what the attacker is counting on. Work in this order:

• Move funds from the affected wallet to a wallet created on a clean device with a brand-new seed phrase. A compromised phrase can never be made safe again.
• On smart-contract chains, revoke approvals from the compromised address, but only after the funds are out.
• Never enter your old seed phrase into a 'recovery tool'. Every one of them is a scam.
• Report to your national cybercrime or fraud authority; in the US that is IC3, and consumer complaints go to the FTC.

Sources[40][44][46]