Wallet and Key Management: Your Digital Asset Security Guardian? -web3 series section 6

As your old friend on Web3 Road, I know the words wallet and key may sound a bit technical, but they are actually the core of your digital asset security. Today, I will take you to gain an in-depth understanding of wallet and key management, help you master practical skills, and protect your wealth.

What is a digital wallet?

A digital wallet is a tool for storing your cryptocurrency and digital assets. It not only saves money, it can also help you manage assets, sign transactions, and connect to various decentralized applications (DApps).

There are two main types of wallets:

• Hot Wallet is connected to the Internet and is easy to use, suitable for daily transactions and experience DApps, but has relatively high security risks. For example, MetaMask and Trust Wallet.
• Cold Wallet is offline storage, not connected to the Internet, and has extremely high security, suitable for long-term holding and large assets. For example, Ledger hardware wallets and paper wallets.

According to the 2024 blockchain security report, about 60% of cryptocurrency theft cases are caused by hot wallet security loopholes, indicating the importance of cold wallets.

What are private keys and mnemonic words?

The private key is the "key" of your digital assets, controlling your wallet and assets. If you own a private key, you have ownership of the asset.

Mnemonics are phrases composed of 12 or 24 words to facilitate your backup and recovery of private keys.

Remember, private keys and mnemonic words must be kept confidential and cannot be disclosed to anyone. Once leaked, the assets may be stolen.

Best Practices for Private Key Management

• Never store private keys or mnemonic words online , such as email, cloud disk, and chat tools.
• Multiple backups , write mnemonic words on paper and store them in different safe locations.
• Using a hardware wallet , the private key is stored in the device and is not easily compromised by hackers.
• Enable multisig , multiple keys jointly control assets, and improve security levels.

Common risks and prevention in wallet use

Real case sharing

Case 1: Private key leakage of a well-known NFT collector. An NFT collector stored the mnemonic word in his email address, and the email address was hacked and the NFT worth millions of dollars was stolen. The lesson is: Never save sensitive information online.

Case 2: Ledger hardware wallet was attacked In 2024, the Ledger user database was leaked, but the private key of the hardware wallet was not compromised, reflecting the security advantages of the hardware wallet.

Case 3: Multi-signature wallets help DAO security A DAO uses a multi-signature wallet to manage funds, and at least 3 authorizations can only be used to use assets, greatly reducing the risk of a single point of failure.

How to choose the right wallet?

• New users : You can first use a hot wallet, such as MetaMask, for convenient experience.
• Medium- and long-term holders : It is recommended to cooperate with cold wallets, hardware wallets such as Ledger or Trezor.
• Organizations and Teams : Use multi-signature and permission management tools to ensure funds are secure.

【FAQ】

Q: What is the difference between mnemonic words and private keys?

A: Mnemonic words are a set of words that help you recover your private key, and the private key is the key that directly controls your wallet.

Q: If the auxiliary words are lost, can the assets be retrieved?

A: Generally speaking, losing a helper word means that the wallet cannot be restored and assets will be permanently lost.

Q: Can you tell your friend to help me with your wallet password?

A: It is absolutely not recommended that passwords and private keys are absolutely confidential, and disclosure may lead to theft of assets.

Q: How to prevent phishing websites?

A: Only access the official channel to download the wallet, do not easily click on unfamiliar links, and confirm that the URL is safe.

Summarize

Wallet and key are the "identity" and "key" you enter the Web3 world. Only by safe management can you embrace a decentralized future with peace of mind. As an old friend around you, I encourage you to study hard and take safety measures to protect your digital wealth.

If you encounter any problems, come and ask me anytime, let’s protect the safety of your assets together!

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