When your financial assets are digital and frequently stored online with other entities being hacked is a concern. Learn some common sense items and practical tips you can implement to manage your assets in a secure manner.

Metamask software wallet: https://metamask.io

Forbes article on hardware wallets for cryptocurrency: https://www.forbes.com/sites/forbes-personal-shopper/2021/07/19/best-crypto-wallet/

Hey everyone, no one on this podcast is a financial advisor and all information presented on this podcast is for informational purposes only

And now that we have the legal stuff out of the way, let's jump on in

Welcome to the generational wealth with cryptocurrency podcast. I'm your host McIntosh and today we're going to be talking about hacks now

We're gonna jump on in this is going to be a fairly short session. I believe

But we do need to discuss it. We're dealing with your

You know, we're dealing with money. We're dealing with your finances potentially. We're dealing with a lot of money

so we want to be careful with that a

lot of a

Lot of this honestly revolves around common sense

so I

know

You know when we first got when we first got cell phones that you didn't have people randomly texting you with some

scam trying to get you to click on a

on a link so that you could win a prize or

Or whatever and

Yet now these are quite common I get messages all the time

Things like oh

Oh, let's see. Do do do do do I

Have I have one in a couple of days apparently

But bump a bum

Well, here's one where it's just a link

Why would I click on that and it was sent to a whole bunch of people from somebody that I didn't know?

There's no telling where that's gonna go

So there's things click here to confirm your

$500 gift card from Walmart, you know junk like that stuff that

Doesn't really make a whole lot of sense if you stop and think about it for just a second

But we've learned to deal with that right? That's just part of the reality of having a cell phone

Same thing with crypto. You're going to get a lot of

messages

Online if you're on say a discord group about cryptocurrency

You will have people who will direct message you saying hey

Blah blah blah. Here's this thing, you know, send me money. Well, however, they word it and

99 times out of a hundred

It's scam and so you need to be very careful when you're dealing with stuff like that

We've talked in the past about wallets wallets. We used to store our currency in our crypto in

Do not so with any wallet as I've said, you've got a private key

You've got a public key do not ever ever ever ever ever ever

Give people your private key

when you give them the private key you give them control and they will clean you out just like that so

Don't ever do that

If you have more than a minimal amount of crypto and that's up to you as to what that means

You might want to split that up and keep it in multiple places

Especially especially if you're using these centralized exchanges

like Coinbase or Kraken or I don't know by Nance or one of these other exchanges because

Hacks do happen on a centralized exchange

And they do things to help mitigate that and actually I'll mention that again in a minute as to one of those ways that

They do that, but they do happen infamously Mount Gox, which I've mentioned before

Ironically, I was actually looking through I was

Going through something and I told y'all that I actually lost some money on Mount Gox and I thought I'd gotten it back

Or at least most of it or whatever

But it happened back in 2014 and I don't really room and it was fairly soon after I gotten involved in crypto

And I don't really remember the details

But I was going through my email

And I did find I had a login on Mount Gox

Back in 2014 and I did find um on Kraken actually where they were pointing people to a claim site for something

Some type of settlement. This is like the final sell settlement of the creditors

And as a person who had crypto on that exchange, I would be a creditor

Hopefully will get us

Either money or more money. I don't even know at this point. It doesn't matter

I'm going to go through the process. I didn't have a whole lot on there

That I well I didn't have a whole lot on there in terms of money

But the interesting things is that if you look back at bitcoin price in 2014, it was only like five hundred dollars

So even if I had a couple hundred dollars on there

It would have been like half of bitcoin and so it's worth

Going through the process

to try and figure out

this

System that's in japanese

Converted, you know with translations into english and hopefully I can navigate this because

If I can recover 90 percent of what I had on there

Potentially, it could be a lot of money. I don't know. I'll I'll let you all know maybe at some point

I doubt it's going to turn into anything, but I've got to thinking about that because of the prices

You know in 2014 versus now, it's worth me pursuing certainly

So we'll see anyways, that's an example certainly the most

Widespread example of a hack of a crypto uh central exchange

Uh, there's been others

And so it's just prudent. You know, maybe maybe you're not comfortable keeping more than a thousand dollars on a on a central exchange

I don't know

I think you'll find as you're as your account grows

You're not going to divide up 10 different crypto exchanges, you know to keep

Ten thousand dollars, but you do what?

What you're comfortable with

And it's a simple thing to do. You know, you transfer money transfer your coin from one one account to another

No big deal

That's one way of minimizing your risk on a central

On a centralized exchange. I would also recommend if you're using a centralized exchange

And virtually all of you will be to at least at least to an extent if only to trade

I would also recommend in your settings that you're going to use what's called two-factor authentication

So you may get a text

When you log in that it gives you some code numbers. You've probably seen this with maybe a bank account

2fa two-factor authentication

But you know, you're you're going to plug in those numbers to after you plug in your password

So you're providing two forms of authentication

Or you're going to use an app that generates numbers that you would plug in something like that

That's called two-factor authentication

You definitely want to use that that way if your password were to be compromised. They would also have to have your authentication

Method in order to log in

Which makes it very unlikely

Another thing that you should do is enable

the options so that when you

log in when you

Send money or when you deposit money you get an email you're getting visibility into

Into your account activity

So that may be a way that potentially could keep you from losing money there

So I would definitely recommend all of that

This is kind of going back to the common sense stuff. You also need to keep hard copies of your passwords

And your recovery words, which we'll talk about in just a minute for your software wallets

Stored in a safe or another secure location. I personally don't trust myself to remember

My if if i'm not logging in frequently to a system, i'm not going to remember a password

So if I maybe I throw some money in there and then five years later

I come back to it, but I can't remember my password and i'm locked out of my account and that would be bad

Especially if you're not using a centralized exchange if you're using a centralized exchange

They usually have a process to reset your password and you have to prove yourself, but you can do it

But if you are running your own wallet

A software wallet and you lose the password then you lose the money

This isn't really security, but I did want to throw this in

And this is something that people can maybe they don't like talking about this, but I think this is important

You need to have a plan in case you become incapacitated

Or in case that you die

You know if you're married

You're safe and secure

You know if you're married your spouse needs to have

Access they they need to have a list of the accounts basically they need to have access

Otherwise

If you were to die

Unexpectedly they won't have any way of getting access to that and and that would be a shame

They really it's so that's just something that you need to think about

now

I want to talk about the three main ways that you can store your crypto

The first way of course is a centralized exchange. We've been talking about this already

You know, these are companies that you log into like coinbase or kraken they store your money

Technically there's no private key that you own

And that really means you don't actually own the money and i've talked about that

But most people are okay with that. It's like a bank

You are depending on them to secure your

Crypto and they can do that in a variety of ways. You may want to look into

How your central exchange stores it the majority of their crypto

They should be keeping in something called cold storage and we're going to talk about that more in just a second

But it's a very secure way

Of keeping crypto

They have to keep some on hand for people to move around to trade with this kind of thing

but

I don't know 90 percent of their crypto should actually be kept in cold storage. It should be kept offline because

That is what keeps

If the system were to be compromised, it would be what would keep the hackers out of the vast majority of that crypto

So if coinbase were to be hacked

Uh, and I do believe coinbase does keep the majority of their coin in cold storage

Maybe they get five percent of their total crypto. It'd probably be less

but let's just say that coinbase being as large a company as they are with the amount of

Coin that they're dealing with with the profits that they have

They could manage that

They should be able to turn around to any customer who's affected by that

If if this hack was caused

By their negligence and pay for it and it not shut down the exchange

so

That's the best way to keep

A coin on a central exchange if it's a an exchange that's built a system like this now

I already mentioned cold storage. There's two types of storage where you're holding it yourself

There's what's called a hot wallet and there's what's called a cold wallet

A hot wallet is a digital wallet. That's on the internet. It's on your computer

It's on your smartphone a very common example of one would be called metamask. I believe

And I haven't looked up this figure but just anecdotally. I believe it's it's probably the most common software wallet

That's out there now somebody may be able to send me a figure saying that it's not but it's certainly a very common one

Metamask.io

Is the website?

I'll have that in the show notes as well, but it is open source. It's got a long track record

And it's a high quality product. I actually use it. I actually use it

but with a hot wallet, you've got your private keys and your

public keys

for your coin

online

so if there's a

A flaw that can be exploited in your system

a

Hacker could potentially take control of that wallet

and drain your coin

so it's not

It's not a panacea. It's not perfect. I would say

Probably and this is not advice, but for me personally, I would say that it's better

To keep it in a hot wallet rather than on a crypto exchange. Now. I use centralized exchanges

centralized exchanges

From time to time to trade coin. I tend to not keep my coin on that exchange though

I just don't trust them. I've seen too much. I guess. I don't know. I'm too old. I don't know whatever

But I just don't keep my coin there, but I do utilize them. I'm not

I'm not to the point where I like I only use decentralized exchanges

all right, so

hot wallet

Metamask there's a a number of others

a cold wallet cold storage

Really?

It's probably a better word for it and I already mentioned cold storage talking about

Centralized exchanges cold storage is some type of storage that's not connected to the internet

Cannot have an internet connection if it does then it's not cold storage

How do you do that? Well

You can do that in a variety of ways

One of the best ways and if you have a significant amount of crypto

This is probably something you ought to think about is a hardware wallet

So this is basically like a usb drive most of you

If not, everybody's probably familiar with like a usb thumb drive

And you plug it into your computer

Which your computer should not be connected

when you do this, but you

You can

Load your coin up disconnect it put it in a safe put it in your pocket

Actually, you could carry it around with you. You could have millions of dollars

in your pocket

And that may sound crazy

And if I had millions of dollars on one, I probably would not carry it around with me, but it is certainly possible

One of the immediate questions that popped to my head when thinking about this is well

What happens if it breaks what happens if?

Uh, it gets smashed accidentally for whatever reason

So you can actually recover

What's in there?

Through what is called a seed phrase

now

This is not your private key

And there are differences

But you can use a seed phrase to recover a wallet

Actually, you can use the seed phrase to recover a metamask wallet

I've actually done that

But you can do the same thing with a hot wallet

So you can set up a new wallet and basically you can transfer over to it

Now that is pretty cool. So I have a hardware wallet

Maybe i'm in a car crash and it gets smashed up because I keep it in my

Pocket because I that's just how I roll

And

No, no now what will I order another and I put in my seed phrase and I recover it

And I go on my merry way now if i'm carrying it around and somebody says hey, give me that

And they're a mugger

What am I going to do? I'm going to give them that

Because they don't have the private key. They can't get into it

And they don't have the seed phrase so they can't recover it

So it's it's a it's a very secure system. It's not, you know, there's no system. That's unhackable

But it's very secure

That's not the only type of cold storage

Interestingly, well, you can use a software wallet in the same way

On an offline computer now to be cold storage. You have to be offline

But you could use software on your computer to actually manage that

You can use paper

Understand bitcoin. It's just a series of characters and you can actually write it out

I don't really recommend it. It's not very

durable

Uh, people could see it and especially these days when everybody's got a camera in their

In their back pocket, you could snap a picture of it real quick

And reconstitute it later if you knew what you were doing

You could even do it as a qr code. So those last couple of methods

They're not really very durable, but they do work and they're not online

So as long as they're not online, it's cold storage and as long as it's cold storage

You can consider it to be highly secure if not highly durable

Now if I were doing it on paper for some reason, I would have that locked up in a fireproof safe

Right now my thumb drive. I may choose to do the same thing with a software wallet

obviously, I can't put that in a safe and even though a software wallet may be

Free versus a hardware wallet, which they run between like 50 and 150 bucks

It's more difficult to work with a software wallet and I don't know. There's just to me the hardware wallet

Once you're serious about this, if I know that for the next 10 years, I'm going to be buying crypto

Cryptocurrency, I'm going to be stacking sats as the bitcoiners say or

You know, I'm going to be dollar cost averaging for the next 10 years and I know over that period of time. I've got a

An opportunity to to make a large amount of money

Right because I've looked at the last 10 years and I've realized that

I've realized that the adoption of crypto is just taking off and the next 10 years

Are going to make the last 10 years look like child's play that even if I were to lose one little

Piece of a coin it could potentially be a lot of money. Even if it's not a bitcoin, which now they're you know, 45,000

47,000 whatever it is

Because we don't know what it's going to be 10 years from now

10 years from now, my estimation is is it's going to be a lot more than it is right now

So if I were to even lose part of an eath right now, I would not be happy because i'm looking at the 10 years down the road

So to me spending the 150 bucks

The hundred hundred and fifty dollars or fifty dollars on my hardware wallet

It's an investment. It's not an expense

Hardware wallet. It's an investment. It's not an expense

That's probably the safest way that you can keep your crypto in the long term

It's not as easy to move it on and off but

It's definitely more secure and it's definitely something you should think about

Certainly in the long run if you're not if you're just getting started then, you know, maybe you don't want to spend

Even fifty dollars to do that. That's okay

Uh, just get going do something don't stand there

And do nothing

Uh, i'm going to include an article that was in forbes actually back in july of this year

About the best crypto wallets. I looked through it. It looked fairly reasonable

The top brands that they're recommending are certainly the most common

Top brands out there. It's not like they just

You know pulled something out of thin air. So i'm going to include that in the show notes

If you have any interest in that, I certainly get no

Compensation from that not looking to make any money off of that. It's not the deal

Not at all

I just want you guys to be safe. I want you to be secure

I want you to not be up at night worried about your coin. Oh my i've got thirty thousand dollars

On this exchange and what would happen if you know, the exchange came apart. I don't know

Six years later, maybe you'll get money back possibly right like what I was talking about with mount cox

And the funny thing is they expect us to remember our password

so

Anyways, that's kind of my brief introduction

Looking at probably 15 or 20 minutes talking about hacking

Uh certainly would get you off to a good start give you an idea of

You know, where are you at?

And where you need to be. I didn't actually talk about password security

I've been in the computer industry for a long time. This almost falls under common sense, but

You know don't use password for your password. Let's not be stupid come up with good passwords

Preferably a completely randomly generated one. Do not use the same password

on different sites

Beyond the scope of what we're really talking about. But if you can't keep up with your passwords get a password manager

I actually use um

I've used two for a long time. I use data vault. I just recently switched to key pass

Which is an open source password manager works really well across a wide variety of

A wide variety of computers guys. That's going to wrap it up for the week. There's no real news this week

I don't really have any news items to cover not aware of any countries that adopted bitcoin this week

I wouldn't be surprised if one stuck past me

market's actually been kind of

Going sideways got a little bit of dip going on over the weekend, but i'm pretty sure that tomorrow

Early next week. It's going to pick back up

but uh

You can always reach me at mccintosh.fintech

At gmail.com that's m-c-i-n-t-o-s-h

dot f-i-n

t-e-c-h

at gmail.com

Let me know what you're thinking got questions. I'll certainly do my best to answer those