Introduction

The FTX collapse in 2022 really left me shaken. I was new to crypto then, knew nothing except following trends to buy coins, kept all my coins on exchanges, and couldn't sleep well at night. Looking back at those days now, I was so naive! Today I want to share how I, as a crypto newbie, gradually built my asset security protection system, hoping to provide some insights for those who are equally confused.

Painful Lessons

I was really too young then, with an extremely shallow understanding of asset security. I thought since major exchanges had so many users, they must be safe, right? And everyone was using them, what could go wrong? Then FTX's collapse hit me like a hammer to the head.

That period was truly agonizing, watching crypto influencers expose details, hearing friends lose millions on FTX, it was devastating. What's more crushing is that this wasn't even crypto's biggest disaster. The 2014 Mt.Gox exchange hack resulted in bitcoin losses worth over $35 billion at current prices! These numbers represent real lessons paid for in blood and tears.

I remember seeing many investors' tragic experiences on social media, some had invested their entire savings. Their stories made me deeply realize that playing in crypto without security awareness is playing with fire. I had many sleepless nights during that time, constantly thinking about how to protect my assets.

Path to Awakening

These painful lessons completely changed my understanding of asset security. I started frantically learning various security knowledge, starting with the most basic wallet concepts. I remember spending every evening after work researching, going through all the articles and videos from crypto influencers.

Through learning, I discovered that crypto wallets come in many types. Hot wallets are like the everyday wallets we carry, convenient but relatively risky; cold wallets are like safes, more troublesome to operate but much more secure. Seeing data showing that over 80% of crypto theft incidents in 2022 occurred on hot wallets, I immediately decided to properly plan my asset allocation.

During my studies, I also discovered many security risks I had never noticed before. For instance, smart contract security issues, where many projects deliberately set backdoors in contracts; and phishing websites becoming increasingly sophisticated in their disguises. This knowledge gave me a more comprehensive understanding of crypto security protection.

Practical Experience

After more than a year of exploration and practice, I finally established a relatively complete personal crypto asset security protection system. Honestly, the process was quite troublesome, but it's worth it for asset security.

First is asset distribution. I now use a 3-3-4 configuration plan: 30% of assets on major exchanges for spot trading. Exchange selection requires special attention - I mainly use Binance now because their fund reserves are relatively transparent and they have the SAFU fund as protection.

Another 30% is in decentralized wallets for DeFi projects. I mainly use MetaMask because its ecosystem is relatively complete and the community is active, so security vulnerabilities get fixed promptly. But using decentralized wallets requires special attention to security, like regularly checking contract authorizations to prevent malicious contracts from secretly draining assets.

The remaining 40% is stored in hardware wallets for long-term holding. I use Ledger, which though expensive, guarantees security. It also supports multiple cryptocurrencies and has a relatively user-friendly interface, suitable for tech novices like me.

Speaking of multi-factor authentication, it's my favorite. I've enabled Google Authenticator for both exchange accounts and various wallets. Data shows that accounts using two-factor authentication are 96% less likely to be hacked compared to single password verification - this number is really reassuring.

I've also been extremely careful with private key management. I split my 24 seed phrases into three parts, stored in three different secure locations. One part is in my home safe, one in a bank safety deposit box, and one with a trusted family member. This way, assets won't be completely lost even in case of accidents.

I get particularly nervous every time I handle private keys, afraid someone might see them or they might accidentally leak. Once while cleaning my room, I almost threw away the paper with the seed phrases - just thinking about it makes me nervous. Since then, I've marked all papers containing seed phrases with special markings to prevent accidental disposal.

Advanced Operations

At this point, some friends might think: isn't this too troublesome? But I believe in crypto, it's better to be overly careful than careless. After all, these are real assets, and once something goes wrong, it's too late for regrets.

Here are some advanced security suggestions I'm practicing:

First is regular security audits. I take time each month to check all asset-related authorization permissions. Especially when participating in DeFi projects, it's crucial to revoke unnecessary authorizations promptly. Statistics show that over 15% of DeFi asset losses in 2022 were caused by expired unrevokedcontract authorizations. This number tells us that security audits cannot be taken lightly.

I've also established an emergency response plan. This includes preparing an emergency contact list with customer service contacts for major exchanges and contact information for experienced players. This allows for quick assistance if problems arise. Additionally, I regularly practice asset transfer procedures to ensure quick action in emergencies.

Speaking of emergency plans, I've specifically prepared an emergency fund pool. This is a separate fund reserved for unexpected situations. For example, during the Terra collapse, many people were helplessly watching their assets shrink because their funds were locked in DeFi projects. Having an emergency fund pool at least maintains some liquidity during crises.

To enhance security, I've done lots of detailed work. For instance, I bought a new computer specifically for crypto-related activities to avoid viruses or hacker intrusions. I've also installed security software on my phone and regularly scan for potential security threats.

Future Outlook

As the cryptocurrency industry develops, asset security issues will only receive more attention. Statistics show that crypto security incidents caused over $1.2 billion in losses globally in the first half of 2023. This shocking number shows us the importance of security protection.

I believe future cryptocurrency security protection will definitely develop towards professionalization and intelligence. There might be more professional crypto asset custody services or AI-based security protection systems. But no matter how technology develops, basic security awareness and protection measures remain essential.

Some innovative security solutions are already appearing in the market. For example, multi-signature wallets requiring multiple people's authorization to transfer assets, and social recovery wallets that can recover lost private keys through trusted social connections. These new technologies are all trying to solve asset security problems.

I particularly look forward to seeing more security solutions for ordinary users. After all, not everyone is a tech expert who can understand complex security mechanisms. If there were tools that are both secure and easy to use, I believe they would help more people better protect their assets.

Conclusion

After experiencing so much, I deeply understand that security is absolutely crucial in crypto. Don't think security protection is troublesome, and don't harbor fluke mind. After all, lost assets may never be recovered.

Over this past year and more, I've grown from someone with no concept of asset security to an investor with a relatively complete security protection system. Though the process was difficult, every step was worthwhile.

I hope my experience can provide some insights for everyone. The crypto journey is still long, let's grow and progress together. Remember, in crypto, security always comes first. Don't let your assets be at risk due to momentary laziness or lucky mindset.

Feel free to share any thoughts or experiences in the comments. After all, we're all in this together in crypto, and we can only avoid pitfalls by sharing with each other. Let's keep going!