How to protect your Bitcoin assets? The 18th edition of BitPinas Webcast, a weekly #CryptoPH show, focused on the discussion about the first-ever cryptocurrency to exist in the space — Bitcoin.
Hosted by BitPinas Editor-in-Chief Michael Mislos, the webcast was joined by Bitcoiner Ramon Tayag and fintech-focused Lawyer, Atty. Rafael Padilla.
The Landscape of Crypto Risks
In September of the previous year, almost $2 billion worth of crypto was reported to have been stolen through cybercrime and hacking incidents, according to Chainalysis. Such data could deter most Filipinos from entering this industry, as a report by Ethereum firm ConsenSys indicates that 53% of Filipinos perceive crypto scams as the main obstacle.
What methods could be employed to safeguard bitcoin holdings from fraudulent activities? Insights on the subject were provided by the panel.
Prioritizing Personal Safety
“Isa sa mga pinaka-importante (to safeguard your bitcoin) is your personal safety, especially, for people who are very public. People know you, no matter how secure your bitcoin wallets are, iyong personal safety mo rin ay importante.”Michael Mislos. Editor-in-Chief, BitPinas
This idea was echoed by Tayag, who added that “even if your keys are safe, you could still be (victim of) what they called the ‘five-dollar wrench attack.’”
The five-dollar wrench attack describes a crime that employs physical violence to steal digital assets, including cryptocurrencies. The term comes from the idea that a simple tool, such as a wrench, can be used to threaten someone who holds a large amount of crypto and force them to hand over their private keys or passwords.
“Syempre marami sa atin sa community na baka dahil nag-appreciate na iyong (fiat value ng) bitcoin nila, baka masyado nang luxurious iyong lifestyle nila, at baka masyado nang pino-post sa social media.”Rafael Padilla, Fintech Lawyer
How to Protect Your Bitcoin Assets: Selecting the Right Wallet
Meanwhile, Tayag also mentioned the phrase, “not your keys, not your coins,” a common tagline for those who do not promote using custodial wallets:
“A lot of people’s bitcoins are in custodial wallets, so iyong keys ay wala sa kanila. I highly encourage people to take custody of their own and take it slow, hindi kailangang kumplikado ang set-up. Always test your set-up.”Ramon Tayag, Bitcoin Advocate
For the Pinoy Bitcoin OG, it does not need to have an expensive crypto wallet to store bitcoin holdings, but bitcoiners must choose the right wallet for them and avoid using custodial wallets.
Custodial wallets are a variety of online crypto wallet that relies on cloud-based storage and enables the storage and management of cryptocurrencies through a web interface.
There are also non-custodial wallets, which are also online wallets, but do not rely on a third-party service, so users have full control over their private keys and funds.
Thirdly, there are hardware wallets, which are considered to have the highest level of security, as these are physical devices that are designed to store crypto offline.
(Read more: How to Buy and Store Bitcoin: A Step-by-Step Guide)
But there is another type of offline wallet, called a paper wallet. Basically, a paper wallet is a piece of printed paper that contains the trader’s public address and private key.
This is where Tayag reminded bitcoin enthusiasts that while people have been fine with using paper wallets, they should generate the wallet when their computer is already offline:
“Kasi kung online iyan, possibly, someone else knows what your seed is. And it is not simple (to use).”Ramon Tayag, Bitcoin Advocate
How to Protect Your Bitcoin Assets: Multiple Wallets
“I like leaning on hardware wallets, and if what you have is large already, you can multisig. You should not completely trust one wallet paper, kasi kung naka multi-sig ka, kung may pasaway na wallet paper, protected ka.”Ramon Tayag, Bitcoin Advocate
To end the discussion, Padilla compared owning bitcoin to owning a bank, which means to protect your bitcoin, also protect your bank:
“If you are gonna be your own bank, prepare also for your own bank robbery. Ibig sabihin, protektahan mo ang sarili mo.”Rafael Padilla, Fintech and Blockchain Lawyer
This article is published on BitPinas: How to Protect Your Bitcoin Assets from Fraud
Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.