Lecture Notes on Crypto Wallet Security

Importance of Wallet Security

• Essential when actively trading or exchanging cryptocurrencies and NFTs.
• Adhering to strict security standards is crucial.

Multiple Wallet Setup

• Strategy: Use multiple “layers” of wallets for different purposes.
• Minimum recommendation: 3 separate “layers”

Wallet Layers Overview

1. Hot Wallet (Layer 1):

   • Store funds you are willing to lose.
   • Use for experimenting with new platforms.
   • Quick access for untrusted areas (e.g., DEXs, NFT sites).
   • Often called a "Burner Wallet."
   • Should be replaced regularly if compromised.

2. Warm Wallet (Layer 2):

   • For funds/assets needing regular access.
   • Connect only to vetted and trusted dApps.
   • More secure than a Hot Wallet.
   • Suitable for larger sums without fear of phishing.

3. Cold Wallet (Layer 3):

   • Secure funds for long-term.
   • Never connect to dApps or platforms.
   • Only used for transactions with own wallets.
   • Public key should not be shared.
   • Best managed through hardware wallets (e.g., Ledger, Trezor).

Security Practices

• Each wallet must have separate private phrases.

Pocket Universe Security Extension

• Available on Google Chrome and Chromium browsers.
• Provides detailed, layman-friendly transaction explanations.
• Offers $20,000 insurance on deemed “safe” transactions.
• Recommended to be installed on all crypto-using browsers.
• Currently not available for mobile devices.

Understanding Blockchain

• Blockchain: A decentralized ledger of all transactions on a cryptocurrency network.
• Transparent transaction history without 3rd party verification.

Blockchain Explorers

• Etherscan: For Ethereum transactions.
• Bitaps: For Bitcoin transactions.
• Blockchain.com: Multiple cryptocurrency networks.

Reading the Blockchain

• Use explorers to view and verify transaction history.
• Enter wallet/contract address to see real-time history.
• Verify transaction existence, success, failure, and ownership.
• Vital tool for anyone handling crypto.