How to Keep Your Funds Safe On Binance Smart Chain

The complete beginner’s guide to keeping your crypto safe on Binance Smart Chain.

Power and Responsibility

Cryptocurrency puts power in the hands of users. While centralized finance is bound to entities like banks, building protective structures within societies and card technology companies that police it––cryptocurrency cuts those ties.

Most cryptocurrency users consider this freedom from centralization a blessing. However, such blessings can quickly become a curse in moments of carelessness. Without proper security practices, cryptocurrency can host many dangers. Here we’ll discuss some of the best ways to practice responsible coin management, with a particular focus on Binance Smart Chain.

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Private Keys and Custody

One of the first things to consider when dealing with cryptocurrency is who holds the coins. Some users think they hold their coins by default, but that’s not actually true. 

In fact, one of the longest-standing axioms in crypto is: ‘not your keys, not your coins.’ 

To explain what this means, we first need to understand the concept of keys in cryptocurrency. 

In common with other blockchains, every Binance Smart Chain address has two associated keys. First is the public key which is the source of the wallet address and can be freely shared. Second is the private key, which should only be known to its owner.

Private keys are vital for security because it is the private key which ‘unlocks’ a blockchain address and allows the holder to spend those coins. Private keys can look like a long string of numbers and letters, but they are commonly also represented by a ‘seed phrase.’ On Binance Smart Chain, seed phrases may contain 12, 15, 18, 21, or even 24 words.

BEWARE: If someone other than you learns your seed phrase, they can use it to unlock your wallet and drain your funds.

On centralized exchanges, the private key is retained by the exchange. The exchange acts as the user’s custodian, and it is the exchange’s job to ensure those coins are kept safe. Leaving coins on an exchange is an act of trust. The customer trusts that the exchange will take good care of their coins, not lose them, and continue to grant the customer access to that money. 

For this reason, it is sensible not to leave large sums of cryptocurrency to sit idle on centralized exchanges. Further, in the event of requiring a centralized exchange, it is always recommended to use the services of a major recognized player such as Binance.

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Non-custodial Wallets

For crypto that needs to be secured safely for the longer term, a non-custodial wallet is recommended. Non-custodial wallets are the name given to wallets in which the user has full control over the coins. For this reason, non-custodial wallets could also be more intuitively called ‘self-custody.’

Within the non-custodial umbrella, there are many differing subcategories, including browser-based wallets, software wallets, and hardware wallets.

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Hot or Cold?

The next differentiator between wallets is ‘hot’ wallets and ‘cold’ wallets. The less exposure a wallet has to the internet, the colder and more secure it is. Cold wallets are the gold standard in coin protection and tend to be hardware-based.

Two of the most popular hardware wallets on the market today are Trezor and Ledger. Alternatively, NGRAVE is a completely air-gapped wallet for the most ice cold of storage. Those seeking a wallet with strong Binance Smart Chain support should also consider SafePal, which secured early strategic and financial support from Binance.

SafePal also has an option for a software wallet minus the hardware, giving users another option to consider.

From here, we turn to in-browser wallets of the type that Metamask belongs to. Metamask is the industry leader in this field, and although there are other contenders such as MathWallet and Binance Chain wallet, Metamask retains its #1 position.

Since in-browser wallets are always connected to the internet, they are considered the least secure wallet option. On the other hand, they are quick and convenient, which is why people use them. The best advice for these wallets is, therefore, to leave the absolute minimum of crypto on them at all times. These wallets are useful for holding everyday spending money and working capital, but they are never a long-term storage solution.

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Recognizing Scams

Since in-browser wallets are the least secure wallet option, these wallets are targeted most often by hackers and scammers. Conmen want the easiest of wins, and so they will attempt to convince you to hand over your seed phrase or connect your wallet to a phony website. 

Scammers will often pose as helpful community members or staff on social media sites like Telegram. Beware of anyone who contacts you on social media offering unsolicited help – they are most likely a scammer.

Scammers can create user names and profiles that look very similar to genuine profiles and likenesses. These ‘cloned accounts’ are designed to confuse and mislead. Scammers typically offer free tokens, airdrop rewards, and other benefits. Sometimes they also provide technical assistance as a way of gaining a person’s trust.

Scammers will invite you to click on a link that takes you to a fake website and to approve this site with your Metamask or in-browser wallet. However, the smart contract will not do what it claims to do and will instead allow the user to drain the wallet.

Another increasingly common scam is the airdrop scam. This occurs when scammers send a worthless token to user wallets. This phishing attack attempts to lure users to a website designed to appear as though it is a genuine crypto project. Should users connect their wallets to the site, the scammers can again drain the user’s wallet.

If you find unsolicited tokens airdropped to your wallet, it is most likely a scam.

Source : bsc.news