Start with Crypto | 7 Steps to Gaining Full Control Over Your Crypto

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7 steps to gain full control over your crypto

The 7 steps below describe how to get self-custody over the crypto currencies you have or want to get. This means that you'll have full control over your crypto and that noone can confiscate, block or restrict your crypto. In this way you reduce your dependence on banks or other financial institutions and experience the freedom that cryptocurrencies offer.

Step 1 – Understand the importance and benefits of cryptocurrencies

In a world where traditional financial systems wield ever-increasing control over our money and transactions, cryptocurrencies offer a transformative alternative, empowering individuals with unprecedented financial autonomy. Here are some reasons to embrace cryptocurrencies for those new to the crypto sphere:

  • Escape from the control of financial institutions
    Cryptocurrencies operate outside the grasp of banks and financial institutions, which increasingly exert control over transactions, freezing accounts and encroaching on privacy. By transacting with cryptocurrencies you reclaim autonomy over their finances, free from the constraints imposed by centralized entities.
  • Escape the debt-based monetary system
    The current monetary system relies on debt creation, perpetuating inflation and devaluing national currencies over time. Cryptocurrencies offer a finite and transparent supply, mitigating the risks associated with inflation and providing a hedge against currency devaluation.
  • Accessibility and convenience
    Unlike the cumbersome process of opening a traditional bank account, getting started with cryptocurrencies is remarkably simple. With just a few clicks you can download and install a crypto wallet and gain immediate access to a global financial network. This accessibility is particularly beneficial for those hindered by bureaucratic hurdles.
  • A “freedom alternative” to potential Central Bank Digital Currencies (CBDCs)
    Both cryptocurrencies and potential future CBDCs are digital. However there’s a crucial difference. Potential future CBDCs are centralized and subject to governmental control, meaning that a central party can freeze, restrict or confiscate your funds. On the contrary, many cryptocurrencies operate on decentralized networks that no single party controls, providing protection against manipulation.
  • Global Access
    Cryptocurrencies provide access to financial services to individuals who may not have access to traditional banking systems, especially in regions with underdeveloped financial infrastructure. Also, cryptocurrencies can facilitate cheaper and faster international payments, bypassing traditional intermediaries and associated fees.

In conclusion, cryptocurrencies represent more than just a new form of digital currency; they embody a paradigm shift towards financial sovereignty. By embracing cryptocurrencies, you can break free from the shackles of traditional financial systems, reclaiming control over your finances and privacy in an increasingly digitized world.

Step 2 – Decide which crypto(s) you want to get

Deciding which crypto(s) to get depends on your goals. Below are some examples of possible goals to get, hold and use crypto.

  • Decentralized store of value
    The decentralized nature of cryptocurrencies, operating without central authority or control, attracts people who seek alternatives to traditional financial systems. Bitcoin is the main crypto for this.
  • Anonymity and Privacy
    Some cryptocurrencies offer a level of anonymity and privacy in transactions. Monero is an example of a cryptocurrency specifically designed for this purpose.
  • Payments
    Some cryptocurrencies facilitate cheaper and faster cross-border transactions, bypassing traditional intermediaries who can’t block those transactions, and bypassing associated fees.
  • Investment Opportunity
    Many people enter the crypto space with the expectation that the value of certain cryptocurrencies will increase over time, offering potential financial gains through investment. Needless to say that investment have associated risks, with some cryptos those risks are very high.
  • Use Case and Utility
    Cryptocurrencies that offer practical utility or serve specific use cases could be interesting for those particular reasons

It takes research to make a well informed decision on which crypto(s) fulfil your requirements

Step 3 – Choose & install a crypto wallet

The appropriate crypto wallet to choose depends on which crypto(s) you want to get.
There are 2 important distinctions to be aware of regarding crypto wallets:

  • Non-custodial wallets vs. custodial wallets
    Non-custodial wallets allow you to have full control of your crypto. Nobody besides the owner has access to this wallet.
    Custodial wallets on the other hand are wallets that are under control of a third party. This means that they are able to restrict or block your access to your crypto or confiscate your funds.
    So if you want full control of your wallet, choose a non-custodial wallet. Be aware that with more freedom comes more responsibility. When you use a non-custodial wallet, you need to backup your wallet. If you don’t do that and lose access to your wallet, you won’t be able to get access back to your crypto.
  • Software wallets vs. hardware wallets
    A software wallet (also called a hot wallet) is a wallet you can install on a computer or mobile phone and use without further measures.
    A hardware wallet (also called a cold wallet) is a physical device that is needed to approve any crypto transaction you want to make.
    Generally a hardware wallet is considered to be safer than a software wallet. That’s because if the device on which your wallet is installed gets hacked, it’s still not possible to steal your crypto if you have a hardware wallet because every transaction needs to be approved on that separate device.
    For large amounts of funds hardware wallets are highly recommended. For smaller amounts of money, it’s OK to use software wallets.
    Always buy a hardware wallet from the official manufacturer’s website and not from third parties as they could be compromised.

Examples of software wallets that support many cryptos are Exodus wallet and Trust wallet.
Examples of hardware wallets are Trezor and Ledger.

Step 4 – Backup your wallet

Non-custodial wallets give you full control over your funds. However, this control also comes with added responsibility. In the event of device failure, loss, or theft, having a secure backup ensures that your assets remain accessible. There is no third party that manages your funds that can help you.

Creating a backup of your non-custodial wallet is akin to having a spare key to your home. It acts as a fail-safe, allowing you to recover your funds even if your primary device is compromised or inaccessible. Without a backup, losing access to your wallet could mean losing access to your assets permanently.

Steps to backing up your non-custodial wallet:

  1. Identify Your Backup Options
    Most non-custodial wallets generate a unique set of words known as a mnemonic phrase or seed phrase. This sequence of words serves as a master key to your wallet and can be used to restore access to your funds on any compatible device.
    Some wallets ask you to write down the sequence of words when you set up the wallet, others allow you to find the seed phrase in the security settings of the wallet.
  2. Secure Your Backup
    Write down your mnemonic phrase on durable material such as paper. Store your backup in a safe and secure location, preferably away from your primary device. Consider using multiple backup locations for added redundancy.
    Be aware that anyone who has access to your backup can access your crypto.
  3. Test Your Backup
    Before relying on your backup in an emergency, ensure it works as intended. Test the restoration process on a separate device to confirm your backup is accurate.
  4. Regularly update your backup:
    As you transact with your wallet or generate new addresses, remember to update your backup accordingly. Periodically verify its accuracy and integrity.

Backing up your non-custodial wallet is a simple yet crucial step in safeguarding your digital assets. By following these steps and remaining vigilant, you can mitigate the risk of losing access to your funds and enjoy peace of mind knowing your investments are secure. Remember, in the world of cryptocurrency, being your own bank comes with great responsibility, but with the right precautions, you can navigate this new financial frontier with confidence.

Step 5 – Receive crypto in your wallet

There are different ways to receive crypto in your wallet, here are some examples:

  1. Exchange for fiat with someone you trust
    One way to acquire cryptocurrency is by exchanging fiat currency (traditional money like USD, EUR, etc.) with someone you trust who already holds crypto. This can be done through peer-to-peer transactions, ensuring a direct transfer of funds from their wallet to yours.
  2. Earn It and get paid in crypto
    Another way to receive cryptocurrency is by earning it through various means such as freelancing, offering goods or services, completing online tasks, or even through traditional employment where some companies offer to pay in cryptocurrency. Getting paid in crypto can be an excellent way to accumulate digital assets over time.
  3. Buy at a crypto ATM
    Crypto ATMs, also known as Bitcoin ATMs, are physical kiosks that allow users to buy cryptocurrencies using cash or debit/credit cards. These ATMs provide a convenient way to purchase crypto directly, similar to how you would withdraw cash from a traditional ATM.
    Depending on the ATM and country there could be a limit up to which you can buy crypto without the need to reveal identifying information.
  4. Buy at a regulated exchange
    Perhaps the most common method for acquiring cryptocurrency is by purchasing it through a regulated cryptocurrency exchange. However because of government regulations these exchanges usually have KYC (Know Your Customer) policies that require you to send them a copy of your identity card or passport and possibly other information such as proof of address. These exchanges will probably send information about your crypto purchases to one or more tax agencies.

Step 6 – Practice security measures

There are many hacks and scams prevalent in the cryptocurrency realm. Below are some examples of them and strategies to protect yourself against them:

  1. Phishing attacks via malicious websites
    Phishing attacks involve luring users to fraudulent websites that mimic legitimate ones, aiming to steal sensitive information like recovery phrases. Protect yourself by:
    ◦ Always verifying the authenticity of websites before interacting with them, especially when prompted to connect your wallet.
    ◦ Using bookmarked links or manually entering website addresses to access your wallet, rather than clicking on links from unknown sources.
  2. Fake “updates” via emails or messages
    Scammers sometimes send deceptive emails or messages claiming your wallet needs an update for a supposed security enhancement. These communications contain links to malicious websites designed to steal your information. Protect yourself by:
    ◦ Refraining from clicking on links or downloading attachments from unsolicited emails or messages, especially those urging immediate updates.
    ◦ Validating the legitimacy of any update requests by visiting the official website or app store directly.
  3. Fraudulent exchanges and wallets
    Malicious actors create counterfeit exchanges and wallets to deceive users into depositing funds. To mitigate this risk:
    ◦ Conduct thorough research and rely only on reputable and established wallet providers or exchanges.
    ◦ Verify the URL and ensure it matches the official website before entering any sensitive information.
  4. Social engineering attacks
    Social engineering tactics manipulate individuals into disclosing sensitive information or undertaking actions compromising their security. An example of this is scammers impersonating crypto project helpdesks. Protect yourself by:
    ◦ Verifying the identity of individuals or organizations before sharing any sensitive information.
    ◦ Being cautious and skeptical when faced with unsolicited requests for information or assistance, especially regarding your wallet or funds.
  5. False promotions
    Scammers may impersonate famous personalities or influencers, offering fraudulent promotions promising disproportionate returns. To avoid falling victim:
    ◦ Maintain skepticism towards offers that seem too good to be true.
    ◦ Verify the legitimacy of promotions by cross-referencing information from official sources or reputable news outlets.
  6. Ponzi schemes, sometimes called “DeFi project”
    Some projects promise unrealistically high daily yields, resembling Ponzi schemes. Protect yourself by:
    ◦ Exercising caution and conducting thorough research before participating in any investment or yield-generating opportunity.
    ◦ Being wary of projects promising unsustainable returns.

By staying informed and implementing robust security measures, you can significantly reduce the risk of falling victim to hacks and scams targeting non-custodial wallets. Remember to prioritize the security of your digital assets and exercise caution when navigating the cryptocurrency landscape. Your vigilance is key to safeguarding your funds against malicious actors.

Step 7 – Stay informed

Staying informed about developments in the cryptocurrency world is crucial for making informed decisions and staying ahead in this rapidly evolving industry. Here are some ways to stay updated:

  • Email newsletters
    Subscribe to email newsletters from reputable cryptocurrency publications and analysts. These newsletters deliver curated content, market insights, and analysis directly to your inbox, allowing you to stay updated conveniently.
  • Podcasts and YouTube channels
    Subscribe to podcasts and YouTube channels focused on cryptocurrency and blockchain technology. Many content creators regularly share interviews, market updates, educational content, and industry insights.
  • Crypto news websites and blogs
    Numerous online platforms offer comprehensive coverage of cryptocurrency news, trends, and analysis. Websites like CoinDesk, CoinTelegraph, and Decrypt provide up-to-date information on market movements, regulatory changes, and emerging technologies.
  • Social media channels
    Follow reputable cryptocurrency influencers, experts, and projects on platforms like Twitter, LinkedIn, and Reddit. Engaging with the crypto community allows you to stay informed about the latest developments, discussions, and insights.

By leveraging diverse sources of information, you can stay informed and empowered to navigate the dynamic landscape of the cryptocurrency world effectively. Remember to verify information from multiple sources and exercise critical thinking when evaluating news and updates.