Security, Security, Security
Getting into DeFi essentially means becoming your own bank in a land without effective law enforcement. Sooner or later, sophisticated digital bank robbers will try to hack you and steal everything you have. If you don't want to lose all of your money, then it would be more than wise to strengthen your cyber security.
According to CNBC, more than 10 billion dollars was lost due to DeFi scams and thefts in 2021 alone.
Theft will always be possible, but if you don't practice proper cyber security, theft of your digital assets will become probable.
But don't despair! Here are a few simple steps anyone can take to drastically increase their cyber safety.
Scan for Malware, Beef Up Your Passwords, and Enable Multi-Factor Authentication
There are dozens of free apps which can quickly scan your computer for malware. Then you can use a service like 1Password reset and improve all of your most critical passwords. This sounds like an obnoxious experience, but 1Password is a great service (well worth the $4 monthly fee) and helps people become endlessly more secure.
When it comes to multi-factor authentication, authenticator apps like Google Authenticator are theoretically more secure than the typical SMS authentication, but not all sites offer that option. If that's the case, no big deal. SMS verification is still very worthwhile.
Get a Crypto-Optimized Browser
You will use this browser and only this browser for the sole purpose of DeFi investing. Brave Browser and the Opera Crypto Developer Browser both come with a built-in VPN to help protect you from malicious sites while you're online and offer unique, customizable security features.
Also, if you're ever asked to provide an email address, consider creating a totally anonymous account with an encrypted email provider like Proton Mail, protected by a strong password and multi-factor authentication.
Buy a Hardware Wallet NOW!
In my opinion, a hardware wallet is a DeFi necessity. Ledger offers three brilliant brilliant, affordable hardware wallets. I started as cheap as possible with the Ledger Nano S ($59). Unfortunately, I quickly outgrew it and bought a Nano S Plus ($79) which is endlessly superior.
Ledger's most expensive wallet, the Nano X ($149), is an excellent choice for those who want to access their crypto while they're on the go because the Nano X is the only Ledger hardware wallet which offers bluetooth connectivity.
I personally don't feel comfortable taking my hardware wallet outside of my home, but to each their own!
Store Your Seed Phrase Somewhere No One Else Will Ever Find It
When you connect your Ledger to the Ledger Live app, your hardwallet's screen will display its 24 word seed phrase for the first -- and last -- time. Ledger recommends keeping multiple offline backups of this phrase. If you lose your hardware wallet, the only way you have a chance of recovering your funds is to know this phrase.
If your seed phrase isn't properly secured, then your crypto isn't secured, either. It might be wise to keep such a sensitive phrase completely offline where hackers cannot get to it.
Considering Opening an Account or Two at Centralized Exchanges (Just In Case)
Centralized exchanges offer a lot of obvious benefits. There are more income opportunities in the DeFi world, but Kraken, OK Coin, and even Binance.US pay interest on some cryptocurrencies.
(You might notice that I didn't mention Coinbase. Why? Because of the many centralized exchanges I've used, all in all, Coinbase is the worst. I'll publish a detailed article with more details next week.)
Regardless of which exchanges you use, it'd be smart to consider securing these accounts with multi-factor authentication like an authenticator app or possibly even a physical Yubikey.
You're Ready to Begin Your Journey into the Fascinating (and Potentially Prosperous) World of Decentralized Finance
Once you've completed these steps, you can feel significantly safer about venturing into the wild world of DeFi.
Congratulations! There are many fun and fascinating things in the DeFi universe.
What exactly are these fun and fascinating things, you ask?
Stay tuned for my upcoming article on that very topic :)