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The original was posted on /r/cryptocurrency by /u/deckartcain on 2023-07-24 07:40:38+00:00.
Yesterday, someone posted here claiming their hardware wallet got hacked, and they lost all their life savings. It’s tragic, but it reminds us how bad security can wreak havoc when doing self custody.
Other users quickly figured out that the person leaked their seed phrase by typing it into a password manager. That’s a risky move, as it exposes the seed phrase to potential lurkers.
Password managers on the cloud can get hacked, and it has happened before. Also, malware can record keystrokes, making it easy for attackers to snatch the seed phrase.
Never, ever type your seed phrase using your keyboard. Always rely on the built-in methods provided by your hardware wallet. They are designed to ensure you never have to manually enter your seed phrase.
A few also seem to have misunderstood what a hardware wallet actually does. A hardware wallet provides you with a safe way of accessing your seed phrase, without actually having to type it into your computer.
Your hardware wallet is not your wallet. Your seed phrase is still your wallet / private keys.
Not being forced to type in, or keep your seed phrase on your computer removes a huge security risk.
That’s of course not the only reason to use a hardware wallet, but it’s by far the most important. A hardware wallet also protects you against another often used method of crypto theft; seeing what address you are attempting to send to, without potential manipulation on a compromised computer.
Malware can affect your clipboard and make you send funds to other addresses than intended. Always check your hardware wallet to confirm it’s the right address.
Good seed phrase security involves never sharing it with anyone, always keeping a back-up or two, and keeping it safe from theft, fire and from curious eyes. Keep one at your home in a secure location, and one or more at various secure locations.