During the past three years, the Lumi team has been working on advancing the wallet’s tech and design to make the regular daily experience with cryptocurrency safe and easy. Quite a few of the improvements have come to life thanks to our users, especially the ones who have only started their journey.
If you’ve been in the crypto space for some time, you might feel there’s nothing complicated about it. But try to remember how you started. Everything seemed confusing and incomprehensible at times, didn’t it?
But figuring crypto out ‘along the way’ is not a good strategy and every user must learn the basics beforehand. Cryptocurrency transactions are irreversible and there are a few rules that you need to know before you start investing your money into it.
We decided to address several major struggles of crypto beginners in an attempt to avoid unnecessary disappointments.
It’s All About Mnemonic
The number one issue newcomers stumble upon is the necessity of dealing with mnemonics. A 12-word phrase that guards access to your assets is still a fresh concept. Many new users think that they are PIN codes, fingerprints, and Face IDs that guard their digital money, so they log out of their wallets without a second thought.
Logging out of an anonymous crypto wallet without writing down your passphrase will result in losing access to your funds forever.
A mnemonic phrase (aka seed phrase, recovery phrase, or backup) is a 12, 18 or 24-word phrase that acts as a 2FA feature, in a way. In case you lose your mobile phone, it gets stolen, or you simply log out by yourself, you can still get access to your wallet from another device using your seed phrase.
Nobody can accidentally guess your mnemonic. Even if they dedicate a lifetime and use a bunch of resources, it is still highly unlikely. In case you want to know more, we tried to imagine what it would take to crack your mnemonic and calculated the odds.
Now, here’s the thing with anonymity – if you do not provide any information, there will be no way to link you to the funds. Although this is good news for your privacy concerns, nobody will be able to help you if you lose your mnemonic and you’re logged out of the wallet.
Decentralization a priori means that there is no third party that will come to the rescue in the case that you did something wrong. So unless you left some personal info, like an email, there is no possibility to restore access to your funds in the case that you lose your mnemonic.
Scammers vs Mnemonics
Another severe problem with mnemonics comes from the outside. The more popular the platform gets, the more freeloaders try to snatch a piece of the pie. Since the Internet provides people with a certain level of anonymity and the blockchain system was created to facilitate private payments, scammers try to get whatever they can out of it.
With time, they come up with more sophisticated ways to scam people. Whether creating phishing websites that mimic real ones or impersonating the staff of a wallet or exchange, their goal is always the same – to get access to your mnemonic so they can quickly transfer the money to their own wallet.
One thing you need to accept once and for all: nobody except for you, including the members of the crypto wallet, your dog, and your partner, should have access to your mnemonic phrase. Once you share it with someone, especially with a stranger, prepare to say goodbye to your money.
The good news is that it’s easy to stay safe.
Crypto Security Basics
Following these basic rules will make your cryptocurrency journey smooth and hassle-free.
- Once you create the wallet, do the backup! Go to Settings and write down your mnemonic (seed) phrase.
- Do not keep your mnemonic on your phone – if the phone gets lost, stolen or breaks, it won’t do you any good. Keep a few copies of the phrase written on a piece of paper. Yes, an actual physical piece of paper. Store it in a safe place and don’t forget where it is.
- Try to avoid copy-pasting your mnemonic, some apps that you use might be reading this info.
- Never share your seed phrase with anyone, even if they say they are from the Lumi Wallet team. No one should know your mnemonic except for you!
- Do not click on links from strangers that they send you via social media (Telegram, especially). Do not fill in any questionnaires.
- In case you think your mnemonic has been compromised but your funds are still there, create a new wallet using your laptop and quickly transfer your crypto there. You can use this new mnemonic to log in to the Lumi Wallet app, too.
- If you need help, contact our support team directly via [email protected]
These are just a few easy tips but following them will keep your finance safe. We’re going to handle all major security precautions, but remember that in the decentralized world where no third party is involved, the responsibility to keep yourself safe lies primarily on you.
Since one of the main missions of Lumi is to create a perfectly easy and universal tool for working with cryptocurrency, listening to the struggles and requests of our community is a big part of the deal.
The problem with lost and stolen mnemonics is still one of the most crucial ones among new cryptocurrency users. More and more people are coming into the blockchain space in hopes of extra income, but fail to ‘read the manual’ and end up losing their funds.
Financial literacy, especially when you’re dealing with a decentralized system, is not to be taken lightly. Start with the basics, research blockchain and crypto topics, and invest wisely.