Take note and avoid these common mistakes.
Self-custody gives you the highest level of control over your crypto, but it also requires a higher level of discipline. Many users underestimate how easy it is to make mistakes that can compromise their funds. These mistakes rarely come from ignorance—they usually come from rushing, overconfidence, or misunderstanding how wallets and private keys work. By recognising the most common pitfalls early, you can avoid the errors that lead to lost assets or security breaches.
Your recovery phrase is the ultimate fallback for your wallet. If your device fails or your app resets, this phrase is the only way to regain access. Because it is so powerful, it is also the most dangerous item to mishandle.
Many beginners make the mistake of storing their recovery phrase digitally—such as in a screenshot, cloud storage, email, or notes app—without realising how easily these platforms can be compromised. A single breach is enough for an attacker to drain every asset you hold.
Best practice is to keep your recovery phrase offline, written clearly on paper or stored using a specialised metal backup. Keep multiple copies in separate physical locations to reduce the risk of accidental loss.
Even if your wallet is strong, the device you run it on may not be. Phones and laptops infected with malware can intercept wallet interactions, copy your clipboard, or manipulate transactions before you sign them. Many phishing attacks succeed not because the user made a poor wallet choice, but because their device was already compromised.
Keeping your device secure means running regular updates, avoiding pirated apps, using antivirus tools, and never installing wallet extensions or apps from unofficial sources. A self-custody setup is only as safe as the device behind it.
Phishing remains one of the most effective ways scammers trick users into giving up their private information. These attacks often imitate wallet interfaces, emails, or customer support messages to pressure users into sharing their recovery phrase or signing malicious transactions.
Common examples include:
No legitimate wallet provider will ever ask for your seed phrase after setup. When something feels urgent or threatening, pause before clicking anything—high pressure is a common attack tactic.
Because many tokens exist on multiple blockchains, users sometimes send assets using the wrong network without realising it. Sending funds on the incorrect chain may cause them to become temporarily inaccessible or permanently lost if the destination wallet cannot support that network.
To avoid this:
A few seconds of verification can prevent irreversible loss.
One of the easiest ways to lose crypto permanently is to send it to the wrong address. This often happens due to simple mistakes—copy/paste errors, choosing the wrong saved address, or not noticing that clipboard malware replaced your copied address with an attacker’s.
Before every transfer, check the first four and last four characters of the address. Avoid copying addresses on shared devices or through messaging apps where malware could be present. Some wallets allow you to label trusted addresses, which adds another layer of safety.
Many users skip the small test transaction step because it feels unnecessary—but that step often saves people from expensive mistakes. A small test amount confirms that the network, address, and wallet are all compatible before you send larger amounts.
Test transactions are especially important when dealing with new wallets, unfamiliar networks, or high-value transfers. It’s a simple way to catch issues early without risking your full balance.
Hardware wallets are one of the safest ways to store crypto, but they are not foolproof. Mistakes usually occur when users misunderstand how the device stores the seed phrase or when they enter the recovery phrase on a computer instead of the device.
To use a hardware wallet safely:
Another common mistake is setting gas fees incorrectly. Fees that are too low may cause your transaction to get stuck for hours. Fees that are too high waste money unnecessarily. Understanding how gas fees work—especially on Ethereum—is essential for efficient self-custody.
Most wallets now offer recommended fee settings, and sticking to these defaults reduces the risk of manual errors.
Some wallets generate additional backup files, keystore files, or device-specific configurations that users forget to save. Losing these files can create recovery issues later, especially if the device becomes damaged, stolen, or corrupted.
Keep backups offline in secure locations and verify that they can be accessed when needed. Periodic checks help ensure your recovery process is still valid.
Direct-to-wallet platforms simplify the process by removing one of the riskiest steps: withdrawing from custodial exchanges. Instead of trusting an exchange to release your funds, the crypto is delivered directly to your wallet as soon as you buy it. This reduces exposure to custodial failure while encouraging users to start in self-custody from the beginning.
Elbaite’s non-custodial model sends your purchased crypto straight to the wallet you control, helping you avoid withdrawal delays and platform-level risks. While users still have responsibility for managing their recovery phrase and securing their wallets, Elbaite eliminates the dangers that come with pooled custodial accounts and makes safe self-custody more accessible.
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Elbaite Pty Ltd (“Elbaite”) is incorporated in Australia and registered with the U.S. Financial Crimes Enforcement Network (FinCEN) as a Money Services Business. We will never ask for the private keys to your personal digital currency wallet. Elbaite is not liable for any losses you may incur, and you are solely responsible for your investment decisions. Before deciding if our services are right for you, take into consideration your own financial situation & needs and/or obtain professional financial or taxation advice from a licensed provider. Elbaite does not provide financial advice and Elbaite does not have any affiliation with external traders, advisors or trading platforms. Please note: Be cautious of phishing sites and always verify that you're on the official Elbaite.com website before entering any sensitive information.
