Security, Taxes & the 7 Rules
7 key takeaways
- Most losses are not hacks — they're phishing, fake support, romance/pig-butchering scams and seed-phrase theft.
- Nobody legitimate will ever ask for your seed phrase or remote access.
- Every sale, swap, and spend is usually a taxable event; staking rewards are income.
- Use tax software from day one; reconstructing years later is painful.
- Diversify custody: hardware wallet, one or two reputable exchanges.
- Position sizing: never more than you can watch drop 70% without panic-selling.
- Keep learning from primary sources: protocol docs, audits, on-chain data.
The scam leaderboard
1) Pig-butchering: a stranger builds a relationship, then a 'guaranteed' trading platform. 2) Fake support: a DM after you post a question. 3) Address poisoning: a look-alike address in your history. 4) Wallet drainers: a site asks you to 'verify' or 'claim' and you sign a malicious approval. 5) Fake hardware wallets with pre-set seeds. 6) Impersonation giveaways. 7) Fake exchanges and apps. Recognise the shape and you'll dodge all of them.
Taxes in one screen
Buying with fiat: not taxable. Selling, swapping coin-to-coin, or spending: capital gain or loss on the difference from your cost basis. Staking, lending interest, airdrops, mining: ordinary income at receipt. Transfers between your own wallets: not taxable. Rules vary by country — the Top 7 Tax Tools handle the details.
Operational security
Separate email for crypto; app-based 2FA or a hardware key; a dedicated browser profile for DeFi; a hardware wallet for savings; a 'burner' hot wallet for minting and new apps; bookmarks instead of search results for exchange logins; and a monthly review of approvals.
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The 7 rules
1) Only invest what you can lose. 2) Self-custody your savings. 3) Verify every address on the device. 4) Never share a seed. 5) Know where the yield comes from. 6) Log every transaction for tax. 7) Ignore urgency — scams and bad trades both run on it.
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Frequently asked questions
I was scammed — what now?
Move remaining funds to a new wallet immediately, revoke approvals, report to your exchange and local police/cyber-crime unit, and ignore anyone offering 'recovery' — that's the second scam.
Do I owe tax if I never cashed out to fiat?
In most countries, yes: swapping one coin for another is a disposal.
How often should I review security?
Monthly: approvals, 2FA devices, exchange whitelist, and firmware updates.