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CoinMinutes' Framework for Assessing Crypto Security and Risk
Crypto security isn't optional—it's essential. Hackers stole over $3.8 billion in cryptocurrency market in 2022 alone, according to Chainalysis. That's real people's money gone in an instant.
We created our security framework at CoinMinutes after seeing too many folks lose their savings to hacks and scams. Even experienced crypto users struggle to tell if a project is secure.
Take Jeff from Portland. He put $5,000 into a new DeFi platform without checking its security. Two weeks later, hackers found a code bug and emptied the entire platform. His money vanished overnight.
Why Security and Risk Matter in Crypto
Crypto is totally different from your bank account. In the majority of cases, there is no safety net to catch you if things turn bad. Your crypto is stolen? Well, most likely, it is gone forever. No insurance will cover it, and no customer service will be there to help you retrieve it.
Three main reasons which work together to make security matter in crypto are:
- Once it's gone, it's gone: Transactions are irrevocable. Sending your Bitcoin to a scammer? That money is then "getting away" forever.
- You are your own bank: You are in charge of your security. Independence is good for 'what is yours' but it also means that the responsibility for the security of the assets is solely yours.
- Hackers target crypto: An accomplished attack leads to immediate, untraceable, and fully at the disposal of the attackers, gains.
Melissa, a teacher who lost her savings, said: "I had my seed phrase written down in a text file on my computer. The hackers that got into my email located it and took all 2.3 ETH I had been saving. I didn't know anything about basic security, and it cost me everything."
An Overview of CoinMinutes' Security & Risk Assessment Framework
Our framework has four steps that look at different security aspects:
| Step | Focus Area | Key Questions We Answer |
| 1 | Project Security Fundamentals | Is the code secure? Has it been audited? |
| 2 | Risk Factors Beyond Code | Who runs this project? What's their track record? |
| 3 | Real-Time Threat Monitoring | Are there active threats or new vulnerabilities? |
| 4 | User-Centric Safety | How can you protect your own assets? |
We give each project a security score from 1-10. This helps you quickly understand risk levels without becoming a security expert yourself.
Step 1: Project Security Fundamentals
We start off by examining the technical base of the crypto project. The aspects we look at are code quality, security audits, and infrastructure.
We look at:
- Code Audits: Has a trusted person checked the code? A 2022 report by Immunefi revealed that projects with multiple audits had half the serious vulnerabilities.
- Open Source Code: Is the code open for anyone to look at? Open source projects enable community scrutiny, which usually finds issues before the attackers.
- Smart Contract Security: We identify such vulnerabilities as reentrancy, overflow, and permission issues.
Ryan averted a big mistake: "I was on the verge of putting my money in a yield farming protocol that promised sky-high returns. CoinMinutes Cryptocurrency was the one that spotted that there were zero code audits for that project. I decided not to go with it and, three weeks later, it got hacked for $4 million."
Step 2: Risk Factors Beyond the Code
Security is not just about the code, it is also about people. Here we identify the humans behind the project.
We examine:
- Team Background: Who is responsible for this? Teams that are anonymous are more risky. We investigate the developers' backgrounds and the work they have done before.
- Decision Making: What is the process for making decisions in the project? If only one or two people have the total control over, then it is a red flag.
- Money Management: How were the funds handled? The more signatures there are for transactions and the more treasury practices that are done in a transparent way, the better the security.
DeFi Safety discovered that the projects with teams who were identified had 64% fewer catastrophic failures than those with anonymous teams. That single fact should be enough to make you reconsider anonymous projects.
Mike said, "CoinMinutes almost helped me to make a mistake when I was about to invest in a project that had great technology but it turned out that only two anonymous developers controlled all the decisions. Six months later, they left with all the money."
Step 3: Real-Time Threat Monitoring
Crypto security, one million times, is not a one-time job. The rise of new threats, which happens every day, forces us to place special emphasis on real-time security monitoring.
We keep watch in various ways, including:
- Tracking Active Exploits: We monitor crypto attacks to identify the ways in which similar vulnerabilities can affect different projects.
- Vulnerability Reports: We keep an eye on the security researchers for the first signs of panic.
- Unusual Activity: The different transaction patterns, in most cases, have been the signaling of an attack in progress.
Information provided by Rekt.news indicates that 62% of the major exploits had warning signs at least 48 hours before the main attack. Our monitoring is designed to detect such early signs.
Lisa said to us: "CoinMinutes alerted me about suspicious activity on a lending platform, so I withdrew my assets. That night, the platform was hacked for $18 million. That early warning made it possible for me to get my money out in time."
Find More Information: Behind the Scenes: How CoinMinutes Develops Its Exclusive Crypto Reports
Step 4: User-Centric Safety Tips and Guidance
While your own behavior is crucial in ensuring your safety even with secure projects, this stage provides some practical safety advice for everyday users.
Our security advice includes:
- Wallet Security: Detailed directions for securing different types of wallets.
- Safe Transactions: Suggestions for verifying the correctness of the address, sending a test amount first and recognizing scammers.
- Backup Plans: The measures to create secure backups in case of an emergency.
A study conducted in 2023 revealed that 73% of the victims of crypto theft made security mistakes that were avoidable. Most of the losses could have been avoided if basic safety practices were followed.
We don't just instruct "secure your keys." Rather, we give you exact instructions such as: "Your seed phrase should be written on paper and never in a digital form. Put it in a waterproof container located in a place that is only accessible to you and a few family members whom you trust."
How CoinMinutes Supports Ongoing User Protection
We don’t only implement our security system, but we also offer assistance on an ongoing basis as threats change:
- Quick Alerts: We give alerts about critical issues, most of the time within 4 hours of identification.
- Updated Guides: Routine articles about the latest security practices.
- Community Warnings: Our users disclose possible threats to each other, thereby, forming an early warning network.
Ahmed points to our alerts to the rescue of his funds: "Their alert about a counterfeit exchange website saved me. The fraudulent site looked just like the real one, but CoinMinutes was the first to notice the small difference in the URL and thus before I connected my wallet."
Useful Reference: https://magic.ly/coinminutes
Conclusion
To remain safe in the crypto environment, one must always be vigilant. Our four-step process allows you to verify if the projects are safe, comprehend their risks, keep an eye out for any threats, and secure your assets.
There is no such thing as a risk-free framework, which is crypto altogether. The objective is to make decisions that are guided by true and clear security information.
Security becomes even more vital as the number of people in the crypto market grows. The reason why our framework is there to assist is because the newcomers usually do not have the technical knowledge to evaluate the security on their own.
Through the use of technical assessment and the provision of practical advice, we have created a security system in crypto that is user-friendly for everyone, not only for the tech experts.
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