What You Can Do By The End

• Back up a seed phrase correctly
• Compare custody models
• Spot phishing and revoke approvals
• Fix a reentrancy bug
• Read an audit with care

Whoever Holds The Key Holds The Asset

• A wallet stores keys and signs for you.
• Assets stay on the chain.
• No password reset exists for a lost key.
• You become your own security department.

Seed Phrases

• 12 or 24 words created with BIP-39.
• All keys derive from the phrase.
• Anyone with the words controls the account.
• No legitimate service ever asks for it.

Backing Up A Phrase

• Write on paper or stamp in metal.
• Keep two copies in different places.
• Never store it in photos, notes or cloud.
• Test the restore on a second device.

Who Holds The Keys?

• Custodial: the company holds keys, you hold a claim.
• Self-custody: you hold keys and risk.
• Each model trades convenience for control.

Hardware Wallets

• The key lives inside a secure chip.
• The computer builds the transaction.
• You verify details on the device screen.
• The device signs and returns the signature.

computer:  builds transaction
device:    shows to, amount, fee
you:       press confirm
device:    signs, key never leaves

Multisignature Wallets

• Several keys must approve a spend.
• Example: 2 of 3 signers.
• Protects against one lost or stolen key.
• Safe is a widely used contract wallet.

How Phishing Works

• Fake sites reached by sponsored search results.
• Fake support agents in direct messages.
• Urgent emails about account risk.
• Free token claims that ask for a signature.

Connect, Sign, Approve

• Connect shares only your public address.
• A transaction signature can move funds.
• An approval lets a contract spend tokens later.
• Off-chain permits grant rights with no visible transaction.

Reduce The Damage

• Verify full addresses, not just the ends.
• Send a small test transaction first.
• Revoke old allowances monthly.
• Use a separate wallet for experiments.

Reentrancy: The Vulnerable Vault

• The vault sends ether before updating balance.
• The receiver calls withdraw again.
• The old balance is still recorded.

function withdraw() external {
    uint256 amount = balances[msg.sender];
    require(amount > 0, "nothing");
    (bool ok, ) = msg.sender.call{value: amount}("");
    require(ok, "send failed");
    balances[msg.sender] = 0;
}

Reentrancy: The Fix

• Checks, then effects, then interactions.
• Zero the balance before the external call.
• Add a reentrancy guard as a second layer.

function withdraw() external {
    uint256 amount = balances[msg.sender];
    require(amount > 0, "nothing");
    balances[msg.sender] = 0;
    (bool ok, ) = msg.sender.call{value: amount}("");
    require(ok, "send failed");
}

Other Common Bugs

• Missing access control on admin functions.
• Unchecked results of external calls.
• Weak oracles that one trade can move.
• Authorization with tx.origin.

What An Audit Can And Cannot Say

• It reviews one version at one moment.
• It can miss bugs.
• It does not judge economic design.
• Check which findings were fixed.

Recap

• Keys control assets, so back them up well.
• Pick custody to match the amount at risk.
• Read every signature, revoke old approvals.
• Audits help, and they have limits.

Next Week: Real-World Use And Regulation

• Identity, supply chains, payments, public goods.
• How regulators approach crypto.
• The EU and Turkey at a high level.

Questions And Exercise

• Attack and fix the vault in Remix.
• Restore a test wallet from its phrase.
• Write your one-page security plan.