Wallet Security Pitfalls: Why Automated Bot Private Key Management Modes Conceal Risks

HashBandit · 2025-12-28T02:40:10+00:00

The article discusses the current centralized private key risks associated with DEX automated trading robot products and emphasizes that if the server is attacked, user assets will face significant risks. Additionally, self-custody wallets are not foolproof and may be exposed to various security threats. The author believes that improving wallet security should balance ease of use, and security and user experience can coexist.

HashBandit

2025-12-28 02:40:10

Abstract generation in progress

【Crypto World】Recently, someone brought up the issue of wallet theft. Let’s discuss the underlying logic behind it.

Many of the current DEX automated trading robot products have a fatal flaw—the risk of private key centralization. Simply put, these products require you to upload your private key to their servers, storing it in plaintext or decryptable form. Just hearing that sounds problematic, right?

If the server is hacked, the actual risk level is no different from putting your assets on an exchange. Therefore, the security standards for these products must meet exchange-level requirements; otherwise, the risk is quite high. This is not alarmism—it’s a systemic risk.

Self-custody wallets are not completely safe either. Code vulnerabilities, malicious developers, compromised user devices, data leaks… these are common ways to get compromised. Especially for automated strategy products, which often rely structurally on private key custody. Once a link in the chain breaks, the entire system is at risk.

But this doesn’t mean we should give up on usability. The true evolution of wallet security should be to make private key security and ease of use no longer mutually exclusive. In other words, security and user experience can coexist—they just depend on how the product is designed.

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ShitcoinArbitrageur

· 22h ago

My God, it's the same old story again. Uploading private keys to the server and still calling it decentralization? Laughable. What's the difference from a centralized exchange? --- I've been saying for a long time that those bots are scams. Only now are people starting to realize? --- So you still have to manage your private keys yourself. It's troublesome, but at least you can sleep peacefully. --- The risk of centralization really can't be overstated. It seems most products haven't thought it through. --- If self-custody can also be hacked, then what the hell am I even using? --- That's why I never touch those automated bots. It's really a gamble on luck. --- To put it simply, if your private key is in someone else's hands, you have no say. Those who haven't realized this should wake up.

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GasBandit

· 22h ago

Uploading private keys to the server? Isn't that a suicidal move? No wonder so many people fall for it. --- Honestly, you still need to manage your private keys yourself. Don't be fooled by those bots. --- Exchange-level security standards? Most small projects haven't even done basic audits. --- Damn, that's why I never use these automated products. Too damn unsafe. --- Self-custody also has risks, but at least you have control. That's very important. --- Another bloody lesson. When will there be a truly secure solution? --- So ultimately, it's still cold wallets. Other solutions are just gambling.

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MemeCoinSavant

· 22h ago

ngl storing private keys on some bot's server is just asking to get rugged... honestly surprised people still fall for this in 2024

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SchrodingerProfit

· 22h ago

I'll just set up a local wallet bot directly. Anyway, I can't make money, so I can avoid being exploited by others.

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ILCollector

· 22h ago

Wow, isn't this just putting private keys on someone else's server? And they dare to call it an automated product. I just want to ask, what are these teams thinking?

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LiquidatedAgain

· 22h ago

It's a pity I didn't know earlier... I am among the people who got their positions liquidated by this thing. Uploading private keys to the server? To put it nicely, it's called automation; to be blunt, it's gambling that this company won't get hacked. And what happened? My little dreams are gone just like that.

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