Hardware wallets with cryptographic currency are known to give users full control over their cryptography and provide more security, but such wallets are vulnerable to risks such as theft, destruction or loss.
Does it mean that all your Bitcoin (BTC) will be lost forever if your hardware wallet is lost, burned or stolen? Not at all.
There are several options for recovering a cryptocurrency for someone who has lost access to their hardware wallet. The only requirement to recover cryptographic assets, in that case, would be to maintain access to private keys.
A private key is a cryptographic string of letters and numbers that allows users to access cryptographic assets as well as complete transactions and receive cryptographic code.
Most cryptocurrencies typically provide a private key in the form of a recovery memo, which contains human-readable copies that allow users to recover private keys. The mnemonic form is usually activated through BIP39, the most common standard used to create cryptographic wallets.
BIP39 recovery phrase, also called seed, is basically a keyword that consists of 12 or 24 random words that are used to recover a cryptocurrency wallet. Encryption wallet platforms usually create a prompt right at the beginning of the wallet setup, which teaches users to write it down on paper.
Not your keys, not your coins
According to the managers of the major hardware wallet companies Ledger and Trezor, the security of the recovery set is much more important than keeping the hardware wallet safe.
Keeping a private key safe is a guiding principle for the cryptocurrency community, which is based on the phrase, “Not your keys, not your coins.” The principle means that users do not really have control over their coins if they do not have their private keys.
Both Ledger and Trezor wallets allow users to regain access to their wallets through milling by simply using a different hardware wallet.
“A user can recover their wallet and money on any new Ledger wallet. “Otherwise, they could also compare themselves to Trezor, SafePal or other hardware wallets,” Charles Guillemet, Ledger’s chief technology officer, told Cointelegraph.
Users can also access a software wallet to access their assets if the hardware wallet is lost, stolen or destroyed. “If you lost your Trezor, but you still have your recovery seeds, you can recover your money through many hardware and software wallets on the market,” said Jan Andraščík, Trezor’s Chief Information Officer.
According to Ledger and Trezor executives, the list of compatible software wallets includes platforms such as Electrum, Exodus, MetaMask, Samourai, Wasabi, Spot and more.
Threat of backup
Since the security of the recovery statement is a priority in maintaining access to the crypto wallet, one might be wondering how best to protect the seed statement.
“Preserving the seed is one of the most important issues in Bitcoin security,” Andraščík told Cointelegraph. He pointed out three main threats when it comes to BIP39 keywords: those caused by the user himself, all kinds of natural or man-made or theft disasters.
Loss of recovery is very common: A wallet user might accidentally throw it out or just not understand its importance right at the beginning of the wallet setup.
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Users could also choose the wrong place to store their recovery statement, with one common mistake being to simply put the statement online. Users of a wallet should never digitize their digital devices to avoid unfortunate events such as hacking, Ledger’s Guillemet said, adding:
“It is important for users to ensure recovery. It should be stored in a safe place and should not be digital – in other words, do not put your words in an email or text file and do not take pictures. “
As such, most cryptocurrencies recommend that their users simply write the seed on a piece of paper and keep it in a safe place.
Tips to protect your recovery sentence
To ensure reliable protection for the recovery statement, you can go beyond just writing it down on a piece of paper.
Ledger and Trezor executives provide a number of tips for users of cryptocurrencies to increase the protection of their seedlings, including the use of refractory storage cartridges or steel plates to dig the recovery set.
Other sophisticated methods of protecting seedlings also include distributing backups between several groups of people and places such as family, bank safes or a secret place in the yard. One such method is known as Shamir Backup, which allows users to distribute their private keys in several parts that are necessary together to recover the wallet.
While hardware wallet providers do their best to help users recover their assets if they lose their wallet, there is still not much they can do to lose recovery.
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That’s because the private key is designed to be in the sole possession of a non-custodial wallet user,’s Trešor’s Andraščík said. He pointed out that the principle of custody and its security impact is completely against the idea of having some kind of “copy” and added:
“If someone has a chance to recover your Bitcoin, it means they have access to your Bitcoin and you need to trust that these players will always treat you with kindness. We are getting rid of the need to trust, and rather encourage with them to verify.
“Ledger also works to improve the user experience in general, removing the pain points without compromising security. That said, autonomy remains the DNA blockchain and DNA Ledger. Users always have control, “said Guillemet.
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