Restoring a Lost, Stolen or Destroyed Bitcoin Wallet
As soon as you install any Bitcoin Wallet, you must ensure you have everything needed to actually restore your Wallet and your Bitcoins, in case of loss of the original device or Wallet. Your first task is securing the random words that form the seed phrase for your wallet, plus any passwords, Pins, Private Keys or other secret keys that secure your Wallet. The information, showing how to backup everything needed to successfully restore your Wallet, in case the original was lost or destroyed, will be available on the Wallet Developers Website. Please don’t skip this step. Make sure you know how to recover you Wallet and Bitcoin if disaster struck and your original wallet or devices were lost or destroyed.
Ideally, this crucial information should be kept on paper, as digital devices can fail. Some people even engrave their seed phrase on a piece of metal. Keep this information confidential to you alone, and in a secure location, completely separated from the device that holds your wallet, and protected against fire, damage or theft. Bitcoin does make you your own Bank, and security of your own Bitcoin is your responsibility. Running a google search for “How to keep your Bitcoin Wallet Seed Safe” may give you some ideas, based on your own circumstances, for storing this information securely. Some Wallets, although not all of them, will require that you backup certain files onto an external device, such as a USB thumb drive.
Be careful however, as occasionally some Wallets require more than just the Wallet’s main Data-file to be included in a backup. You may also have to backup your Wallet’s Private Keys, and these could be in a separate file from the main Wallet data-file. If you don’t backup everything required to restore a lost wallet, you could lose your Wallet completely if the original Wallet was lost or destroyed. If you use a thumb drive as a backup device, you should only use a high quality device, and also use more than one. We recommend at least three separate USB thumb Drives, used in rotation, to backup your Wallet’s data files. Other Wallets function slightly differently and do not need any backed up files to restore a lost wallet, but can be recovered using the Seed phrase alone. It depends on the Wallet you have chosen, whether a physical backup of files is required or not.
If you use a thumb drive as a backup device, you should only use a high quality device, and also use more than one. We recommend at least three separate USB thumb Drives, used in rotation, to backup your Wallet’s data files. Other Wallets function slightly differently and do not need any backed up files to restore a lost wallet, but can be recovered using the Seed phrase alone. It depends on the Wallet you have chosen, whether a physical backup of files is required or not. In our previous episode we installed an Electrum Wallet, and before receiving Bitcoins into our Wallet, our first task is to figure out how to recover our Bitcoins if this Wallet was lost or destroyed. To restore a lost or destroyed Electrum Wallet only requires a copy of the original Wallet’s Seed phrase.
However, don’t take our word for this. Bitcoin Wallet Applications continually evolve, so what may be the correct advice one day, could be wrong the next. After installing your Electrum Wallet, always visit the Website for the Wallet’s manufacturer or developer. Consult their online documentation, frequently asked questions or Community forum, so that you know exactly what you need to do to recreate your Wallet and recover your Bitcoins, in case the original wallet was lost or destroyed. Follow the Developers instructions closely, and secure everything required to recreate your Wallet. Many people have lost their Bitcoin Wallets because they did not follow these simple steps.
If you need to Backup Your Wallet Data File, and Export your Private Keys – Always use Multiple Backup Copies!
Let’s do this with Electrum, by visiting the Electrum.org homepage. From the homepage, we can see two helpful links, which you will find on most Wallet websites: Documentation and Community Forum. If you need to ask questions about how to ensure you have everything needed to restore a lost Wallet, either of these sections will help. Most Websites will have a Community Forum, which allows you to get advice from real people. Key phrases to search for are “Backup”, “restore” or “recover your wallet”. By looking through the Electrum Documentation, or community forum pages, we can quickly find the correct procedure to restore our Wallet, should this ever be needed. If I quote directly from the Electrum FAQ section: “It is not possible to recover your password. This is why we ask you to save your seed on paper.” “To restore your wallet from the seed phrase, create a new wallet, select the type, then select “I already have a seed”, and proceed to input your seed.” Following these steps will allow you to recreate your Electrum Wallet on a new computer or smartphone.
It’s that easy to restore an Electrum Wallet, even if the computer or smartphone that held your original Wallet was lost, stolen or destroyed. This is made possible because of reverse encryption, and the BlockChain Public Ledger, which holds details of all Bitcoin Transactions, including those from the original wallet. This highlights why storing your seed very securely, ideally on paper, and completely separated from your device is essential. It should also highlight one of the major drawbacks with Bitcoin Wallets, which is the very real possibility of theft, either cyber or physical. If you lost the computer or smartphone holding your Wallet, and you also lost the seed phrase, or Private Keys, then your Wallet could be gone — forever. Also, if a thief stole your seed phrase, or your Private Keys, they could potentially use them to recreate and thus steal your wallet. One final thing to consider is that none of us live forever. If you have relatives and loved ones that you would wish to leave your Bitcoin to, should you pass away, then you may need to account for this in your Will. Also ensure that you leave your loved ones the means to actually access your Bitcoin Wallet. We can’t advise you how best to do this, as every person’s circumstances are different. Running a google search for methods other people have used to account for Bitcoin Wallets in their Wills may help you. And that’s us.
In summary, and before you begin to actively use your Bitcoin Wallet, it pays to ask yourself this simple question: “If I lost all of the computers or smartphones that hold my Bitcoin Wallet, do I have the means to recreate my Wallet, and is this information and data stored safely, securely and completely separated from the original devices?” If you intend to use Bitcoin, the answer should always be “Yes”.