Last Updated on June 14, 2022 by Bitfinsider

According to officials at Ledger and Trezor, the security of the recovery phrase is far more critical than the security of the hardware wallet.

Hardware bitcoin wallets are known for giving customers complete control over their funds and providing increased protection, yet they are vulnerable to theft, destruction, and loss.

Is this to say that if your hardware wallet is lost, burned, or stolen, all of your Bitcoin (BTC) will be lost forever?

If you’ve lost access to your hardware wallet, you have a few methods for getting your cryptocurrency back. In that case, keeping access to the private keys would be the only prerequisite for recovering crypto assets.

A private key is a cryptographic string of letters and numbers that enables users to access cryptocurrency assets, execute transactions, and receive cryptocurrency.

Most crypto wallets include a private key in the form of a recovery phrase, which includes a human-readable backup that allows users to recover private keys. BIP39, the most prevalent standard for creating seed phrases for crypto wallets, is often utilized to enable the mnemonic form.

A BIP39 recovery phrase is a password made up of 12 or 24 random words that is used to unlock a cryptocurrency wallet. During the initial setup of a wallet, most crypto wallet platforms produce a seed phrase and encourage customers to write it down on paper.

Guiding principle for the crypto community

The security of the recovery phrase is far more crucial than keeping the hardware wallet safe, according to executives at key hardware crypto wallet companies Ledger and Trezor.

The saying “Not your keys, not your money” encapsulates the crypto community’s guiding philosophy of keeping a private key safe. Users are not truly in control of their currencies if they do not own their private keys, according to this notion.

Users of both Ledger and Trezor wallets can recover access to their wallets using a seed phrase and another hardware wallet. In the event that a user’s hardware wallet is lost, stolen, or destroyed, they can use software wallets to access their cash.

Platforms like Electrum, Exodus, MetaMask, Samourai, Wasabi, Spot, and others are on the list of compatible software wallets, according to Ledger and Trezor officials.

Potential threats to a backup phrase

Because keeping access to a crypto wallet depends on the security of the recovery phrase, some may ask how to effectively safeguard the seed phrase.

When it comes to threats that may compromise BIP39 passwords, there are three in total: those generated by the user, natural or man-made calamities, and theft.

The loss of a recovery phase is fairly common: a wallet user may throw it out by accident or just not realize the value of it when setting up the wallet.

Users may also make the mistake of storing their recovery word in the incorrect location, with one typical blunder being to simply post the phrase online. To avoid unfortunate occurrences such as hacking, crypto wallet users should never digitize their seed phrases.

As a result, most crypto wallets advise their users to simply write down the seed phrase on a piece of paper and keep it somewhere safe.

How to safeguard your recovery phrase

It is possible to go beyond simply writing down the recovery phrase on paper to provide dependable protection.

Executives from Ledger and Trezor offer a number of suggestions for crypto wallet users looking to improve the security of their seed phrases, like employing fire-resistant storage capsules or steel plates to engrave the recovery phrase.

Distributing backups among multiple groups of people and locations, such as family, a safe box at the bank, or a secret area in the garden, are more advanced strategies for protecting a seed phrase. Shamir Backup is one such solution, which allows users to split their private keys into numerous pieces that must be combined to recover the wallet.

While hardware wallet providers try their best to assist consumers in recovering their assets in the event that their wallets are lost, there is nothing they can do if a recovery phrase is lost. Therefore, users should be very mindful when handling your recovery phrase.

Hardware wallets are safe and secure devices that can be used offline. They keep your cryptocurrency offline, making it impossible for you to be hacked.

To find out more on the leading hardware wallets, you may view our reviews here: Ledger & Trezor

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1. The Intelligent Investor by Benjamin Graham
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3. The Basics of Bitcoins and Blockchains: An Introduction to Cryptocurrencies and the Technology That Powers Them by Antony Lewis

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Disclaimer: The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, legal, tax or other advice. Investing in or trading cryptocurrency or stocks comes with a risk of financial loss.