What to Do BEFORE Your Wallet Is Lost / Stolen / Damaged
Preparation is key in any venture, and crypto storage is no different. Here are some preparatory steps to be done as soon as you receive your new hardware wallet in the post:
- When setting up your hardware wallet, you'll be provided with a recovery phrase, typically 12 to 24 words long. Write this down on paper, not digitally, and store it in a secure place. It's the only way to recover your wallet if it is lost or damaged.
- Keep your recovery phrase secret. Anyone with access to this phrase has access to your crypto.
- Make more than one copy of the recovery phrase and store them in different secure locations.
- If possible, consider engraving your recovery phrase on a piece of metal. It's resistant to water and fire damage unlike paper.
What to Do When Your Crypto Wallet Is Lost
The sinking feeling when you realise your crypto wallet is missing can be terrifying, but all hope is not lost. Here's what to do:
- Breathe and try to retrace your steps. It might be closer than you think.
- If you can't find it, it's time to dip into your backup. With your recovery phrase at hand, you can purchase a new hardware wallet and input the recovery phrase during the setup.
- The funds will be restored in the new wallet, even though your original wallet is lost.
What to Do if Your Crypto Wallet is Stolen
In the unfortunate event of theft:
- Act quickly. Use your recovery phrase to restore your funds in a new hardware wallet as soon as possible.
- In cases where you fear that your PIN might have been compromised, transfer your funds to another secure wallet immediately.
What to Do When Your Crypto Wallet Is Damaged
When your crypto wallet suffers physical damage:
- If the wallet is still functional, transfer your funds to another secure wallet immediately.
- If it's non-functional, use your recovery phrase to restore your funds on a new hardware wallet.
Using Your Recovery Phrase
Your recovery phrase is your ultimate backup. To use it:
- Purchase a new hardware wallet (preferably the same model).
- During the setup process, you will usually be able to choose 'Restore a wallet' or 'Use a recovery phrase' instead of creating a new wallet.
- Enter your recovery phrase in the exact order it was given to you.
- Your wallet, along with all your funds, will be restored.
Future-Proofing Your Cryptocurrency Storage
- Regularly check the condition of your hardware wallet. Ensure it's free from physical damage and functioning properly.
- Revisit the places you've stored your recovery phrase periodically to ensure they're secure and accessible.
- Don’t become complacent. Always stay updated with the latest security practices and advice in the crypto world.
Precautions to Prevent Future Loss or Damage
- Avoid exposing your hardware wallet to harsh conditions that can lead to its malfunction or destruction. This includes excessive heat, water, and physical damage.
- Don't carry your hardware wallet around if you don't have to. The more you expose it to the outside world, the higher the risk of losing or damaging it.
- Consider using a safe deposit box or a home safe for storing your hardware wallet. It can provide a higher level of security compared to typical storage spaces.
- Don't store your recovery phrase and your hardware wallet together. If someone steals the wallet, they could potentially gain access to your recovery phrase as well.
- Be cautious about who you share information regarding your crypto assets with. The fewer people who know you have a hardware wallet, the safer your assets are.
- Use strong and unique PIN codes for your hardware wallet. This serves as another layer of defence if your wallet falls into the wrong hands.
- Regularly update the firmware of your hardware wallet. Companies often release security patches to protect against newly discovered threats.
- Consider using multi-signature wallets for additional security. In a multi-signature setup, multiple keys are required to sign a transaction, providing an extra layer of protection.
