It’s bad enough when you lose your data normally. Losing important documents or photos can be a major frustration. But when that data loss has financial ramifications, it’s potentially an even bigger problem. Consider, then, how you would react if you lost access to all the bitcoin in your wallet. For some people, that would be a major disaster.
You may be thinking that could never happen to you. Don’t be so certain. Digital forensics analysis firm Chainalysis conducted some research, concluding that about 3.78 million, or 23 percent, of all bitcoin at that point were lost.
If there’s one thing you take away from reading this, make it this: always backup your wallet. Your bitcoin is not secure if you don’t backup. You might suffer hardware or software failure, or the device you hold your wallet on could be stolen or go missing. Backing up protects you against this.
Also, do it regularly and on an automatic schedule, encrypt with a secure password, and store the wallet in multiple locations. This final point ensures redundancy – backing up to the same drive your wallet is stored on is pointless, since something like a fire would destroy both at once.
Your backup method will depend on the type of wallet, but it’s usually either a wallet.dat file backup, a BIP32 master private key, or a BIP39 mnemonic seed phrase. Nearly all wallets nowadays use the latter.
If using a hardware wallet – something like a Trezor or Ledger – then they will create a mnemonic seed phrase when first setting them up. These seeds are BIP39, by the way. They consist of randomly generated words and you should write them down somewhere that will never be connected to the internet. This phrase can then be used to recover your wallet in any eventuality.
If you’re using Bitcoin Core, this uses the wallet.dat file for storing the private keys to match the bitcoin within the wallet. If you’re on Windows, this file can be found in the ‘%APPDATA%\Bitcoin’ folder. On Mac, it’s ‘~/Library/Application Support/Bitcoin’. Finally, on Linxu, it’s ‘~/.bitcoin/’.
When you’ve found the file, replicate it to a secondary location like an external drive, USB, or private cloud. Never use public cloud solutions because these are more prone to security threats from outside sources. When it comes to restoring, copy the backup over the existing wallet.dat file. Bear in mind this will overwrite what’s already there, since Bitcoin Core can only have one version of the file at any time.
If you haven’t backed up and have suffered data loss, you might be able to recover the wallet.dat file. Try using data recovery software to scan your computer and it might be able to pull a version of the file, even if it seems corrupted or missing to you.
As you can see, restoring from backup is easy – you either type some words or move a file across. It’s so easy to create a backup plan to protect your wallet, so don’t delay. You need to protect your Bitcoin against all eventualities.
How to Recover Your Bitcoin Wallet
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