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Ensuring the safety of your cryptocurrencies is crucial, especially when it comes to recovering them if your crypto wallet is lost.
One of the key aspects of protecting your cryptocurrencies is understanding what it is Cold wallet backup And if you must create one.
In this post, we’ll explore how to back up cold wallets, as well as the pros, cons, and best practices for safely setting up your cold wallet recovery.
Table of contents
Why is backup important for cold wallets?
A cold wallet is an offline storage device for your cryptocurrencies. It can be a hardware wallet or even a physical paper wallet.
It’s called cold Because they are offline, this makes them more secure than hot wallets, which are always online. For this reason, hot wallets are more vulnerable to hacking and phishing.
What a cold wallet offers is high security from cyber threats, but most of them are not immune to physical damage, theft or loss.
Since cryptocurrency transactions are irreversible, having a cold wallet backup is vital!
Can cold wallets be backed up?
A cold wallet backup means that you create a secure copy of your wallet’s private keys and/or recovery seed phrase.
The master or seed phrase gives you access to your encryption. By backing them up, you can recover your cryptocurrency funds if your physical wallet is lost, stolen or damaged.
The best hardware wallets usually come with initial recovery phrases, which range from 12 to 24 words. It is created during the initial setup of your hardware wallet.
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Are cold wallet backups recommended?
When it comes to backing up a cold wallet, the expert consensus is that you should create a backup wallet.
Did you know?
Nearly 20% of the total Bitcoin supply will likely never be recovered due to the loss of private keys.
Therefore, most cryptocurrency security experts strongly suggest making a backup of your cold wallet.
The reason is simple: it increases the chances of getting your money back if something happens to your physical wallet.
On the other hand, some experts warn that backups could introduce new risks. For example, a poorly secured backup, such as one on paper, within email, or an online cloud server, is a cause for concern.
So, what’s the final idea?
Use a metal crypto wallet to recover your initials, like Material DIY, which is waterproof, fireproof, and strong enough to last the test of time!
How to backup your cold wallet
Properly backing up your cold wallet is a crucial step to protecting your cryptocurrency assets.
Here’s a step-by-step guide to help you create a secure backup and avoid common mistakes.
1️⃣Create your seed phrase
When you first set up your cold wallet, the device will generate a seed phrase for recovery. It can be from 12 to 24 words. This phrase is similar to the “master key” of your cryptocurrency wallet.
An example could be “Cup eat dog phone nail sit red screen christmas seven light pen“
2️⃣Write your seed phrase
Once you create the statement, you have a few options to “write” it or store it. You can use physical paper, or emboss it on a medium-sized, sturdy metal crypto wallet.
3️⃣ Store the backup in a private place
Keep your seed phrase recovery in a safe place that no one knows about. Do not share its location or code with anyone.
Avoid common mistakes
- Do not take a digital photo or screenshot of the seed phrase, as it can be hacked online.
- Don’t store it in other digital formats, such as email, cloud servers, or physical devices that can connect to a computer. One of the biggest mistakes users make is saving the seed phrase to cloud storage, email, or personal devices connected to the Internet.
- Do not share your recovery phrase with anyone.
- Do not keep your hardware wallet and seed phrase wallet in the same place.
Best practices for recovering a cold wallet after loss
Before we dive into how to recover your cryptocurrencies, let’s discuss the difference between cold storage and hardware wallets.
Although people generally consider hardware wallets to be safer and more secure than hot wallets, not all hardware wallets are cold wallets.
Most hardware wallets have electronic components, meaning they have a screen that transmits information to and from the app or require connection to a computer.
With true cold storage wallets, you can avoid concerns about technical malfunctions or malware, as they never need to connect to another device.
Basic steps to recover encryption
Imagine this scenario: Your crypto wallet has been stolen, and you cannot access your digital assets. Fortunately, you were smart enough to create a recovery seed phrase for your portfolio.
Here’s what to do next:
➡️First, get a new cold crypto wallet that supports recovery.
➡️Then select “Restore” or “Recovery” option during setup.
➡️Make sure to restore from the seed phrase and not create a new wallet.
➡️Carefully enter your seed phrase. Don’t make any spelling mistakes!
➡️Complete setup by following the instructions indicated on your new wallet.
➡️Finally, check your funds to make sure you redeem your cryptocurrencies.
Shared backup solutions
Metal backups: Steel panels, such as Material DIY, are very popular because they are very durable. Being resistant to fire, water and physical damage, they are long-lasting solutions for securely storing your recovery phrase.
Paper backupAlthough paper backups are easy to set up, they come with risks due to damage. They are extremely vulnerable if not stored in a safe and protected environment. The degree of human error is higher.
Digital backups: Creating encrypted digital backups on offline devices (separated) can be a convenient option, but you should disconnect them from the Internet to avoid the risk of hacking.
Step-by-step guide: How to back up your cold wallet using DIY materials
- Create your seed phrase: When you set up your cold wallet, you will be given a 12 or 24 word seed phrase. This phrase is necessary to access your cryptocurrencies if the wallet is lost or damaged.
- Back up your materials yourself: engrave your seed phrase on the stainless steel plate. You have the option to engrave up to 24 words.
- Store your cold wallet backup in a safe place.
Should you rely on a backup? Risks and alternatives to consider
Whether or not there is a backup solution, you should always have one.
There’s nothing worse than losing your cryptocurrencies forever because you were too lazy or didn’t think it was important to back up your crypto wallet.
Having a recovery wallet carries similar risks to holding cryptocurrencies – you can lose it, it can be stolen, or it can get damaged.
But, by taking advantage of the best options available, e.g DIY materialsYou can help protect your digital investments for life.
Frequently asked questions
Can I backup a cold wallet?
- Yes, you can back up your cold wallet by securely storing the seed phrase on a metal backup like Material DIY.
What is the most secure way to store my backup?
- The safest way is to use a metal crypto wallet to recover the seed phrase. These are usually damage-resistant and made to last.
What should I do if I lose my cold wallet?
- If you backed up the seed phrase, simply purchase a new wallet and restore your cryptocurrency by entering the seed phrase during setup.
Are paper backups safe?
- Although paper backups are easy to create, they are vulnerable to fire and water, and will eventually degrade over time.
