What To Do If You Lose Your CryptoWallet?
Introduction
We can see cryptocurrency and blockchain technology emerging every day, even though they are very new technologies for everyone. In spite of this, I would like to mention that cryptocurrency and blockchain technology is the subject of a lot of confusion and doubt in investors’ mind. Many of the investors asked whether the investment in cryptocurrency is safe or not. So, this is a very controversial question. Can crypto wallets protect your money? Tell me what happens if your money is wiped from your wallet? No one knows cryptocurrency and blockchain as a secure way to park your money.
The article of livemint states that "phishing websites are commonly used to steal sensitive information from users, Ponzi schemes, and fake investment schemes like Moris Coin are also scams in crypto." We have heard many cases regarding cryptocurrency. Therefore, the bigger question is whether cryptocurrency wallets are safe or not?
Hence, In this article, you will learn a lot of stuff about crypto wallets, and how you can secure your crypto wallet. Let’s begin!
What Is a Crypto Wallet?
Crypto Wallet is similar to our digital wallet. In a digital wallet, you can store your money, send or receive money from others. Similarly, in a crypto wallet, you can store, send or receive your cryptocurrencies such as Bitcoin, Ethereum, etc. Therefore, if you purchase any cryptocurrency, it will be stored in your crypto wallet. Every crypto wallet has its own public address and private key. So what does it mean? It is a key that helps in your crypto transactions. Public keys allow you to receive funds. These keys identify your account on the network. On the other hand, private keys can only be used for signed transactions and to prove you have the related public key.
How Do The Crypto Wallet Works?
Contrary to popular belief that Crypto One does not actually store cryptocurrencies but rather they work as a kind of gateway providing you with the necessary tools to communicate with the blockchain. In other words, these wallets are capable of generating all the information needed for the use of cryptocurrencies.
Blockchain technology is the public ledger that can store the data in the form of blocks, that’s why it is called a blockchain. If you sending your coin, one of these you just keep in your mind, You sent the same wallet address on the same cryptocurrency. Let’s understand by giving example If you want to send bitcoin but you mention the wrong wallet address (somewhat like BCH instead of BTC), then you may be lost your money. If you list your money you can’t claim anyone’s office or any authority. Because transaction in cryptocurrency is decentralized. So, make sure you entered the right address before sending crypto.
Feature of Blockchain Wallets
Now we learned what is a crypto wallet and how does it work? I would like to give some exciting features of crypto wallet that you must know. Here, are some features of crypto wallets.
● Easy to use
A Crypto wallet is similar to a daily digital wallet. It is very easy to send or receive any transactions.
● Barrier-Free Transaction
An amazing benefit of crypto wallets is barrier-free transactions. You can send your crypto across the globe without having any mediators.
● Low Transaction Fees
Hassle-free to transfer your crypto from one to another. There are very low transactions free as compared to any traditional bank.
● User Interface
USe-interface of any crypto wallet was so amazing. If you are from a non-technical background then don’t worry you can use this wallet very seamlessly.
● Security
You will get robust security features in the crypto wallet like two-factor authentication, automated logout, private keys, etc. If you are afraid to keep your money in your crypto wallet then don’t be worry your money is safe in the crypto wallet.
Different Types of Crypto Wallet
For your cryptocurrency transaction mainly two types of crypto wallets are available: Hot and cold wallets.
So, let’s get a difference between both Hot and Cold crypto wallets
Hot Wallets
Hot wallets are online wallets (like Paypal or UPI) for day-to-day transactions. With these wallets, you can transfer cryptocurrencies quickly.
For Example, Coin.Space and Coinbase are online wallets.
Hot wallet's private keys are stored in the cloud for quick transfer. You can remotely access your hot wallet from anywhere with the help of mobile and desktop devices.
Cold Wallets:
With cold wallets, the transactions are signed offline and then disclosed online. For getting high security they are maintained offline rather than cloud network.
For Example, Trezor and Ledger are cold wallets.
Cold wallets stored their private keys in separate hardware that is not connected to the cloud or they are safely stored on a paper document. The cold wallets are safe from unauthorized access like hacking and other online vulnerabilities.
Does it Make Sense to Recover Cryptocurrency Lost?
Losing a crypto wallet or private key is very dangerous for you. There are limited or two methods available for recovering your lost crypto wallets and keys.
So let's discuss these methods
1. Extracting Data from Hard Drives
There are lots of cases available of crypto users who lose their cryptocurrency wallets and keys.
Early crypto users or miners have been most affected because they have no idea that crypt prices would skyrocket in the future. It is impossible to tell exactly how many crypto users lost their wallets and private keys.
This recovery method is useful for those crypto users who previously store their wallets and keys on their computer hard drives. This current data recovery method can help to restore deleted files, but there is no guarantee that your will definitely recover your crypto wallet intact.
With the help of data recovery software, you can try to recover your wallet or keys. Also, there are many companies available that can help in recovering your data. But they are very expensive.
2. Using Cryptohunters
With the help of Cryptohunter services, you can recover your lost or stolen keys. The right combination of keys to a wallet can only be brute-forced with a lot of computing power. If the user remembers a small part of the lost keys then it helps to reduce the processing time.
Mostly legitimate services companies ask for a percentage of the holding as compensation.
That said breaking down this level of encryption required a massive amount of procession power. And breaking a crypto wallet(without a partial code) is theoretically feasible but practically next to impossible.
In short, mining coins is more profitable than hacking wallets using this quantum computing power.
How to Avoid Losing Your Crypto Wallet or Keys
Securing your crypto wallets or keys is very important for avoiding the loss of funds and related inconveniences. Here I discuss three ways that help to prevent losing your crypto keys.
1. Have a Secure Backup
In the case of using a non-custodial crypto wallet, you need to keep safe your mnemonic recovery phrase. Choose a secure location that helps to regain access to your key if the keys get lost.
Storing the keys in a computer or mobile phone is also riskier because they can be hacked. For getting high security, You need to choose a device or paper or thing which is not connected to the internet.
2. Using a Custodial Wallet
A custodial wallet is best for those wallet owners who deem direct responsibility of the wallet key is too risky. Here, the wallet's private key is managed by a third party. In case you lose your wallet key then you can easily recover it with the help of email. Choosing a regulated exchange is best to use. Mostly custodial wallets are web-based.
3. Use a Hardware Wallet
Choosing crypto hardware wallets is best for getting a high level of security. When you connect this wallet to the computer it requires a pin to unlock it.
They are highly secure from hacking attacks and malware. They use cryptographic hashing technology and utilize a microcontroller for enhanced protection.
Make sure your cryptocurrency wallet keys are safe!
Many blogs and videos claim several ways to save your crypto wallet keys, But let me tell you most of the ways are useless. The truth is that, Designing of your crypto wallet to secure your money. By using advanced security algorithms, crypto wallets are extremely safe.
Conclusion
Cryptocurrency like bitcoin, Ethereum is not regulated in many countries. Government can't give you any relief if you suffer any loss. Therefore, many investors or traders have questions in their minds about what happens if their money can be wiped out from the crypto wallets. Therefore, through this article, I explained the concept of crypto wallets. Crypto wallet is designed by an algorithm for high secured transactions from one medium to another.
There are different types of wallets available to store your crypto. But choosing a hardware wallet is the best option to secure the wallet key. Also, there are limited methods available for recovering your wallet key, if you lose it.