If you own a cold-storage hardware wallet to safely store your cryptocurrency and NFTs, then it’s obvious that you care about securing your digital goods. But what happens if you break or even lose your wallet?
If your hardware wallet is lost or damaged you can still recover your assets using your secret recovery phrase. You will need a new hardware wallet to access your assets. Unfortunately, if you lose your recovery phrase, there’s no way to recover your assets even with a new wallet.
Knowing how to access your assets in case of a lost or stolen wallet is important. That’s why I decided to cover this topic extensively below.
What to Do if Your Wallet Is Lost Or Damaged?
If your wallet is lost or damaged, don’t panic. If you still have your secret recovery phrase everything will be okay. All you need to regain access to your digital assets is a new wallet. If you don’t know which wallet to get, I’ve also created this comprehensive breakdown of the best hardware wallets.
First, purchase a new wallet. Once you receive your new wallet, you can begin the process of setting up a new address to transfer all of your assets from your lost or damaged wallet.
If your wallet is simply damaged and no longer works, you don’t have to use a new address if you don’t want to. However, if your wallet has been lost or stolen I suggest that you utilize the new address that comes with your hardware wallet to avoid your assets from being stolen.
The reason why you can still access your digital assets even if you lose or damage your wallet is that they are stored on the blockchain. Contrary to popular belief, digital assets aren’t actually stored in your wallet.
How Does a Recovery Phrase Work?
Every recovery phrase is tied to a wallet address that is stored on the blockchain. Wallets simply act as a barrier for users to access addresses on the blockchain. Hence why you can simply enter your secret phrase into any other hardware wallet and have access to your assets.
A recovery phrase is a specific list of words that makes up your phrase. A total of 2048 words exist in this list, which is also referred to as the BIP-39 Word List.
If you’re afraid that someone might guess your specific set of 24 words, it’s unlikely. That would mean that someone has to guess your password, pin, and secret recovery phrase. There is a massive total of over 115 quattuorvigintillion (1 followed by 75 zeros) possible recovery phrase combinations.
Whoever might have stolen your wallet is more likely to win the lottery a couple of times before they’d ever guess your recovery phrase.
While your recovery phrase is presented to you as a set of words, they actually translate into a long string of data. However, for your convenience, they are displayed as humanly readable words.
How to Recover Your Assets From Your Lost or Damaged Wallet
The two most popular hardware wallets for storing crypto and NFTs are Ledger and Trezor. Below I will walk you through the proper steps to access your old Ledger or Trezor wallet and transfer your assets to your new wallet.
Ledger Wallets
Let’s start with those of you who have a new Ledger wallet and are ready to begin the process. Follow these 10 steps below to recover your assets from your lost or damaged device.
1. Reset Ledger Live. To do this, open the application and select the settings icon, scroll down and click “Reset”.
2. Plug in your new Ledger device, open up Ledger Live, and select “Initialize as new device”. Back up your new recovery phrase offline by writing it down and putting it somewhere safe.
3. Copy all of your new public addresses. To do this, click on the receive option for all of the crypto that you use and copy the public key that comes up, you will need these addresses to send all your assets to this new wallet.
4. Reset your Ledger device. In settings on the device, select “Reset All”. If you don’t remember your passcode don’t worry, you can reset it after 3 failed attempts.
5. Reset Ledger Live.
6. Recover the Ledger Device with your recovery phrase from the lost device. Go into Ledger Live and click “Restore device from recovery phrase”.
7. Follow the steps and import your recovery phrase from the lost device.
8. Now that you have access to your assets you can transfer them all to your new addresses. (If your device was just damaged, you don’t have to transfer your assets to the new address if you don’t want to. You can stop at this step.)
9. After you’ve transferred your assets, reset the Ledger device and Ledger Live.
10. Click “Restore device from recovery phrase” but this time, import the new recovery phrase.
You will now have all of your assets on your new Ledger device with a new recovery phrase.
Trezor Wallets
Next, I’m going to walk you through recovering your assets if you use a Trezor device.
1. Visit Trezor’s website and select “Create a new wallet”. From here you can securely back up your new wallet’s recovery phrase offline.
2. Copy all the public addresses for the assets you hold. This can be done by copying and pasting them into a word document.
3. If you are struggling to find the address, click the receive option to display your public address.
4. Wipe your device. To do this, go to the advanced section and select “Wipe device”.
5. Recover the Trezor with the lost device’s recovery phrase. Go to Trezor’s website and select “Recover wallet”.
6. Import your recovery phrase from your lost device. Now you have access to all your activity and assets from the old device. (If your device was just damaged, you don’t have to transfer your assets to the new address if you don’t want to. You can stop at this step.)
7. Send all of your assets to the new public addresses you previously recorded. Now all your assets are waiting for you on your new device.
8. Wipe it and then recover the new device using its new recovery phrase.
That’s it! Remember, if your wallet was lost or stolen, I highly recommend transferring your assets to the new wallet address. If you simply broke your wallet, destroy it completely, and use the new wallet to recover your previous address and assets.
How Safe Are Hardware Wallets?
Hardware wallets are safe because they store your recovery phrase, pin, and password offline. This makes it near impossible for viruses and hackers to access your wallet, even if your computer becomes infected or is compromised. Hardware wallets are the safest option for storing crypto and NFTs.
The safety aspect of a hardware wallet comes from the fact that it stores all of your login data offline. However, the moment you choose to connect your wallet to a computer, and especially any DApps, you are putting it at risk.
That’s because many wallets are hacked by simply signing malicious transactions using your wallet. These transactions can be disguised as a minting website or other DApps that require you to connect your wallet. The moment you connect your wallet, you could be giving hackers complete access to your wallet and all your assets within.
That’s why it’s so important to never connect your wallet to a site you don’t trust. Also, always double-check the URL you are visiting to ensure it is the correct one. Many hackers will use URLs with very similar names to the real site in an attempt to take advantage of those not paying close attention.
Tips To Use Your Hardware Wallet Safely
Overall, hardware wallets are safe and secure. To use them safely, however, requires the proper knowledge. That’s where I come in. Below are my top tips to ensure you are using your hardware wallet as safely as possible.
Avoid Transacting Using Your Hardware Wallet
Hardware wallets are safe because they are offline. The moment you connect your wallet to the internet, you are putting your assets at risk. It’s advised not to use your hardware wallet to transact if you can help it.
Instead, you can use a hot wallet like Metamask to transact, and then send your assets to your hardware wallet for storage use only. Or, you could buy two hardware wallets and use one to transact and one for storage. Either way, the wallet you use for storage should never be connected to the internet if you can help it.
Never Share Your Recovery Phrase
Your recovery phrase is the main thing keeping people out of your wallet. Under no circumstances should you ever share your recovery phrase with someone you don’t want to have access to your assets.
Not your tax person, not your bank teller, not your neighbor, not even your grandma. Keep it to yourself. You don’t go around telling everyone your bank login information, do you? Treat your recovery phrase with the same respect.
Store Your Recovery Phrase In a Secure Spot
Although there may be some online options for storing your recovery phrase, it’s inadvisable to use any of them. If your recovery phrase is stored on any device that is connected to the internet in any way, you are at risk.
I recommend writing down your secret recovery phrase on a piece of paper in pen. Or, if you’re really serious about keeping your recovery phrase safe, stamping it onto a piece of metal using this metal seed storage kit is the best option.
Stamping your recovery phrase onto a piece of metal ensures it remains intact even in the harshest conditions such as a fire or flood. For $45, it’s worth the peace of mind.
Use A Strong Password
It goes without saying that you should also use a strong password to keep your hardware wallet secure. Although your recovery phrase is likely more than enough, you can never be too safe. When creating your password, make sure to use upper and lower case letters, various symbols, numbers, and even words in different languages (ie instead of the word beer, use the Spanish word cerveza).
Everything you can do to add an extra layer of security to your wallet is well worth it. Once you have a strong password, be sure to write it down and store it with your recovery phrase. The password isn’t as crucial as your phrase for recovering your wallet.
If you forget or lose your password, you will have to enter your recovery phrase to create a new one.
Always Use A Secure Internet Connection
I feel that a secure internet connection is an underrated concern when considering wallet security. By secure internet, I simply mean using a private connection. If you’re at a cafe or other public place and you plan on accessing your wallet via your computer, do not use a public wifi connection.
You’re better off using your mobile hotspot. Or better yet, just use a private connection such as the internet at your house.
Keep Your Wallet Updated
Wallet updates come out often. Before using your wallet, always make sure to update the software if an update is available. These updates fix bugs within the software and ensure your wallet is in optimal shape to function properly and keep your assets safe.
Buy the Right Wallet
Whether you are planning to store cryptocurrency, NFTs, or both in your wallet; you need to ensure you get a wallet that is capable of satisfying your needs.
Some wallets offer less memory than others, meaning, you can only download so many apps on it. Also if you want to store NFTs, there are preferred wallets for storing such assets. The best wallet for safely storing NFTs is the Ledger Nano X.
If you want to view our full breakdown of all the best NFT wallets, we’ve got you covered.
Only Buy Your Wallet From the Manufacturer’s Website
It might be tempting to buy your hardware wallet for a discounted price on Amazon, eBay, or even from a friend online; but it’s highly inadvisable. You should always buy your hardware wallet from the manufacturer’s website.
The reason being is that many people have bought compromised wallets from Amazon. Basically, the sellers take the recovery phrase for themselves, then once the buyer puts assets in the wallet, the seller sends the assets to their own wallet.
You should only ever trust the manufacturer. Especially if the deal seems too good to be true. Trust me, it’s not worth saving a few bucks to have all of your digital assets stolen from you.
I will leave links to the official Ledger and Trezor sites below for your safety and convenience.
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