As cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and other altcoins are becoming increasingly popular, the need for secure storage is also rising. Hot wallets such as desktop wallets and web wallets are handy specifically for storing smaller amounts of crypto assets, as they are less secure than cold storage because of their connection to the internet.
However, cold wallets or hardware wallets are considered the most secure way of storing your BTC and other currencies. The fact that offline wallets like Trezor or Ledger Nano S and Ledger Nano X series aren’t connected to the web and keep your private keys secure on these encrypted, specialized USB devices means your data is secure and only you have the necessary credentials for the wallet.
It’s a great idea to combine a web wallet with a hardware device so that even if someone hacked the account of a web wallet you are using, they still wouldn’t be able to access your funds because the private keys to your crypto are stored in the connected hardware wallet.
Let’s see how you can back up your Bitcoin wallet just in case you misplace, lose, or somehow get your hardware wallet device damaged or stolen.
How to Backup Your Hardware Wallet
In case something unfortunate happens to your hardware wallet, there is no need to worry about your funds getting compromised as long as you took the necessary precautions to secure the backup of your wallet and all the assets in it. All the private keys you store on a hardware wallet can be backed up.
When choosing a new wallet, pay attention to the compatibility between web and hardware wallets, because a good combination means practical, fast, and secure storage of BTC. Also, you should look at the compatibility of your wallet software with different operating systems, especially if you are using Linux or if you plan to access your hardware wallet with a mobile device. If that’s the case, you should check if it works with Android or iOS.
Depending on the wallet you are using, you will have a backup option in your wallet menu titled something like Export Private Keys or Backup Wallet. Using this option, you can backup all of the private keys to your BTC stored in the wallet and store this backup on an external hard drive, USB drive, or piece of paper.
One of the most important things when backing up your Bitcoin wallet is to store the backup securely, preferably in a different place than the hardware wallet itself. If you keep the backup together with the wallet and the location of your wallet gets compromised, you won’t have any use for the backup which is in the same location.
So, it’s best to create multiple backups of your wallet.dat file, both on USB drives and paper wallets with printed out QR codes of the data and to keep these backups in different locations, especially if you are storing multiple Bitcoin addresses with large amounts of funds. You don’t want to take any chances when it comes to the safety of your seed phrase and recovery phrase.
The Importance of Encryption
Hardware wallets like Trezor and Ledger devices already have top-quality encryption and special PIN codes for secure authentication and user access, but it is also a good idea to encrypt the crypto wallet backup files too. It’s far better to store the backup of your entire wallet offline than to store it in an online backup location, because your data can possibly get hacked or stolen.
Even if you are very careful with websites you visit and you don’t take any risks with untrusted third-party websites, your PC or laptop may be connected to the internet using a web provider whose service isn’t really secure. A lot of commercial internet providers don’t really have top-of-the-line security when it comes to their connections, which means that your computer may be at risk of malicious software that can steal your crypto wallet backup data if you aren’t careful.
If you do decide to backup your wallet online then make sure the backup is encrypted in case the data gets compromised, so no one can use it but you. Create a strong password with at least 16 characters composed of a mix of letters, punctuation marks, and digits. Don’t create a password that is literally a couple of catchy words you can remember because it can and will be cracked easily by hackers. You shouldn’t try to memorize your password. Instead, write it on a piece of paper or store it on a USB drive in a text file. It isn’t safe to store your backup data using an online service like Dropbox.
A Few Words Before You Go…
In a cyber world full of potential security risks from hackers, malicious software, and system breaches, it is imperative that you keep your Bitcoin safe. Choosing a good combination of wallets is important, but backing these wallets up is even more important, so you can be sure your funds are really safe.