What Happens If You Lose Or Break Your Hardware Crypto Wallet?

A Crypto Hardware Wallet Is The Most Secure Storage Method

Hardware crypto wallets are famed for providing investors with full control over their cryptocurrency. Rather than holding their portfolio on an exchange or in an online wallet, they move it offline for complete self-custody.

However, when doing so, they choose to use a physical device, such as a USB or hard drive, as the place to keep their crypto safe.

Now, they’re faced with a whole new set of challenges – particularly loss, theft, and damage.

So, what happens if your hardware wallet breaks? Does panic set in, is your crypto gone forever?

In this article, we’ll answer that and much more. But don’t worry – there are plenty of options to retain your cryptocurrency.

How To Recover Your Cryptocurrency

So, you can find your wallet, and you’re frantically Googling questions like what happens if my hardware wallet breaks? Fear not. There’s still a chance you can recover your crypto.

You were provided with private keys when you first created your crypto wallet. Also, you will have been told to keep these safe because they’re the only way of accessing your wallet. Without them, your crypto will be gone forever.

The private keys are provided in two formats, a cryptographic collection of numbers and letters or a group of 12 to 24 random words.  

Most wallet providers opt for 12 to 24 random words. Rather than private keys, this is referred to as a recovery phrase.

In order to recover your crypto, and so your lost hardware wallet is not a financial disaster, you must keep backups of your recovery phrase in a safe place.

Keeping Your Crypto Wallet Recovery Phrase Safe

Ok, so we’ve established your recovery phrase is the only way you’re getting your crypto back if you’ve lost your hardware wallet.

Honestly, it’s much more important to keep the recovery phrase safe than it is the crypto hardware wallet itself.

Yes, a lost hardware wallet is an inconvenience because you have to buy a new one, but lost keys mean lost crypto.

So, what are some of the best ways to back up your recovery phrase?

Most people opt for offline methods, like writing it down and storing it in a safe place, but here are a few tips.

Sensibly Storing Your Crypto Wallet Recovery Phrase

Before deciding how and where to store your recovery phrase backups, you need to think about all the potential scenarios where you could lose these too. For example, keeping your recovery phrase written on a sticky note and sticking it to your hardware wallet for cryptowouldn’t be the wisest idea.

Furthermore, if you only keep a backup of your recovery phrase in a drawer at home, what happens if you have a house fire? Your crypto is gone forever.

It’s for these reasons that most people opt for multiple secure locations. There’s nothing wrong with keeping your recovery phrase in a safe at home, but to give yourself extra protection you could consider using a safe deposit box at a bank or a storage unit.

To add an extra layer of security to your recovery phrase, you separate it. For example, if your recovery phrase is 12 words long, you could write 4 words down on 3 different pieces of paper and store them all separately. That way, if someone were to find your recovery phrase, they won’t be able to access your wallet without the other two pieces of paper.

One issue with this is that you’ll have to keep one master recovery phrase to mitigate the potential loss or damage to the others.

Potential Threats To Your Recovery Phrase

It’s not all sunshine and roses. There are threats to your recovery phrase, and remember, if you lose it or someone malicious gets access to it, your crypto is gone forever.

The first worry you have is losing your recovery phrase. Above, we’ve explained how you can mitigate this. Your best approach is to store several backups in different locations.

Secondly, another cause for concern is malicious actors getting hold of your recovery phrase. If they also have access to your public key, they’ll be able to get into your wallet.

If you’ve decided to leave copies of your backup recovery phrase with people, you need to be completely sure you trust them. Alternatively, you can use the method of providing multiple people with partial recovery phrases.

In Summary

A cryptocurrency hardware wallet is one of the best and most protected ways to secure your crypto. Even if your wallet is lost, damaged, or stolen, if you’ve prepared yourself correctly, you will always have access to your cryptocurrency.

As we’ve established, remembering and protecting your private keys or recovery phrase is the most important element of cryptocurrency ownership. So, while self-custody is secure, it comes with more responsibility and planning ahead.

Keep multiple backups, only store them in highly secure places or with people you trust, and if possible, split your recovery phrase into numerous sections for even greater protection.

So, yes, you can still access your cryptocurrency if you lose or break your crypto hardware wallet.

If you’re reading this article, you clearly care about protecting your crypto. Check out Escrypto and the range of institutional-grade storage options designed to give retail investors the highest chance of securing their investments.