Bitcoin is amazing for a plethora of reasons. One of the biggest reasons it’s so enticing to people is that it’s completely decentralized. No government or company is managing or controlling your funds if you don’t want them to. You are completely responsible and in control of your money.
But, as exciting as this can be, it can also be scary for some. Having sole responsibility for something so important can be a little bit intimidating at times. I mean, people have lost access to millions of dollars in Bitcoin simply because they forgot or lost the private key to their wallet.
Luckily, this is a problem that other Bitcoin users have thought of before you, so you don’t have to deal with it alone. It’s why “recovery phrases” exist. They are exactly as the name suggests; phrases that let you recover your digital currency wallet. They are also sometimes called passphrases or seed phrases.
Let’s say you lose the phone that your wallet was installed on, upgrade to a new one, or decide to change your wallet provider. Your recovery phrase serves as your private keys to ensure that you don’t just up and lose all of your funds. In fact, you can just import the whole thing with those 12 or 24 words.
Non-custodial wallets like the Coin Cloud Wallet give you your own special 12-word recovery phrase to keep and use. This recovery phrase is like a mnemonic version of your private key, and is vital to your ability to secure and restore your funds. So don’t lose it!
(On the flipside, with a custodial wallet, you basically just have an online account to log into. The website owner keeps your keys and can help you reset your account password. But you can’t import your wallet elsewhere, and anyone who comes across the private keys database can also steal your money.)
Okay, I know, it’s a little unfair to demand that you keep track of your recovery phrases without really explaining how. So let me start by telling you what NOT to do.
You are heavily discouraged from storing your recovery phrases or your private keys on any cloud-based note application. For example, if you write it down in your iPhone notes with iCloud storage on, that might not be the best idea. In fact, it’s a terrible idea.
It’s also not a good idea to store that password on something like a Google doc or Dropbox. These types of services make your information more accessible to those potential robbers. It is much easier for an information thief to hack into a Google doc than it is for them to access some other offline alternative. Even if you do find an offline note alternative, it still might not be a great idea to have that information on your phone or computer at all.
Instead, most people consider the most secure tactic to be writing the phrases down on something that you and only you have access to. The only real concerns surrounding this method is:
We just made up that FODYP acronym. But we think it will be as big as FOMO (Fear of Missing Out).
Anyway, cool acronyms aside, people were quick to come up with a solution to the first issue, and it is probably simpler than anything else about Bitcoin. The idea is to use metal instead of paper. Yeah, it’s that easy.
For less than twenty dollars, you can purchase a metal card, plate or flip case that allows you to “write down” (engrave, punch or sticker) your private keys or recovery phrases. Or sometimes you insert the letters like a kids’ spelling toy.
Note that some of these devices only give you room for the first four letters of each word in the recovery phrase. That’s because the words used for these seed phrases come from a list of 2,048 Bitcoin Improvement Proposal (BIP) words, known as BIP39, none of which have the same first four letters.
However it’s configured, metal is much more durable than paper. So it keeps your essential information from instantly perishing the way a scrap of paper can.
There’s also the option of storing your wallet on a flash drive, hard drive or in a hardware wallet that you can plug into your computer. These hardware “cold storage” devices are also offline, and therefore less prone to theft (but you still need to record and store your private recovery phrase — and you have to move your money online to use it).
Even if you know that whatever you’re writing your keys on won’t get destroyed by water, fire or any other natural disasters, it’s still common to be afraid of losing these keys. And well, the only advice for you is the same advice we’ll give about losing your car keys: Keep them somewhere memorable but safe and be as attentive to them as you can.
(A bowl by the front door or hook in the kitchen work well for car keys; we suggest a safe or lock box for your recovery phrase. Fireproof and waterproof if you insist on using paper!)
Disclaimer: The information and views supplied on the Coin Cloud blog are for educational and entertainment purposes only. We are not financial advisors, so please do your research and consult with a trusted financial specialist before investing your money.
Founded in 2014 in Las Vegas, Nevada, Coin Cloud is the leading digital currency machine (DCM) operator. With over 4,500 locations nationwide, in 48 states and Brazil, Coin Cloud operates the world’s largest and fastest-growing network of 100% two-way DCMs, a more advanced version of the Bitcoin ATM. Every Coin Cloud DCM empowers you to quickly and easily buy and sell over 40 cryptocurrency options with cash.
When You Buy $150 or More at Any Coin Cloud DCM
Use promo code COINCLOUD at the machine
Enter your email for updates, promos, and more ...