It’s a reality that could happen to anyone: the computer, cell phone, or hardware wallet you were using to store your bitcoins is lost, stolen, or suddenly stops working. But don’t sweat! As long as you have the seed phrase you created when you set up your bitcoin wallet, there are steps you can take to recover your bitcoin. The following article explains how to recover your bitcoins from broken devices.
You’ll also find tips on how to avoid losing your bitcoin in the first place.
Table of Contents:
What to do if you lose your Bitcoins
If the device you were using to store your bitcoin fails, these five tips can help you figure out how to start recovering your funds:
Tip #1
Get backup of the seed phrase you created when you set up your wallet. Ideally, you have stored your seed phrase in multiple secure physical locations.
Tip #2
If you don’t have a backup of the initialization phrase, your private keys may still be stored on your device, even if your device stops working. Depending on your setup, you can ask experts to help you recover those funds, but beware of scammers who will try to recover the funds themselves.
Tip #3
Import your bitcoin into a new wallet. The chosen wallet should allow the use of importing keys from initialization phrases. Each wallet software will handle it differently, but if you do a web search you should be able to find detailed instructions. At the end of this article we provide an example of restoring an Electrum bitcoin wallet using a seed phrase.
Suggestion #4
Some wallet software requires the seed sentence to be 12 words long, while others require it to be 24 words long. You will need to use wallet software that supports the use of a seed phrase that matches the length of yours. The safest bet is probably to use the same wallet software you used to create your seed phrase in the first place.
Suggestion #5
Know your portfolio type. Some wallet software supports multiple wallet types, so you may need to enter the wallet type along with the phrase seed. For example, you may need to distinguish between standard wallets and multisignature wallets, or between legacy addresses and SegWit addresses.
How to avoid losing your Bitcoins
Whether you’ve lost your bitcoin in the past or not, these tips can help you prevent your bitcoin loss in the future:
Tip #1
Back up the starting phrase to multiple secure physical locations. If you lose your seed phrase, your funds will go forever.
Tip #2
You shouldn’t back up your seed phrase to a computer you use for anything other than bitcoin. Instead, it’s best to store it on paper in multiple safe places.
Tip #3
When backing up your seed phrase, you should also record the “derivation path” used by the wallet. Different wallets use different methods to restore wallets from seed phrases. These methods are commonly referred to as derivation paths. For this reason, you should register the name of the wallet software with your seed phrase. If possible, you should also record the derivation path with your sowing phrase. You may be able to find the derivation path using the wallet software help files or by performing a web search for the wallet software name + “derivation path”. If you’re having trouble finding the derivation path for your wallet software, this website lists derivation paths for many wallet types.
Suggestion #4
If you use multiple signature and other non-standard wallet types, you will need to be especially careful when backing up the seed phrase. These wallet types are generally not used by beginners and require a more complicated process for bitcoin recovery. These wallet types use something called a “bitcoin script” to store funds, and you’ll need to have both the script and seed phrase to recover your funds. For this reason, we advise beginners to use only standard wallet types.
Example: Retrieving an Electrum wallet from the phrase Seed
For example, we conducted a very simple recovery from a phrase using an Electrum wallet. Other portfolios will look a little different, but the fundamentals remain the same.
When setting up the sample Electrum wallet, we recorded the following information:
- Seed phrase: canyon hazard monitor mention lemon frog claim hollow example cover really wire
- Wallet Software: Electrum v3.3.8
- Wallet Type: Standard
- Address Type: SegWit
- ‘/1′ m/48’/0’/0’/2′ Does not use BIP39 seed phrases but can import them
Derivation path (from walletsrecovery.org): Single signatory: m/44’|49’|84/0’/0′ Multisig: m/45’/0/0/0 m/48’/0’/0
Here’s a list of addresses in the sample wallet, which we’ll try to retrieve:
After a computer failure, we can restore our funds using the following steps:
1. Run the Electrum wallet and choose a wallet name. This can be anything and does not necessarily have to match the name of the original wallet:
2. Our wallet was a standard wallet type:
3. We want to use our existing seed phrase to create the wallet:
4. We insert our seed phrase that we had backed up:
5. We can encrypt wallet keys using any passphrase we want. It does not need to match the one used when we originally created our portfolio:
Now that we
have recovered our wallet, we can see that our recovery was successful by checking the address list to see that it matches the wallet from before the computer failed:
Note: By default, addresses are not displayed in Electrum. Use View -> Show Addresses if you want to view them.
