Don’t Panic. If you lose your wallet your Crypto are still protected. By using your Seed Phrase you can still recover access to all of your coins. Here are some best practice steps to take to ensure their safe recovery.
You’re Protected by your Seed Phrase
Remember, your coins are not actually stored in your wallet. The wallet simply controls access to your coins and is protected by your Seed Phrase.
As long as you alone have your Seed Phrase (sometimes called Recovery Seed) then nobody else can access your hardware wallet.
Best Practice when you Lose your Hardware Wallet
Assess Impact of Delay
Assume you will not find it and start the process of recovery and generate a new Seed Phrase.
Choose a temporary replacement wallet:
If changing the type/version then double-check compatibility.
Recover to the temporary wallet;
Using your Seed Phrase follow the wallets instructions for ‘Recovering’ or ‘Recovery Process’
Setup a new Hardware wallet
Generate a new Seed Phrase and consider having spares.
Transfer Assets to the New Hardware Wallet
Store new Seed Phrase safely.
What To Do when you lose your Hardware wallet
- Assess Impact of Delay
- Choose a compatible temporary wallet
- Recover your lost wallet to the temporary wallet
- Buy a new compatible hardware wallet
- Transfer your assets from your temporary wallet to a new hardware wallet
Assess Impact of Delay
You might have lost your wallet for any number of reasons but the key difference between them is the potential for somebody to steal your crypto.
- If you dropped it into the ocean, inside a new concrete floor, or somewhere in the house, then you might feel confident that nobody else is going to find it and potentially hack it. You have more time to sort out a replacement.
- If, however, you cant find it after a train trip, visit to the gym, leaving work, etc then it is probably better to assume the worst. This doesn’t mean you should panic. It means you should be looking to restore your access to your Crypto and then to change your Seed Phrase.
- If you think your wallet has been stolen deliberately then you should probably act with haste. Consider if anyone might have access to or knowledge of your Seed Phrase.
Remember, a thief simply having your hardware wallet is not enough, the wallets have a high level of anti-hacking security built-in (pin codes, passphrase, self-destruct, etc). If, however, the same person might also have your Seed Phrase they will have access to the assets it holds.
If the hardware wallet has simply been damaged then you may prefer to read our other guide about broken hardware wallets with less focus on being hacked.
Temporary replacement wallet
In order to ‘recover’ your Crypto you will need another wallet. This is the temporary wallet you will use until you have your new Hardware Wallet.
The fastest will be to recover to a software or browser-based wallet, unless you have access to another hardware wallet. (Remember you could even ‘borrow’ a hardware wallet)
If the lost wallet was BIP39 compatible (most of them are) then you may be able to recover your assets to a BIP39 compatible hardware, mobile, software, or browser-based wallet.
If you choose a mobile, browser, exchange wallet, etc you have to decide if the risks of having your crypto assets in an online Hot Wallet for a short period are greater than your lost hardware wallet potentially being hacked.
If a lost hardware wallet is a potential issue going forward then I would definitely suggest investing in some spares, see more below.
Choosing a Suitable Temporary Wallet for Recovery
The recovery process may differ slightly depending on which temporary wallet you are using. If it is BIP39 compatible then on the setup of the wallet you will be asked if you want to create a new backup or to recover from an existing one. For the temporary wallet, you want to ‘recover’. You will then be prompted to enter your Seed Phrase for your lost wallet.
Upon completion of the process, you will have recovered access to all of your keys and again have access to your Crypto assets, albeit with the same Seed Phrase that might be compromised.
If you do not want to wait for a suitable hardware wallet you can now move your assets as you wish. Otherwise, you will now want to buy a suitable BIP39 hardware wallet.
NOTE: You should check that the new wallet you plan to use is both exactly compatible and can accept all of the coins that you have stored on your lost hardware wallet!!
List of BIP39 compatible Wallets
What is BIP39?
BIP39 is simply a widely accepted method by which wallets generate a seed phrase.
The method allows a wallet’s software to use algorithms in order to generate a seed phrase, usually 12 or 24 words. That phrase can then be translated by other BIP39 wallets to regenerate the addresses and private keys of that wallet.
As the method is widely used it is often possible to recover your BIP39 hardware wallet to other BIP39 wallets without being locked to one manufacturer.
The BIP39 name comes from ‘Bitcoin Improvement Proposal No. 39’
HOWEVER: There are other seed phrase creation methods (e.g Electrum) and different derivation paths so it is necessary to ensure your intended new wallet type is exactly compatible!
- It seems that some manufacturers may have utilized the BIP39 method but in a slightly different way! They may have used a different derivation path. In these scenarios, it is possible that your seed phrase will not allow you to recover to a different device. Even if they are both BIP39!
To check the derivation paths of common hardware wallets check here: https://walletsrecovery.org/
- It is also possible that the intended wallets do NOT offer the ability to work with ALL the same coins. Having found a wallet with a suitable derivation path then check it can receive your coins!
My Wallet isn’t exactly Compatible! What do I do!
In these scenarios, the best thing is to try and source the exact same version of the hardware wallet as your current lost version. You can then recover in the normal way.
Indeed, you might want to buy two (see Spares below) or alternatively once you have recovered access you may look to move your crypto to a more widely compatible wallet.
In most cases, even with the rapidly changing format and options, manufacturers are aiming to make their devices backward compatible. This means by sticking with the same manufacturer, an upgraded version of your wallet should be compatible with an older version. But no guarantees!
Getting a New Hardware Wallet
So now to some good news!
Having lost your existing wallet, it does not mean you have to buy the same hardware wallet again!
The hardware market is evolving rapidly and new features and security options are being included all the time. The establishment of ‘basic criteria’, user-friendliness, and compatibility/access with all coins, blockchains, operating systems, and other wallets has not yet been achieved.
We were quite surprised at how limiting the current wallets were when we drilled down to review their features. Check out our review here.
NOTE: You should check that the new wallet is both exactly compatible and can accept all of the coins that you have stored on your lost hardware wallet!!
Creating a new Seed Phrase
A new Seed Phrase is the key final step you can take to reduce any chance of a hacker gaining access to your Crypto.
Having already recovered your assets to a temporary mobile or software wallet you are in a good position. When you have your new hardware wallet.
When you set up your new hardware wallet rather than ‘Recovering’, where you would use your existing seed phrase you create a ‘New Backup’ onto the new wallet. This will generate a new seed phrase and go thru the process of ensuring you have copied it down correctly.
You then transfer from the mobile / software wallet onto the new hardware wallet with its new Seed Phrase.
Borrowing a Hardware Wallet
This obviously requires a level of trust in the crypto world processes. If your trusty friend has their seed phrase and is confident and happy they can recover to their wallet later, you could borrow their hardware wallet! It of course needs to be compatible.
You would then need to reset the hardware wallet (like reformatting it) and then in the setup ‘Recover’. You can then follow the recovery process, using your Seed Phrase.
Once you have regained access to your crypto assets you can move them. If you have your new hardware wallet you can move them on to there.
You can then ‘reset’ the borrowed hardware wallet again and your friend can ‘restore’ using their Seed Phrase!
It is actually possible to create a new seed phrase with a single hardware wallet without ever using your Seed Phrase online, but it is a slightly more drawn-out process. It requires copying Private Keys and Public addresses and has the potential for user typo errors! It is beyond the scope of this post.
Peace of Mind through having Spares
Having a backup is a well-known method for maintaining peace of mind.
Same Seed Phrase
It is possible to have the same Seed Phrase on two devices. You can therefore keep one safely stored for emergencies whilst having the other for regular use.
If one is damaged you can use the other for immediate access.
Or you might have one for use at the office and one for at home so you do not risk damage, theft, or loss whilst moving locations.
Two Different Seed Phrases
You split your crypto portfolio in any number of ways across the two devices.
One for daily transactions, that stores a small percentage of your assets. One for the bulk of your assets kept in a safe.
Safely create a New Seed Phrase as required.
Your wallet can generate an unlimited number of seed phrases. If you ever feel that your current seed phrase has been compromised you can generate another one.
If you Reset one of the hardware wallets it will generate a new Seed Phrase. You then transfer all your assets from the original wallet with the old Seed Phrase to the wallet with the new Seed Phrase.
NOTE: This same process can be achieved with a single working wallet but requires copying Private Keys and Public addresses and has the potential for user typo errors!
Protect your Seed
All of this still relies on you looking after your seed phrase. Whoever has the seed phrase, has access to all the crypto stored in that wallet.