Bitcoin has been one of the most profitable and talked about investments of the 21st Century. While many people have made a lot of money through bitcoin, many people have lost a lot of money on bitcoin as well and it’s not always because of the price going down. Did you know 20% of all bitcoin has been lost due to users forgetting their passwords to their bitcoin wallets? Unlike fiat currency which could be replaced, there’s a good chance that these bitcoins will never be returned to the marketplace. If you hold your bitcoin through an exchange this may not be a concern for you but if you are someone that deals with bitcoin wallets directly this is something you should be mindful of. In this article we are going to discuss how you can secure your cryptocurrency wallet effectively so that you don’t lose your hard-earned investment:
How is this possible?
Bitcoin investors hold their tokens in digital wallets that are protected by cryptography and only accessible using the user’s private key. Since this key is private, that means that no one else has access to this key and once it is lost, it is virtually impossible to recreate the key. It’s a great way to protect your wallet from access by other people but it also means that you are responsible for protecting this key and not losing it. Unfortunately for many people, they have lost their access key for whatever reason and therefore they are at risk of losing their bitcoin forever.
How can these funds be recovered?
Due to the prevalence of this issue, it has given rise to a cottage industry of “wallet hunters”. These are people that specialize in helping people to access their bitcoin wallets after they have lost their private keys. These hunters can use various tools and techniques to recover lost wallets and the funds within them. However this is not cheap, they typically charge from 5% up to 40% of the funds recovered for their services.
How can this be prevented?
To avoid being part of this 20% the easiest thing to do is to take time to backup your bitcoin wallet. There are several methods for backing up your bitcoin wallet and this ensures that if you ever forget your login information you have a copy of what you need either offline or online. Since bitcoin is decentralized there’s no one that you can call to help you recover your information unless you are willing to pay up to 40% of your investment to get it.
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