Successfully backing up a crypto wallet will help prevent you from ever losing access to your cryptocurrencies and other digital assets. For example, if your crypto wallet is lost or damaged you will still be able to recover your funds if you have backed it up properly. The two main ways are through manual backups and automated cloud backups. The latter is newer and easier to use.
Manual backup problems
Recovery phrases, sometimes called backup phrases or seed phrases, are a way to retain access to the cryptoassets controlled by a crypto wallet if the wallet is lost or destroyed. Recovery phrases consist of a set of 12 to 24 dictionary words:
While recovery phrases are an improvement upon the previous system, which forced people to remember an unintelligible string of characters, recovery phrases have proven to also be difficult for many people to use securely. There is a constant drip of stolen crypto due to exposed recovery phrases and sad stories of lost recovery phrases. Since people are not familiar with recovery phrases, they do not know recovery phrase best practices. For example, never ever show your recovery phrase to anyone via the internet. Or, do not store your recovery phrase unencrypted on a computer.
Another problem of recovery phrases, albeit less serious, is that they don’t take advantage of modern user experience advances. If you restore your wallet or import it to a new device, you need to go through a multi-step process which includes manually inputting the words of your recovery phrase. It’s not difficult, but compared to using automated cloud backup, the difference is noticeable.
Automated cloud backup
Automated cloud backup is Bitcoin.com’s answer to the two major flaws of recovery phrases: that they are unfamiliar and inefficient.
The multichain Bitcoin.com Wallet gives people the option to replace recovery phrases with something more familiar — passwords. Just as a recovery phrase (set of random words) is more familiar than a cryptographic key (string of hexadecimal characters), a password is more familiar than a recovery phrase.
We offer cloud backup services where your private keys are stored in encrypted form in the cloud and automatically updated as you create more wallets. A single custom password of your choosing will decryp a file stored in your Google Drive or Apple iCloud account. If you lose access to your device, you can reinstall the Bitcoin.com Wallet app on a new device, enter your password, and you’ll again have access to all of your cryptoassets. By creating a mix of encryption and cloud services tied with custodial services to help retrieve things, we can maintain a self-custody service while leveraging centralized technologies to lower the burden on the user. Here’s how easy it is to set up:
Recovering or importing a wallet from cloud backup is also a faster and more familiar process. As you can see below, cloud backup consists of two simple steps:
Here’s how it looks in the Bitcoin.com Wallet
Automated cloud backup is the best method of securing your crypto assets. It combines security, and ease-of-use.
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