News
18 Dec 2021

Common Mistakes with Bitcoin Backups

Maybe you want to start taking Bitcoin at your business. Perhaps, you plan to begin trading this virtual currency. That means you need a Bitcoin wallet to receive, transfer, and store your tokens. In that case, you can use a hardware wallet or an online wallet. Either way, you need a Bitcoin wallet backup to ensure that you can recover it if you lose, delete or damage it.

Most people know they need Bitcoin wallet backups, but they make mistakes when creating or using them. Here are common Bitcoin wallet backup mistakes to avoid.

Not Backing Up Your Bitcoin Wallet

Somebody can steal the laptop with your Bitcoin wallet. You can also wipe the mobile phone or lose a hardware wallet. That means you will lose the funds in your wallet forever. Luckily, you can prevent this by backing up your Bitcoin wallet. Unfortunately, some people don’t back up their Bitcoin wallets. That means they lose their funds forever when something happens and lose access to their hardware and mobile wallets.

Entering Wallet Backup on a Mobile Phone or Computer

Bitcoin wallet backup has a master secret. That means anybody with that secret can control the coins in the digital wallet. And some people use software programs to run mobile phones and computer backgrounds. Thus, such people can snoop on your computer or smartphone and get your recovery words remotely.

For this reason, avoid entering your Bitcoin wallet recovery words on a mobile phone or computer. Instead, do this when recovering your wallet. If possible, use hardware wallets for recovery purposes.

Failing to Verify Your Digital Wallet Backup Integrity

Your Bitcoin wallet address should stay somewhere safe. Since it covers future wallet transactions, you might not have to update it all the time. However, it’s wise to revisit the backup more often. For instance, you can put a micro SD card into a hardware wallet if that’s where your backup is to verify its integrity.

Thinking You Must Update Your Backup with Every Bitcoin Transaction

Maybe you trade Bitcoin on a platform like bitcoinup. That means you complete crypto transactions more often than another person that opted to buy and hold onto their crypto assets. However, this doesn’t mean you have to backup your crypto wallet with every transaction.

Today, the world has hierarchical deterministic wallets. With these storages, everything begins with a secret called the seed or master secret. From this seed, the wallet derives future addresses for multiple coins and accounts. Every Bitcoin address has a public or private key. The hierarchical part is that the system automates everything.

That means if you lose your wallet, restoring the funds from the backup won’t entail the creation of a new seed. Instead, you import what you have in the backup. Your Bitcoin wallet can derive the hierarchy of the accounts, addresses, and coins from one secret. And this is a deterministic process because it produces the same Bitcoin addresses all the time.

Not Securing Your Bitcoin Wallet Backup

If you have a hardware wallet with good security features, you may not worry about securing the backup. However, this doesn’t imply you can forget the backup. Ideally, you need a secure backup regardless of the wallet you use. Depending on the number of tokens you have in the wallet, you can store the Bitcoin backup in a locked drawer, safe deposit box, personal safe, or bank.

Ensure that nobody can access the backup without your authority. Nevertheless, make sure that the backup and the hardware wallet are not in the same place. Also, check whether anybody has accessed the backup more often.

Final Thoughts

Bitcoin wallet backups contain sensitive information. Therefore, avoid these mistakes when backing up your Bitcoin wallet. That way, you will ensure the safety of your tokens and easy recovery if you damage or lose your private keys.

 

(Press Release)

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