What happens if I lose my Bitcoins?21. December 2020
What happens if I lose my Bitcoins?
With Bitcoin, you are solely responsible for the assets you own. In a nutshell, you are your own bank. So, more freedom means more responsibility: it’s up to you to take care of your Bitcoins, by keeping your famous private keys in a safe place.
Private keys and the seed: the key to access your Bitcoins.
It is these private keys that prove to the Bitcoin network that you are the owner of the Bitcoins on your addresses. So if you lose your private keys, you lose your Bitcoins!
Fortunately, there is by Bitcoin Aussie System a fairly simple way to regain access to all your private keys. It is a mnemonic phrase: a sequence of words from which all private keys are derived.
This passphrase is therefore the key to regain access to your Bitcoins if, for example, you lose your wallet. This can happen if your computer crashes, or if it is stolen.
You should therefore keep this mnemonic phrase in a safe place (in a safe for example). It is imperative that you never divulge it!
If you lose this mnemonic phrase, then your Bitcoins will be lost forever. There will be NO way to find them again. However, as long as you have this precious sequence of words, anything can happen to your wallet. You can misplace it, your device can break down: no problem, just reinstall a new wallet on a new device, and regenerate your private keys with this phrase to regain access to your precious Bitcoins.
There are different solutions to secure your seed. The most effective is called metal seed storage: it consists of engraving your seed on a metal support. This will withstand water, extreme temperatures and the test of time.
Delegate the management of your private keys to a third party
If you decide to outsource the management of your private keys to a third party, you de facto lose control over your bitcoins.
We are talking about foreign exchange platforms, custody services, and now some banks.
None of these services can claim to provide absolute security. Foreign exchange platforms are sometimes hacked, the most notorious case being the MtGox scandal. However, many specialised companies are very serious, and some enjoy using them.
The decision is yours. If you are sufficiently responsible, wise and suspicious, it is entirely possible to ensure the security of your Bitcoins yourself.
If, on the other hand, you have no time to lose or only want to invest in Bitcoin with the hope of making a profit, this type of solution could be attractive to you.