Are you unsure if you have sent bitcoin to the right address, or have you lost your keys and don't know how to recover it?
Even after more than a decade, people still don't know exactly what "lost bitcoins" really means and when you can and cannot recover your bitcoins. To make a long story short, there are only two ways you can lose access to your bitcoins:
- You send them to an address you do not control.
- You lose the private keys to your wallet.
We will explain both options because lost bitcoins are not a triviality. To be precise, bitcoins that have not been moved for more than 10 years are considered lost
, which is 10% of all BTC
, according to an analysis of blockchain analytics company, Glassnode. That includes the one million BTC stash of Satoshi Nakamoto
, which was mined shortly after the launch of the Bitcoin blockchain. In addition, another 2.5 million are likely to be lost
due to lost private keys
and people losing access to their wallets - like the story of James Howells
losing half a billion worth of bitcoin in a landfill.
Since the supply of Bitcoin is limited to 21 million, another 3.5 million lost reduces the real supply of bitcoin to 17.5 million. In the short run, this does not impact prices, but in the long run, the market will probably realize there are even fewer coins available than anticipated.
To make sure you understand when you can recover lost coins and how to do it, we will look at:
- What to do about lost Bitcoins?
- How to find lost Bitcoins?
- How to go about Bitcoin wallet recovery?
- What to do about a lost hardware wallet?
- How to recover lost cryptocurrency?
- Best practices to recover crypto
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First, you need to understand how storing Bitcoins works and why you cannot lose the coins themselves, only your access to them.
Bitcoins are not stored in your wallet but on the blockchain. Your wallet is just an access point to this blockchain, but your coins can never be "removed" from it. Think of it like this:
- The blockchain is an incredibly long row of lockers.
- Your wallet is the key to this locker containing your coins.
- Your seed phrase is the password to using this key.
You need both the key and the password to move your coins from one locker (Bitcoin address) to another. If you lose the key but have the password, you can get a new key and access your coins because they are still in the locker. If someone else gets your key but doesn't have the password, they cannot access your locker because the password is too difficult to hack.
Therefore, the only two ways to lose bitcoins are:
- Sending them to an address you do not control
- Losing access to the wallet you have: lost access to a hardware wallet or custodial wallet
In the first case, the most likely scenario is sending your coins to an address controlled by scammers. You can only send bitcoins to valid addresses, meaning your transaction cannot go through if the submitted address is invalid due to a typo. A less likely but possible option is mistakenly sending bitcoins to a forked Bitcoin blockchain like Bitcoin Cash
. Again, if you don't control the receiving address, your coins are lost.
This is important to understand because to this day, scammers trick people into believing that lost coins can be "recovered" through their "services." This isn't possible, and the next paragraph will show you what to do to find lost bitcoins and recover them if you lost access to them.
How to Find Lost Bitcoins?
To make a long story short:
If you send coins to an address you do not control, they are gone forever.
This is the equivalent of sending your coins from one locker to a locker you don't have the key or the password for. The only "uncontrolled" addresses you can access are custodial
wallets, like trading accounts. In this case, the locker belongs to the exchange, but you "rent" it with your key and your password. However, the exchange also has one, and that is where the "not your keys, not your coins
" statement comes from.
If you think you mistakenly sent your coins to the wrong address, you can track the transaction ID with a site like Localbitcoinschain
to see where your coins ended up.
The second and more realistic "bitcoins lost" option is losing your Bitcoin wallet. Since there are several ways to store bitcoins, there are also several options for Bitcoin wallet recovery.
How to go About Bitcoin Wallet Recovery?
If you are running a Bitcoin node
, your copy of the Bitcoin blockchain may be out of sync
. In that case, you need to wait for it to sync with the rest of the network and download the latest block. That is one reason why you may not see the coins in your wallet.
Another reason is accidentally deleting data. If you deleted your wallet.dat file, first look for it in the recycle bin or trash folder. In Linux, you can usually find that file under the '.bitcoin/wallets' directory. The file browser must show hidden files since the .bitcoin directory is hidden. If you aren't sure where that is, go to '/home/username/.bitcoin/wallets'.
Install Bitcoin Core on the new computer, copy the 'wallet.dat' file back into the '.bitcoin' directory under your home directory, if you use Linux. If it is Windows, it may be in the hidden 'AppData' directory.
You can also use a recovery app like Recuva that scans your hard drive for deleted files and lets you browse through them safely. This app is also applicable for formatted hard disks. If you found your deleted wallet, you can back it up to an external USB drive or a private cloud. If you obtain your private key using the 'dumpwallet' command using bitcoin-cli, you can write it down on a piece of paper and store it somewhere secure.
If you use an Exodus wallet, you can restore your wallet from the restoration link you received via email.
If your computer won't boot, you can use a Linux Live DVD or Live USB to access the hard drive and search for the wallet.dat file in the Windows 'AppData' directory or under the '.bitcoin' directory in Linux.
What to do About a Lost Hardware Wallet?
Most people are not running their own nodes and use hardware or cold wallets
to store bitcoins.
If you lost your Ledger Nano hardware wallet, you have to recover your private keys from the seed phrase that you received on the provided recovery sheet when you got your wallet. Remember: your coins are gone if you do not have the seed phrase to your wallet.
With the seed phrase, you can press the two buttons at the top of your new Nano S and then press the button corresponding to the 'X' when it asks if you want to configure it as a new device. Press the button corresponding to the tick when it asks if you want to 'Restore Configuration.' Enter a new pin and your seed phrase, and you have access again.
The process is the same for a Trezor wallet.
How to Recover Lost Cryptocurrency?
You may have lost another cryptocurrency like ETH
instead of BTC.
If you have lost access to your hardware wallet, the process is exactly the same as for Bitcoin.
If you lost access to your digital wallet like your Metamask
, you have to recover it with the seed phrase
similar to a hardware wallet. Install a new Metamask extension on a different computer and/or browser and click on 'Import using Secret Recovery Phrase.' Your crypto is lost if you don't have access to your seed phrase
If you lost your password to your custodial wallet, you have to go through the password recovery system of your trading account.
Best Practices to Recover Crypto
To conclude, let's recap the best practices to recover crypto and not lose it in the first place:
- Always keep one (better several) copies of your seed phrases at secure places.
- Always double-check the address you are sending your coins to.
- Never hand-type the entire alphanumeric address. Use QR codes and copy-paste and double-check.
- Make sure you are sending to addresses you know and trust.
- Double-check that you are sending crypto to the relevant blockchain (ERC20-tokens to Ethereum, BEP20-tokens to BSC).
- Don't keep all your coins in one wallet and store your hardware wallets in a safe place.
- If you think you lost coins, double-check the transaction ID.
- Do not fall for recovery service scams. If you don't have your seed phrase, no one can help you.
- Big exchanges are mostly safe but can be hacked, too. Choose if you want to rely on the exchange or yourself for safety.
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