The first rule to ensure safety in crypto is protecting your private keys. However, even with military-grade cryptographic security, the crypto industry is not immune to hacks and losses. Therefore, participants must arm themselves with enough knowledge to protect their wallets, funds, and exchange accounts.
It appears that many people broke the first rule of crypto safety during the early days of crypto. Of the 19.6 million Bitcoins in circulation today -25% ($213 billion) are inaccessible, according to data from Chainalysis. As per another statistic, over $2 billion in Ethereum funds remains lost due to the loss of passwords and private keys. Wallet Rescue Service, a solution that helps people recover their lost data, passwords, and crypto wallets, says people are sending in requests every day to help retrieve their lost fortunes. According to WRS, this number has continued to increase into 2024.
Incidents of Irretrievable Billions Locked in Crypto Wallets
Those locked out of their wallets share the horrors of spending countless months and years attempting to recover their coins. One particular James Howell discarded his hard drive that contained 7,500 BTC. 11 years later, he has had to excavate an entire landfill in New Port, Wales trying to retrieve the stash. Others like Howell narrate how they acquired the coins almost a decade and a half ago when only a few saw the potential of Bitcoin.
Stefan Thomas who tried his last password attempt into his wallet containing 7,002 BTC narrated to the New York Times how he spent months thinking of new recovery strategies for his locked hard drive only to become unsuccessful.
“Then I would go to the computer with some new strategy, and it wouldn’t work, and I would be desperate again.”
— Stefan Thomas
These challenges are one of Bitcoin’s reminders that the security features that underpin blockchain technology are also some of its riskiest undertakings. Thomas, who used the Iron Key hard drive device to store his fortune and lost access, advised users to learn from his lesson and always test their backups.
Crypto Security Features Allow no Room for Password Recovery
Unlike crypto, traditional banking services with online portals can provide users with password recovery options. The structure of Bitcoin technology did understand that people could forget their passwords and find the need to recover their wallets. Hence, instead of storing passwords on a database, the network offered backup in the form of a seedphrase or private key. The problem is that several people forgot their passwords, misplaced their private keys, or misspelled their seed phrases while backing them up on paper. This means there would be no convenient way of recovering the password or accessing funds in a locked wallet.
During an interview, LHV Bank founder Rain Lõhmus narrated to the Estonian National Radio how he lost the private key to an Ethereum wallet containing 250,000 ETH coins. However, the founder said he had not made much effort to recover the funds but was open to any offers from individuals or Ethereum wallet recovery services.
How to Recover Lost Crypto Funds Using a Wallet Recovery Service
Plights like the above ones narrating the loss of significant amounts of money highlight the risks of the blockchain. While blockchain security experts are striving to build default solutions for fund recovery, only a few of them have bore fruits.
Solutions like the Wallet Rescue Service (WRS) have made it apparent that funds retrieval from locked wallets might be tough but not impossible. As per the WRS official site, the service can help crypto users recover data to their lost crypto wallets, through which they can recover lost passwords and locked funds. If someone is struggling with their mixed-up seedphrase or a forgotten seedphrase, they can get back access to their funds through a custom crypto wallet rescue script. Where someone is struggling to access their hardware wallet, WRS states you can book a free hardware wallet analysis.
Unlike any other wallet recovery services which will charge a consultation fee or upfront fees before recovering funds, Wallet Rescue Service mentions on their site that they only take a 20% success fee. If they don’t succeed, you don’t have to pay them anything. The service has also made it clear that their operation is fully in-house and does not rely on third-party GPU/CPU servers or cloud services.
Crypto users should remain careful with their wallets, private keys, and seed phrases, or else they risk losing their funds in the same way. However, most of the users who have lost their funds previously admit they did so at a time when crypto had not gained mainstream popularity. Almost a decade ago when the price of Bitcoin was only a few dollar cents.
However, there are still risks to losing crypto funds today like falling prey to phishing schemes, transacting on insecure networks, sending funds to wrong cryptocurrency addresses, not properly backing up wallets, or storing funds on centralized exchanges. This easy guide should open your eyes to the top common mistakes that result in the loss of crypto funds.