This update is an adaptation of my recent answer to a Quora reader who was in a panic. She asked:
“What can I do after a hard drive crash?
How can I recover my cryptocurrency?”
In the past, I would address the immediate problem of course. (My answer is below). But to prepare for the next unfortunate event, I recommended a wallet type based on a user’s unique experience, expertise and comfort zone. I guided the reader to weigh trade-offs of important criteria: Security, portability, convenience, and quick access to assets).
I had believed that some types of wallets were better for some individuals, but that they required a background in cryptography—or at least a discipline for meticulous practices. As CEO of the Cryptocurrency Standards Association, I had also believed that simple, unified, and popular standards would emerge very soon. I figured that this would enable users to practice safe-wallet maintenance in their own homes.
I was wrong. Most crypto wallets have not sufficiently evolved to counter the risks and complexities of everyday scenarios —not even for expert users. The problem isn’t the fault of any one vendor or hosted online service. It is that all of these gadgets, apps and services have not gotten together behind a single set of risk standards to a point where they become simple, standardized and compliant-friendly in the real world.
The lack of comprehensive standards and best practices dealing with total loss of access can bite anyone in the tush. Expertise and experience be d*mned. Today, I recommend only two types of wallets. All others are simply too risky to play a role in any financial portfolio. They set the stage for losing your wealth and health in so many plausible scenarios:
- If your electronic device is lost, hacked, stolen or run over by a truck
- If you become incapacitated or die
- If you forget a secret, or where you stored it
- If you have no idea what is “multisig” and don’t care to learn strange new practices
- If an online cloud service or exchange goes dark or mysteriously disappears
Here is my answer to the reader who urgently needs to recover from a disk drive crash. After dealing with that crisis (it’s not at all pretty), I explain what do do in the future…
Question: “How can I recover my cryptocurrency after a hard drive crash?”