A cryptocurrency investor from Lucerne in Switzerland is offering a reward of more than $40,000 for the safe return of crypto hardware wallets which hold the private keys to coins worth $800,000. Hardware wallets are considerably safer than using software wallets, but it doesn’t mean that your digital assets are 100% safe. As recommended, he kept the hardware wallets at a bank and only used them twice a year to process a few transactions.
In April 2018, he had collected the devices from the bank and went shopping after finishing work. When he returned home, he noticed that his bag with a Keepkey and a Ledger Nano S was missing. The missing bag also contains an Acer Aspire V3. One reason hardware wallets are not 100% safe is that they work with 12 or 24-word recovery phrases in case the device is lost or stolen. This individual doesn’t appear to know if the bag was stolen from his car or if he simply misplaced it while he was out shopping but he has reported it to the police as a theft.
If you no longer have access to the hardware wallet because it is broken or no longer in your possession, you would use the recovery phrase to regain access to your digital assets. Regrettably, this user doesn’t know what his recovery phrase is, so if the wallets are not returned, the funds will be lost forever. As the wallets are also secured by a PIN, they have no value to anyone that might have stolen or found the devices. Anyone that knows the whereabouts of the hardware wallets is asked to email the owner, Thomas, at email@example.com
Another hardware wallet owner took to hypnosis in the vain hope of remembering his PIN after losing his seed phrase. The Trezor hardware wallet extends the time between each failed attempt to prevent a brute force hack, but unfortunately, hypnosis didn’t help. After more than four months of trying to remember the PIN, he contacted someone that had a hardware hack that might recover his PIN. Trezor had already released a firmware update to prevent the hardware hack, but as the user had been locked out of the device for months, he hadn’t applied the fix. He was charged $3,700 for the hardware hack, but it was money well spent as it allowed him to regain access to his bitcoin worth $32,000.
Ensure you record your passphrase and PIN somewhere safe but separately from physical hardware wallets. Remember to provide details of how to access your digital assets in your will, so your descendants can benefit from your crypto investments. As a final warning, only purchase a hardware wallet from the manufacturer and ensure the seals are not broken when you receive the hardware. In January 2018, this Reddit post confirmed a user had lost their life savings to a compromised wallet bought on eBay.
Financial analyst, smartphone app designer, technical writer, and crypto enthusiast. Blockchain verified graduate of MOOC 9, DFIN-511: Introduction to Digital Currencies, run by the University of Nicosia.