If you’re the owner of some bitcoin, you may find yourself wondering how to backup bitcoin in case they get lost or stolen. After all, stories abound of people putting some bitcoin on a drive, then losing the drive either through error or disaster. One notable example is Elon Musk, though there are plenty of non-millionaires out there who could be better off if they had kept their bitcoin.
We’ll be looking at a few ways to backup your bitcoin, but we should note that none are as comprehensive as, say, backing up your hard drive data using any of our best online backup solutions. It’s actually more like a password using zero-knowledge security: once the proof that you own the bitcoin is gone, the bitcoin is gone, too. Forever.
With that cheery prospect out of the way, let’s take a look at how you can backup your favorite cryptocurrency.
Using a Software Wallet
As we mention in our guide to buying bitcoin, a secure and easy way to stash your cryptocurrency is to use a software wallet like Electrum or Exodus. Not only will it make transacting bitcoin easier, they also have a backup built in through the use of a “seed phrase,” or “mnemonic recovery phrase.”
Thing is, if you own bitcoin, the code is physically present on your computer and the blockchain has saved your transaction in the public ledger. You lose bitcoin by losing access to that code, but the blockchain still has that information, you just need to be able to tell it that. That’s where the seed phrase comes in.
The science behind them is tricky, but in essence a seed phrase is a mnemonic password (mnemonic is the Greek for “memory”) that lets you retrieve your bitcoin. The seed phrase is known only to you, so you want to make sure you store it somewhere safe, but will allow you to always restore any lost bitcoin with only a minimum of effort.
Creating a seed phrase is a matter of clicking on the menu in most wallets (you may avoid using one that doesn’t allow this) and finding the “create seed” function. Write down the generated mnemonic phrase or copy-paste it to a safe location (like one of our best zero-knowledge cloud services). Restoring the wallet is then as simple as clicking the “restore” button and entering the phrase.
Using a Hardware Wallet
Option two, that can also be used in conjunction with a software wallet, is using a hardware wallet like Ledger or Trezor. The actual backup of your bitcoin isn’t on the wallet, but a hardware wallet acts like a physical key that you can insert into your computer which then lets the blockchain know who you are (and that it owes you money).
Your seed phrase isn’t on the hardware wallet, either, but you could always use both in conjunction. In that case, you can use the hardware dongle as a form of two-factor authentication while using the software wallet as the control center for your bitcoin trading.
Should you lose access to your software wallet and drop your hardware wallet in the drink, you can always use the seed phrase to still backup your software wallet as well. It’s no 3-2-1 rule, but it’s close enough.
Copying Your Wallet.dat File
A third option, which you can use together with the other two, is to simple create a copy of your wallet.dat file. This file, which can be found on your hard drive, is basically your proof of ownership of your bitcoin. It stores your particular blockchain info on your hard drive (which is why when Elon Musk lost his drive, he lost his bitcoin).
Thing is, it’s a regular old file that lives on your hard drive and there’s nothing keeping you from copying it. Should you lose your drive — because you overclocked it a wee bit too much or simply because it had lived a full life — you just retrieve the file and you’re back in business.
Finding the wallet.dat file is easy, on Linux and Mac it always lives in the same directory:
- Linux: ~/.bitcoin/
- Mac: %APPDATA%\Bitcoin
If you’re using Windows the “Bitcoin” directory is either under “Application Data” or “AppData\Roaming;” you may need to run the file explorer to find it as the folder may be hidden or installed in a different place altogether (isn’t Windows great?).
Once you’ve located wallet.dat, make copy (don’t move it) and store it somewhere safe. “Safe” in this case is away from the hardware and preferable away from the machine altogether. A USB stick is a good solution (though those are prone to getting lost) or a cloud storage service, although it would be wise to find an alternative to Dropbox and its remarkably lax attitude to security.
Even better would be to encrypt your file before sending it to whatever cloud storage you’ve chosen, because whomever owns wallet.dat, owns the bitcoin associated with it. There’s no way to claim ownership in the blockchain other than with that file, so keeping it safe is of paramount importance.
Much as with your software wallet, picking a strong password to protect the encryption will give you peace of mind. There’s nothing more comforting than knowing your investment is safe and secure, backed up and covered in layers of security.
And there you have it, several ways to backup your bitcoin. Though it’s best to combine all three above methods, just using one or two should help you well enough. If you need more suggestions for places to keep your wallet.dat file, please check what is the best cloud storage pick out there. If you’d like to stay hidden while you transfer, take a look at the best VPN providers we’ve picked out for you.
We hope you found the above guide useful and would love to hear your feedback in the comments below. Are there other, better ways to backup bitcoin, that you know of? Thank you for reading.