Prominent gold bug and Bitcoin skeptic Peter Schiff is a genius. Okay, he isn't, but the apparent loss of his bitcoin (BTC) holdings has helpfully raised the topic of crypto-wallet security.
Yes, your holdings will most likely remain safe so long as you follow best practices, but the frequency with which people report lost crypto has revealed that things aren't as simple as they can be. And if crypto is to become mainstream, then holding onto your private keys, seed phrases and funds really should be idiot-proof.
Fortunately, it's becoming easier to do this. New technologies for ensuring that you don't lose your crypto are emerging, from smart contract wallets to methods for guessing missing seed phrase words.
But for the most part, seed phrase and wallet recovery will be a laborious task for the foreseeable future. So don’t get too complacent.
How easy is it to lose bitcoin?
It's surprisingly common to lose crypto as a result of misplaced passwords or seed phrases.
According to a 2018 report from Chainalysis, bitcoin holders had lost as much as 22% of all BTC in circulation at that point. This is a staggering figure, and it shows just how difficult it is for even early and relatively experienced traders to protect their funds.
However, while Peter Schiff initially claimed he lost his Bitcoin as a result of a faulty wallet (and later he admitted that he was wrong), most experts working in the area of crypto recovery believe that the vast majority of popular wallets are secure.
"Yes, they are reliable," says Arkady Bukh, a partner at Bukh Law Firm and a co-founder of the Bitcoin Recovery Co. "It's really hard to make something stupid, once you get your seed phrase and backup you can always restore or reinstall it."
