How does wallet backup and recovery work?

First, we need to talk a little bit about how crypto wallets work. Crypto wallets work by holding cryptographic keys that are used to prove you have control over cryptoassets on a blockchain. Whenever you wish to do something with your cryptoassets, you instruct the blockchain and use your private cryptographic key as a sort of digital signature to approve your desired action.

Your wallet’s cryptographic key is a long, non-human readable hexidecimal string of characters like this:

Using these keys directly is unwieldy, so crypto wallets handle the keys for you. If you lose this cryptographic key, you will not be able to prove that you control those assets, effectively losing the crypto. Instead of having to remember unintelligible cryptographic keys, most wallets use recovery phrases (sometimes called backup phrases, or seed phrases). Instead of a string of meaningless characters, a recovery phrase is a set of random dictionary words like those pictured below:

Compared to a long string of random characters, the words in a recovery phrase are easier to read and write down without human error.

Problems with recovery phrases

While recovery phrases improved upon cryptographic keys, recovery phrases have proven to also be difficult for many people to use securely. There is a constant drip of stolen crypto due to exposed seed phrases and sad stories of lost recovery phrases. Since people are not familiar with recovery phrases, they do not know recovery phrase best practices. For example, never ever show your recovery phrase to anyone via the internet. Or, do not store your recovery phrase unencrypted on a computer.

Another problem, albeit less serious, of recovery phrases is that they don’t take advantage of modern user experience advances. If you restore your wallet or import it to a new device, you need to go through a multi-step process which includes manually inputting the words of your recovery phrase. It’s not difficult, but compared to using cloud backup, the difference is noticeable.

What is automated cloud backup?

Automated cloud backup is Bitcoin.com’s answer to the two major flaws up recovery phrases: that they are unfamiliar and inefficient.

The Bitcoin.com Wallet gives people the option to replace recovery phrases with something more familiar — passwords. Just as a recovery phrase (set of random words) is more familiar than a cryptographic key (string of hexadecimal characters), a password is more familiar than a recovery phrase.

We offer automated cloud backup services. You’ll create a single custom password that decrypts a file stored in your Google Drive or Apple iCloud account. If you lose access to your device, you can reinstall the Wallet app on a new device, enter your password, and you'll again have access to all of your cryptoassets. By creating a mix of encryption and cloud services tied with custodial services to help retrieve things, we can maintain a self-custody service while leveraging centralized technologies to lower the burden on the user. Here’s how easy it is to set up:

How to restore your wallet from manually inputting a recovery phrase.

As long as you have written down the words of your recovery phrase (typically between 12 and 24 words), you will always be able to restore your old/lost wallets by using that phrase. Steps will differ slightly from wallet to wallet. We present how to do it with the Bitcoin.com Wallet:

1. When you have downloaded the Bitcoin.com Wallet, tap on the "+" symbol to the right of your bitcoin wallets.
2. Now tap on "Import wallet"
3. Enter your 12-word recovery phrase and select the coin (BTC, BCH, ETH, AVAX) for the wallet you want to import. Please note that when entering your phrase, all words must be lowercase with a single space between them, and no space after the final word.
4. Once you have entered all 12 words correctly, tap "Import"
5. If you have followed all the steps correctly your Bitcoin.com wallet will now be restored. (repeat the above steps to recover any sub-wallets)

How to manually backup your wallets:

How to manually restore or import a wallet:

How to restore you wallet from automatic cloud backup

Cloud Backup is much easier than the above manual backup process. Using the Bitcoin.com Wallet you simply:

1. Log into your Google or Apple account.
2. Input the password you used when you set up your cloud back-up.

How to set up automatic cloud backup:

How to restore or import a wallet from automatic cloud backup: