When you first install Crypto Wallet on your phone, you have the option to set up a biometric or a PIN. It’s the keys to your wallet, but what happens if you lose or break your phone?
This is why it is important to “back up” your wallet. Backing up your wallet just means you are creating a backup key and storing it off your phone.
There are several ways to do this, but the easiest is definitely a cloud backup service. Here, you create a custom password for decrypting files stored in your Google Drive or Apple iCloud account. If you lose access to your device, you can reinstall the Wallet app on your new device, enter your password, and you’ll have access to all your crypto assets again.
Note: To use the cloud backup service, you first need to log in to Google Drive or Apple iCloud through the Wallet app.
Alternatively, you can create manual backups. In this case, you will be randomly assigned a set of 12 words (a “passphrase”) to use in each of your digital wallets in your Bitcoin.com wallet.* Then, when you reinstall the application, you will need to enter your 12-word password to access each wallet.
Whether you choose a single password to decrypt your entire wallet, or choose multiple auto-generated 12-word passphrases corresponding to each wallet in your Bitcoin.com wallet, you must adhere to password management best practices.
First, you should never store your passwords in digital form, as doing so opens the possibility of being stolen by hackers. This includes taking a screenshot or digital photo of your handwritten password.
The best strategy for most people is to physically write the password/passphrase on a piece of paper and store that paper in a safe place. If the crypto assets in your wallet are valuable, you will need to (manually) make paper copies and store these copies in different locations (eg, one at your home and one at your family’s).
While all of this might sound a bit complicated, it’s important to remember why it’s so important: when you use a non-custodial wallet, you — and only you — control your funds.
Note that with manual backups, anyone with the password can access your wallet (and steal the assets in it), while with cloud backup services you have an extra layer of protection as an attacker needs to get into your Google or Apple first account and enter the additional master password you created. If you set up your Google or Apple account with 2-Factor Authentication, you are very difficult for hackers.