“My Crypto Got Hacked!” - 2

Posted by webadmin on Friday 14 December 2018

Source: https://www.wired.com/story/i-forgot-my-pin-an-epic-tale-of-losing-dollar30000-in-bitcoin/

Summary: Mark Frauenfelder had gotten the scare of his life when he had forgotten the PIN code to his Trezor wallet as well as losing his 24-word recovery phrase that serves as a backup. His device contained the large amount of 7.4 BTC, which would normally be locked away forever. In the end, he got very lucky and managed to hack his device with the help of an expert and regained the access.

Hardware wallets are generally a secure way to keep your crypto assets safe. A good one will keep your private keys out of reach from your computer, thus keeping them out of harm’s reach. If it is used properly, however. When using a hardware wallet, such as our Ledger Nano S, it is important to follow the instructions when setting up your device properly. Mark Frauenfelder sadly learned this the hard way.

It would only be bad if I couldn’t remember my PIN”

It is important to know your PIN code by heart, but there is one (and ONLY one) backup in case you’d forget it: your recovery phrase. This will help your device generate the same private keys (thus access to the same wallets). This recovery phrase is absolutely critical as its the only backup of your device and needs to be written down on a piece of paper and kept in a secure place.

“Carla?” I asked. “Did you see that orange piece of paper with my bitcoin password on it? I can’t find it in Jane’s room.”

Sadly, in this case it had not been stored in an area out of reach from others. Combined with the forgetting of the PIN code, this means the crypto assets on your device will be lost forever. Mark ended up being lucky, as the device he used (Trezor) ended up having a security flaw at the time, which he was able to exploit with the help of an expert. If not, he would have lost over $30,000 worth of Bitcoin (7.4 BTC).

What we can learn

 

Hardware wallets provide a great security layer. A layer so strong that you would not be able to access your crypto assets if you forget your PIN and lose your 24-word recovery phrase.

We would like to recommend you to:

  • Choose a PIN code you can easily remember, but is secure as well.
  • Keep your 24-word recovery phrase in a safe location, outside of anyone else’s reach.
  • Optional: have a second device that can serve as a backup. 

* This article is originally from Ledger website, the manufacturer of world most popular hardware wallet Ledger Nano S.