Bitcoins consist of specific private and public keys. The user holds the private key in a software "wallet," but the actual currency - the bitcoin - is inaccessible until the private key is verified through a public ledger. Therefore, the user cannot access funds without the private keys, and a hard drive failure or other sudden event can completely eliminate the bitcoins.
"If you lose your private key, your bitcoins are completely inaccessible," said Ben Carmitchel, President of DataRecovery.com. "At that point, the only option is to pay for professional data recovery or to cut your losses."
The user's private key resides in the wallet.dat file, which can be backed up to a hard drive, USB stick, or any other type of storage device. However, a single backup will not permanently protect the user from data loss in some circumstances.
"Because of the way that Bitcoin transactions work, users need to create regular backups of their wallets," said Carmitchel. "Otherwise, some bitcoins could become permanently inaccessible, even if a user has an older backup. This is particularly important for people who use bitcoins on an everyday basis and for people who handle a lot of transactions."
Carmitchel recommends regular encrypted backups to protect against data loss. Up-to-date encryption helps to prevent hacking, and DataRecovery.com can recover encrypted information without putting the data at risk.
"Data recovery should be a last resort, particularly for anyone who invests heavily in Bitcoin," Carmitchel said. "There's no substitute for a good backup strategy, but we're always ready to help Bitcoin users when a server or a hard drive fails."
"If you lose your private key, your bitcoins are completely inaccessible," said Ben Carmitchel, President of DataRecovery.com. "At that point, the only option is to pay for professional data recovery or to cut your losses."
The user's private key resides in the wallet.dat file, which can be backed up to a hard drive, USB stick, or any other type of storage device. However, a single backup will not permanently protect the user from data loss in some circumstances.
"Because of the way that Bitcoin transactions work, users need to create regular backups of their wallets," said Carmitchel. "Otherwise, some bitcoins could become permanently inaccessible, even if a user has an older backup. This is particularly important for people who use bitcoins on an everyday basis and for people who handle a lot of transactions."
Carmitchel recommends regular encrypted backups to protect against data loss. Up-to-date encryption helps to prevent hacking, and DataRecovery.com can recover encrypted information without putting the data at risk.
"Data recovery should be a last resort, particularly for anyone who invests heavily in Bitcoin," Carmitchel said. "There's no substitute for a good backup strategy, but we're always ready to help Bitcoin users when a server or a hard drive fails."
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