Three Leading Threats to Bitcoin and How to Protect your Crypto

The three most common ways to lose Bitcoin include losing access to private keys, falling victim to scams, and being hacked. Each of these risks can lead to a permanent loss of funds, making security a top priority for investors and traders alike.

Losing Access to Private Keys

Anything that is exposed to the internet is vulnerable to digital threats. That includes your cryptocurrency wallet and private keys. Having your keys online only is one of the biggest risks in cryptocurrency.

Many have lost millions as a result of simple mistakes, such as misplacing a seed phrase, storing keys on an old device that gets discarded, or relying on a single copy of a backup that gets damaged. Storing private keys in a secure, offline location is essential to ensuring long-term access to funds.

An Attack on Your Physical Device

If your hardware device is stolen (physically), there are some sophisticated ways to get into the device if the right measures aren’t in place. With physical attacks through means such as power glitching, and attacking the nodes needed to get access to your private key, it is possible for an attacker to get your information through your secure hardware wallet.

Social Engineering Attacks

With social engineering, a scammer will try and get your trust so that you give access to them without worrying if they’ll steal your funds. This usually happens by scammers pretending to be someone or authority that they aren’t in order to gain your trust – and essentially your private keys. This is common in attacks such as phishing and pharming.

Can You Recover Lost Bitcoin?

Recovering lost Bitcoin depends on how it was lost.

If a private key or seed phrase is forgotten or misplaced, there is no way to regain access, as Bitcoin operates on a decentralised system with no password recovery options. Without private keys, funds remain locked on the blockchain indefinitely.

For those who have lost Bitcoin due to accidental deletion or hardware failure, data recovery methods may help if the original wallet file is still retrievable. Specialist recovery services exist, but success rates depend on whether the wallet data was fully erased or simply corrupted.

If Bitcoin is stolen due to hacking or fraud, recovery is unlikely. Since transactions are irreversible, once Bitcoin is transferred, there is no way to reverse the process.

How Many Bitcoin Have Been Lost?

Estimates suggest that between 3 to 4 million Bitcoin have been permanently lost due to forgotten private keys, hardware failures, or accidental deletion. Since Bitcoin has a fixed supply of 21 million coins, this means that around 15-20% of all Bitcoin may be inaccessible forever.

Many of these lost coins belong to early adopters who mined or acquired Bitcoin when it had little value and did not take proper precautions with storage. Some stories of lost Bitcoin include hard drives thrown away, lost paper wallets, and wallets locked behind forgotten passwords.

How to Keep Your Bitcoin Safe for the Long Term

Secure and long-term Bitcoin storage requires strong security practices to prevent loss due to theft, hacking, or forgotten keys. The most secure way to store Bitcoin is through cold storage, keeping private keys offline and away from cyber threats.

A hardware wallet is one of the safest options for long-term storage. Devices like Ledger protect private keys from online threats while allowing users to access their Bitcoin when needed. Setting up multiple layers of security, such as PIN protection and passphrases, adds an extra layer of defence.

For those who prefer non-digital backups, paper wallets or metal backups can be used to store seed phrases securely. Writing down a 12 or 24-word recovery phrase and keeping it in a fireproof and waterproof location ensures that funds remain accessible even if digital devices fail.

Another key consideration is estate planning. If Bitcoin is held as a long-term investment, making sure that trusted family members or legal representatives have instructions on how to access funds is essential. Without proper planning, Bitcoin could be lost forever in the event of unexpected circumstances.