If a cryptocurrency user forgets his password, what happens to his wallet?

[ancrypto]

Depending on the kind of wallet or exchange platform the cryptocurrency user is using, there are different repercussions to forgetting the wallet password.

If we are talking of a custodial wallet or exchange, there are likely to be options for password recovery or account restoration. This is because there is a third-party involvement in such platforms and the user is not the sole manager of his/her password or keys.
Custodial platforms usually establish the user's identification, entailing verification, which makes things easy while seeking assistance from the provider’s support team.

However, the consequences of forgetting the password are not-so-good in the case of non-custodial wallets or similar platforms. Since only the user has complete control over their account, losing the password or keys typically results in losing access to the funds.
With their higher focus on security and user control, non-custodial wallet providers often do not provide the ability to recover or change passwords. So, if you are a user of a self-custodial wallet, you need to take this responsibility seriously! Simply put, you must adhere to best practices to prevent this.

To do so, you can use password managers, set up backup and recovery options like seed phrases or private key backups, and securely store passwords or passphrases in several safe locations.

[Mohd Alman]

its true that forgetting a password is a common concern, but I as a user of the OneKey open-source wallet can regain access to our wallets:

Password Recovery Options: OneKey offers password recovery mechanisms, such as security questions or alternative methods chosen during setup. This allows users to reset their password securely.

Seed Phrase Backup: During the wallet creation process, OneKey prompts users to generate a seed phrase. This backup phrase, usually consisting of 12 to 24 words, serves as a fail-safe. Users can restore their wallet by entering the seed phrase, even if the password is forgotten.

Community Support: The OneKey community is a valuable resource. If a user encounters difficulties, engaging with the community through forums or support channels can provide helpful guidance on password recovery.

Wallet Restoration: In extreme cases where both the password and seed phrase are forgotten, OneKey allows users to reinstall the wallet and input their seed phrase to regain access. They can then set a new password.

Open-Source Transparency: The open-source nature of OneKey ensures transparency and trust. The community can review the code, enhancing security. This transparency is crucial when dealing with sensitive issues like password recovery.

Open-source wallets, like OneKey, shine in scenarios where users face password-related challenges. Their transparent code, combined with robust recovery options, empowers users to regain control of their wallets securely. It's a testament to the user-friendly and security-focused design of OneKey.
thus the wallet prevented me from having any horrible experience in such case.

[robelneo]

Except for the Wasabi wallet where your password will become part of your passphrase after you create your account all the other wallets can be backed up by saving the Passphrase provided by the software, if its on decentralize exchange you always have the option to recover your password as long as you have the email you've used when you create an account on that exchange.
Password is very important always see to it that you keep a backup of your password you can write it down so you can retrieve it anytime you need it.

[Litzki1990]

Humans are fallible, and we believe that we may remember a thing now, but when the use of that thing diminishes, we may forget the security of that thing. No matter how many passwords or other security we remember, we should keep a separate note of those passwords or security so that we can recover our important information from there if we ever forget it. 

When our device is lost or damaged we lose a lot of important information and as a result we suffer a lot. Basically, so that we don't have to be victims of all these sufferings, important passwords and important information should be noted in advance and kept in important places so that they are useful when needed.

[Yamane_Keto]

Depending on the kind of wallet or exchange platform the cryptocurrency user is using, there are different repercussions to forgetting the wallet password.

There is a big difference between exchange platform, custodial wallet, and non-custodial wallet, and when we talk about wallets, we mean non-custodial wallet where you can access the private key or wallet seed.
The password is the encryption of the wallet file which contains the wallet seed, so password + wallet file = wallet seed.

1) If you have access to the wallet seed or private key, you do not need a password.
2) If you do not have access to the wallet seed or private key, you need the password + the wallet file.
3) If you do not have the wallet seed, private key, or wallet file, your funds are lost.
4) If you do not have the wallet seed or private key, but you can access the wallet file without remembering the password, then if the password is simple and can be guessed, you can access your coins, otherwise you have lost them.

Except for the Wasabi wallet where your password will become part of your passphrase after you create your account all the other wallets can be backed up by saving the Passphrase provided by the software,

Wasabi wallet use BIP39 seed there is no difference between them and wallets that follow the same approach. There is a big difference between BIP39 passphrase and wallet password.

[yhiaali3]

4) If you do not have the wallet seed or private key, but you can access the wallet file without remembering the password, then if the password is simple and can be guessed, you can access your coins, otherwise you have lost them.

This case is similar to the case in which a hacker steals the wallet file and then uses one of the programs that hackers use, such as the Brute Force, to guess the password. This program may take from several days to a month to guess the correct password, but in the end it may succeed.

The question here is how can someone with minimal experience in Crypto lose the seed, private key, and password? This goes against the most basic security principles that every crypto beginner knows. The most likely case here is that the wallet file is stolen.

[joniboini]

This case is similar to the case in which a hacker steals the wallet file and then uses one of the programs that hackers use, such as the Brute Force, to guess the password. This program may take from several days to a month to guess the correct password, but in the end it may succeed.

Just a slight correction, brute forcing is the technique. A hacker can use many brute forcing tools, from their own script to popular pen-testing apps available on the internet. Heck, you can probably call the recovery tool that is quite popular for Bitcoin right now a brute forcing app too. CMIIW.

The question here is how can someone with minimal experience in Crypto lose the seed, private key, and password? This goes against the most basic security principles that every crypto beginner knows. The most likely case here is that the wallet file is stolen.

I would not be surprised if it happens though. It is not that unbelievable. Even experienced users can lose their seed, or save it somewhere unsafe like the cloud, etc. There is no limit to human stupidity or lack of awareness, especially if they're still new to things and don't know how to secure their wealth correctly.

[tranthidung]

1) If you have access to the wallet seed or private key, you do not need a password.

It's true.

A wallet password is to encrypt the wallet file or a layer of protection for access to the wallet. It is helpful to prevent hackers to access your wallet and steal cryptocurrency stored in it.

If you have a private key, it is enough to move funds.
If you have a mnemonic seed, you can import it and get access to private key then spend fund.

How to back up a seed phrase?
Why is seed splitting is a bad idea?

It is for Bitcoin wallet but can apply to all non custodial cryptocurrency wallets.

Reminder: Choose open source, non custodial wallets to use.

[Yamane_Keto]

This case is similar to the case in which a hacker steals the wallet file and then uses one of the programs that hackers use, such as the Brute Force, to guess the password. This program may take from several days to a month to guess the correct password, but in the end it may succeed.

Hackers do not tend to do this randomly because Brute Force an average password requires time and costs, as you will pay the cost of guessing each possible word to reach the correct password. Assuming that you do not use a short password (there is no reason to use a short password), hackers rarely Brute Force a random wallet file, they know that the wallet file contains Bitcoin with a value greater than the value of Brute Force and they know that you will not transfer the money at any moment otherwise all their effort will be meaningless.

[NikeFit_7777]

The password, it doesn't make any difference. The Seed-phrase was invented for a reason. If you have saved it, there is absolutely no problem to restore access. When you restore access, you can set a new password.

P.S. Therefore, do not forget to save the Seed-phrase (password as well) - but it is not so important, but (desirable).

I can share interesting articles on security. It is really important.

Links:

- https://b2binpay.com/en/how-to-protect-your-crypto-wallet-top-10-tips

- https://www.linkedin.com/pulse/navigating-wallet-security-protecting-your-digital-assets-tripathi

- https://a16zcrypto.com/posts/article/wallet-security-non-custodial-fallacy

Your safety is in your hands. It always has been and always will be! 

[Charles-Tim]

However, the consequences of forgetting the password are not-so-good in the case of non-custodial wallets or similar platforms. Since only the user has complete control over their account, losing the password or keys typically results in losing access to the funds.

If you lose your password, then get your seed phrase backup, create a new wallet and import the seed phrase to set another password. The seed phrase generates the keys which are required to spend your coins and you will still have full control over your coins. As long as it is not wallet file encrypted with password, you do not need the wallet password.

Except for the Wasabi wallet where your password will become part of your passphrase after you create your account all the other wallets can be backed up by saving the Passphrase provided by the software,

Wasabi wallet use BIP39 seed there is no difference between them and wallets that follow the same approach. There is a big difference between BIP39 passphrase and wallet password.

Wasabi makes it confusing and misleading. The password on Wasabi is the passphrase and not password. You can download the wallet to find that out to be true.

[Sokani]

<snip>

If you forget the password to your exchange wallet, then you have to use the "forget password" option to receive a message from the exchange, with instructions on how to create a new password. If you forget the password to your wallet, there's nothing to worry about, the password is just an extra layer of security to prevent unauthorized users from accessing the funds on your device. The most important thing is the seed phrase, import the seed phrase afresh and your funds will appear.

[Brewmaster]

For most cryptocurrency wallets, forgetting the password can lead to a challenging situation. Here's what typically happens:

1. **Private Key or Recovery Seed:**
   - Users are usually provided with a private key or a recovery seed phrase when creating a wallet.
   - If you forget your password, having the recovery seed or private key allows you to regain access to your wallet.

2. **Reset or Recovery Options:**
   - Some wallets offer password recovery options, often involving email verification or other security measures.
   - However, this varies between wallets, and not all provide password recovery options.

3. **No Recovery Options:**
   - Certain wallets, especially more secure ones like hardware wallets, may not have password recovery options.
   - In such cases, losing the password or recovery seed could mean losing access to the funds permanently.

It's crucial to emphasize the importance of securely storing recovery phrases or private keys. Losing access to these could result in the irreversible loss of funds. Always follow best practices for securing and backing up your wallet information. If in doubt, refer to the specific instructions and support channels provided by the wallet provider.

[Z-tight]

I don't usually back up my wallet passwords, i try to use one i can remember easily. What i back up is my wallet seed phrase, i make multiple copies of it and store it in more than one location. If i ever forget the password that encrypts my wallet file, i would simply use my seed phrase backup to recover my wallet and set another password.

[Wiseman]

It is better not to forget the password and especially the strong phrase of the wallet, otherwise you can forget about your money, in general, if you are in the crypto world, I believe that you need to keep cryptocurrency not only on wallets (if on wallets, then on different, on 3-5) plus not large portions on different exchanges.