Quote from: abramovf on March 02, 2025, 06:02:07 AM

What happens if this device is lost or stops working due to malfunction? All BTC is lost?

The signing device (also known as a hardware wallet) is simply an isolated environment that generates and stores private keys/recovery seed securely. The purpose of these devices, besides signing transactions with the private key inside the device, is to keep the recovery phrase safe at all costs.

The user's main priority should be to store the recovery phrase (wallet backup) in secure locations. If someone loses the device, nothing will happen to their coins as long as they have the wallet backup. With the backup, the wallet can be restored on another hardware wallet (even from a competing brand, it doesn’t matter) or on software wallets like Electrum, Sparrow or Bluewallet, and the funds will be accessible.

Remember, in case of device loss, stay calm and preferably restore your wallet on another hardware wallet when you acquire one. Although restoration can also be done on software wallets, it isn't recommended (unless you don’t mind or have small amounts of funds), since software wallets are connected to the internet and run on devices like phones or PCs, which may contain malware. This is why the best option for both beginners and advanced users is to use hardware wallets or cold storage in air-gapped systems.

Hardware wallet manufacturers, for the most part, maintain blogs with weekly or monthly updates containing tips on how to use their devices. Some of these updates also include guidance on what to do in case of emergencies. While researching, I came across this article from Trezor, which is known for producing educational content and other very good guides and tutorials with didactic materials. For example, this one: What to Do If Your Trezor or Recovery Seed Goes Missing