The seed phrase, also known as the recovery phrase, may just be the most important security guarantee for digital currency users. Seed phrases often serve as the last line of defense to prevent you from losing access to your crypto assets in the event something bad happens to your device or hardware wallet. Computers break down, phones break, and hardware wallets can be stolen, lost, or destroyed. If you experience any of these unfortunate circumstances, you’ll be lucky that your source phrase is properly secured.
How does the seed/recovery phrase work?
A seed phrase is nothing more than a collection of random words that are generated by your crypto wallet when you set it up. This type of wallet can also be used as an emergency backup if you ever need to regain access to your cryptocurrencies. While semantically the two expressions are somewhat similar, recovery keys should not be confused with private keys, which are alphanumeric sequences that allow users to perform all kinds of crypto transactions from their wallets. The commonality is that both types of keys should be protected with the same care, as anyone with access to this data will be able to create a copy of the wallet you own or steal your funds.
How does a seed phrase work?
While most people are used to keeping cash in their wallets, crypto wallets work quite differently.
First of all, cryptocurrencies are not really stored in a crypto wallet at all. In practice, they function as data in the blockchain. Therefore, even if access to your wallet is disrupted for any reason, the data representing your accumulated funds is still safely stored in the blockchain digital ledger.
The seed phrases are generated every time a user creates a new crypto wallet, whether it is a hardware wallet, a software wallet or even a web wallet. These phrases contain words that come from a list of 2048 English words called the BIP39 standard. Most recovery phrases are 12 or 24 words long, and their inherent feature is that each one is unique to the wallet that previously created it.
The words that make up the seed phrase actually correspond to strings of random numbers that the cryptocurrency community calls seeds. Once the seeds are configured correctly, they will then generate the user’s private master key. This key, in turn, can be used to generate additional private keys for a given user. The option to recover the wallet using the initial phrase is most often available in the wallet settings. The correct way to do this is that the words should be entered in exactly the same order they were given before for the recovery to work.
Seed phrase structure
Phrases are random sequences of 12 or 24 simple words that, as mentioned above, come from the English language. It is a trait of humans that they are often not masters at gambling, and therefore it is best to let your wallet automatically generate your seed phrase. An example of a 12-word recovery phrase looks something like this:
– Trade Level Grail Granted
– Again Pillow Beach Western
– Avocado Sector Bench Purpose
A recovery phrase of 24 words would look something like this:
– Latin Bench Grail Pillow
– Purpose Granted Flush Western
– Project Again Level Nephew
– Polar Cry Wolf Nephew Sector
– Tourist Board Citizen Beach
– Impulse Strong Avocado Trade
At this point, it is important to remember that a seed phrase is not just words that can be entered in any order. They must be entered in the same order in which the phrase was generated at the very beginning. In other words, word order is also part of the seed phrase.
How to store a seed phrase?
Every person who wants to avoid losing access to their digital resources should secure the seed phrase with the utmost care. The recovery phrase should never be stored digitally, even if it is password protected. This is because if the device on which the seed phrase is stored ever goes online, it could be vulnerable to hackers or other types of criminals.
Memorizing a seed phrase is of course the most secure method for potential hackers, but human memory can be fallible, so the optimal security method is to implement some old-fashioned security measures, such as a simple pen and paper. Write it down (in the right order!) and protect this paper at all costs so that it never falls into the wrong hands. This includes protecting the paper containing the seed phrase from the elements such as fire, water or anything else that could render it unreadable.
Many of the best safe manufacturers offer models that guarantee varying degrees of protection from the elements, which is certainly something to consider if you decide to take the highly recommended step of keeping your seed phrase under lock and key. In the event that buying a safe is impractical for you, a smaller and less expensive alternative is a steel wallet. The credit card-sized steel wallets feature letter tiles that slide into built-in tracks that users can then configure to spell out their seed phrase. The steel wallet provides effective protection against fire, water and rust. It is definitely a better method than paper. Steel wallet prices start at around $100 and some popular brands and models include Capsule, Cryptotag Billfodl Multishard and Cryptosteel.
Be ready for emergencies
Another thing to consider is what will happen to your seed phrase if there is an emergency. In case you are the only one who knows how to access your seed phrase, but for some reason you are indisposed, no one else will be able to recover your digital assets for you. In these situations, it may be advisable to have a trusted person or family member who will be able to access the recovery phrase in case you would not be able to physically do so.
Seed phrase loss
In the event that you maintain access to your seed phrase yourself and you lose access to your wallet as well as your recovery phrase, you will not have access to your digital assets. However, this is not an oversight of cryptocurrency wallet producers, but a thoughtful and deliberate function. This is because if there was a workaround for the lost source phrase, it would render them pointless. Considering the mechanism of operation of cryptocurrency wallets at this point, it should be strongly emphasized that ensuring the security of the seed phrase is crucial for the security of your digital assets. If you do not feel comfortable securing your recovery phrase on your own account, there is nothing to prevent you from using a custodial service.
Difference between seed phrase and private key?
Seed phrases and private keys are often confused by less experienced cryptocurrency users. The important thing is that both are sequences generated by new crypto wallets. What they have in common is that both must be protected to prevent hackers from accessing your digital assets. However, keep in mind that both have completely different functions and it is important to know the difference.
The private key can be compared to some kind of ATM PIN, the password needed to withdraw funds from an account or approve a transaction at the point of sale using a debit card. The seed phrase, on the other hand, is like a master key that opens the door to life savings. The recovery phrase gives anyone with access to it the ability to take complete, permanent control over the funds accumulated in the account.
Seed Phrase Hacking
The only possible way to hack a recovery phrase is human error. The most common mistakes occur in areas such as a security assessment error, which usually involves storing a recovery phrase in a Google document or a text file on your computer. Assuming the scenario that your seed phrase is physically saved (in writing or in a steel wallet), no one will have a physical access to it except you. The only exceptions to this rule are when you voluntarily disclose a seed phrase or when someone steals the medium on which the phrase is stored. Continuing this thread, it should be added that there are many malicious programs as well as effective phishing methods designed to trick the user into revealing the seed phrase. In conclusion, you should be very careful and suspicious if anyone ever asks you to reveal your recovery phrase for any reason.