A seed phrase is a string of 12 to 24 words that acts as a master key for a non-custodial or self-custodial cryptocurrency wallet. This allows you to retrieve your wallet and regain access to your digital assets residing on the blockchain network.
This article details the concept of seed phrases, how they work, and why they are important. We also provide a step-by-step guide on how to restore your wallet and safely store your seed phrase.
What is a seed phrase?
A seed phrase is a unique sequence of 12, 15, 18, 21, or 24 random words. It is generated from a predefined list of English words. Also known as recovery phrase, mnemonic phrase, secret phrase, or backup phrase. The longer the seed phrase, the more secure your private key and crypto assets are.
Many wallets use the Bitcoin Improvement Proposal-39 word list, while some, like Electrum, use a non-BIP-39 mnemonic system.
If you lose access to your assets or forget your private key, a recovery phrase can help you restore your cryptocurrency wallet. Hierarchical deterministic wallets like Metamask and Trust Wallet can recover all private keys from a single phrase.
How do seed phrases work?
Creating entropy: When you set up a new wallet, a random number called entropy is generated. This is a long numeric string containing at least 128 bits of information. Higher entropy means longer and harder seeds to decode, providing a higher level of security. Generating a checksum: The wallet generates a checksum by hashing the entropy. The first few bytes of the hash become the checksum. This prevents transferring funds to the wrong wallet address or importing the wrong private key. It also detects errors in transaction data that may have occurred during storage/transmission. Even if the word order changes, the checksum will fail and the phrase will be invalid. Append checksum to entropy: A checksum is appended to the end of the random number to maintain the integrity of the recovery phrase. Data Splitting: Based on the length of the secret phrase, the combined data is divided into the required number of chunks/sections. Section Mapping: Every chunk/section is mapped to a specific word in the BIP-39 word list and assigned a number (position index). For example, if the section index is 175, it corresponds to the 176th word in the list. Generate seed phrases: The resulting words are ordered in the same order as the original section. The ordered list of words becomes the seed phrase. The last word is checksum.
Why is a seed phrase important in a crypto wallet?
Wallet recovery: Imagine your cold wallet gets corrupted, your hot wallet gets deleted, or you lose your private keys. In such situations, seed phrases can help you gain access to cryptocurrencies on the blockchain. Recover the entire wallet by regenerating the private key. Private key backup: Seed phrases serve as a failsafe mechanism for cryptocurrencies by backing up the private cryptographic keys. The seed phrase includes a checksum to ensure that you have recorded/entered the secret phrase correctly. Enhanced security: By minimizing the risk of permanently losing access to your wallet, seed phrases provide an additional layer of security for your digital assets. Increased decentralization: Recovery phrases give you full control over your private keys and cryptocurrencies, eliminating the need for third-party administrators.
Seed phrase and private key: what’s the difference?
Seed Phrase Private Key A unique string of 12 to 24 English words that helps you recover your crypto wallet. This is a discrete alphanumeric code that allows you to access crypto assets that reside on the blockchain. If your wallet is lost/reset, a seed phrase is required to restore access to your cryptocurrency and recreate your private keys. A private key is required to authorize transactions and prove ownership of digital assets. This acts as a master key and is derived from a predetermined list of words. It is similar to an ATM PIN and is derived from a seed phrase. If you lose your seed phrase, you will permanently lose the ability to retrieve your wallet. If you lose your private key, you will no longer be able to access the assets controlled by that key. Access can only be restored if the seed phrase is intact.
How can I protect my seed phrase?
Please write it down
Write down exactly the phrases you have memorized on paper. For added protection from natural disasters, stamp/engrave on fire-resistant, water-resistant, and corrosion-resistant metal plates. You can consider metal seed phrase storage solutions such as Ledger’s Cryptosteel Capsule Solo, The Bilfodl, and Cryptotag Zeus.
Choose a safe storage location
Keep your written secret phrase, or the metal plate with it engraved, in a safe place. You can store it in a safe deposit box at your bank or in your locker at home.
never share
Never share your secret recovery phrase with anyone, even family members or the manufacturer of your wallet. Always remain vigilant, as malicious attackers are everywhere and will trick unsuspecting people into divulging sensitive information.
offline storage
Avoid storing seed phrases in digital storage with cloud-based services such as OneDrive or Google Drive. Avoid storing your secret phrase on any internet-connected device. Such services/devices are vulnerable to cyber threats such as hacking, phishing attacks, and malware. Therefore, recovery phrases can be easily stolen or compromised. To protect your cryptocurrency, store your seed phrase safely offline on an air-gapped computer or hardware wallet.
Consider split storage
For maximum security, split your seed phrase and store each fragment in a separate location. For example, some Trezor models support Shamir backup, a SLIP-39 security standard. This allows you to create multiple recovery shares and distribute them in a safe location or to trusted friends. Additionally, you can get a wallet with only a threshold number of shares.
How to recover crypto wallet using seed phrase?
Step 1: Open a new wallet
Choose the right cryptocurrency wallet based on your preferences. Trust Wallet and Exodus are popular online wallets, while Trezor and Ledger are well-known offline wallets.
Hot/Software Wallets: Download the browser plugin or mobile application for your desired wallet from the official website, App Store, or Google Play. Cold/Hardware Wallets: Connect or connect your hardware wallet to your desktop, laptop, or smartphone to access your wallet software. Learn how to enable your wallet.
Step 2: Select “Recover” or “Import” option
Click the “Recover,” “Import,” or “Restore” button in your online wallet app or offline wallet companion software.
Step 3: Enter your seed phrase
To restore your software wallet, enter your secret recovery phrase into your desktop/mobile application. To get your hardware wallet, enter your phrase using your device interface. Hardware wallets have physical buttons for entering letters and numbers. Be sure to enter your seed phrases in the correct order.
Step 4: Set a new password
Once you enter your secret phrase, the application/device will ask you to create a new PIN or password. The new passcode is required to secure access to your wallet, so please keep it safe.
Step 5: Sync with blockchain
Once you set a new password/PIN, your wallet will start syncing and retrieving data from the blockchain. Transaction history and asset balance will also be updated. To sync your hardware wallet, connect it to your computer and open the included software to perform the update. Once your wallet is fully synced, you will see the latest state of the blockchain, including revised transaction records and crypto holdings.
Common mistakes with seed phrase storage
Save your seed phrase online: Don’t capture screenshots or save your recovery phrase to the cloud or online devices. If your server/device is hacked, your seed phrase will be compromised and your cryptocurrency will be lost forever. Transact on a device connected to public Wi-Fi: If you transact using a hot wallet on a device connected to a shared network, you are exposing your seed phrase to online threats. Write down your phrases on paper: Paper is not ideal for storing seed phrases because it is fragile and easily destroyed by fire, water, or natural disasters. Save your phrase in an insecure location: Save your recovery phrase in a secret location that only you can access. If you don’t have a safe place, consider a paid service like Ledger Recover. Split your secret phrase into parts and distribute them to trusted administrators. Share your backup phrase with others: Avoid sharing your seed phrase with anyone, including family and friends. Be wary of scammers and phishing sites that employ social engineering tactics to manipulate users into disclosing sensitive data.
Examples of poor seed phrase management
When you scribble a seed phrase on a piece of paper, it can be mistaken for trash or destroyed by unexpected events. Store your secret key/secret phrase in an easily accessible location such as your closet, wardrobe, kitchen cabinet, or work desk. Keep a single copy of your seed phrase instead of storing multiple copies in different locations. You record or misplace your seed phrase incorrectly. It saves the recovery phrase in the Notes app or in a text file on the infected computer, which is synced across multiple devices. Share your seed phrase with others. Scammer posing as a customer support agent.
conclusion
Seed phrases play a vital role in the world of cryptocurrencies. These can help users get their wallet back even if they lose access to their private keys or cryptocurrencies. Offline wallets or metal storage solutions are perfect for storing your recovery phrase safely and protecting it from prying eyes and hacks.
FAQ
What if I lose my seed phrase?
If you lose your seed phrase, your crypto assets are lost forever. Once someone obtains your recovery phrase, they can regenerate your wallet’s private keys and move your cryptocurrency.
What is an example of a seed phrase?
Examples of seed phrases include “acoustic, cannon, drum, fault, express, scrub, berry, yellow, range, poem, limit, jelly.”
Are seed phrases safe?
Your seed phrase will remain safe as long as you carefully store it in a secure offline location. Improper storage/disclosure can lead to theft of seed phrases and permanent loss of assets.
Are all seed phrases the same length?
no. A typical BIP-39 phrase contains 12 to 24 English words. Shamir Backup (SLIP-39) can also generate 33 word shares.
Can I use my seed phrase in another wallet?
Never use a hardware wallet’s secret recovery phrase to set up a software wallet. Doing so exposes your seed phrase, private key, and cryptocurrency to online threats.
