What is a seed phrase, and how does it protect our digital assets? How to safely store a seed phrase, and what are the main risks associated with it?

To find out the answers to these questions, take a look at our guide. This crypto-friendly guide will discuss seed phrases and their role in the blockchain world. We’ll also explain how they work and how they differ from private keys.

What Is a Seed Phrase in Crypto?

A seed or a recovery phrase is a series of 12–24 generated words that give access to private and public keys stored on crypto wallets. Seed words can also be described as passwords used for fund recovery when crypto wallets get lost or deleted.

These phrases are chosen from a list of 2,048 words that usually come from the Bitcoin Improvement Proposal (BIP 39). This is a security standard that generates mnemonic sentences, i.e., easy-to-remember words, from 128- to 256-bit random numbers.

A recover seed phrase is used in the following situations:

  • When you create a new crypto wallet
  • When a crypto wallet gets deleted or stolen
  • When you need to restore your wallet

Recovery phrases play an important role in the blockchain world. Their main task is to restore access to wallets even if crypto wallet manufacturers get out of business.

How Does a Seed Phrase Work?

The wallet software uses BIP-39, BIP-44, or BIP-32 standards to produce a mnemonic code. As mentioned above, a recovery phrase will be automatically generated when creating a crypto wallet. Depending on the wallet, this phrase will contain a series of 12 or 24 words.

Once these phrases are generated, users can store them or write them down. Recovery phrases are not used to gain access to funds; that’s what PINs and passcodes are for. Instead, they are used to restore lost or deleted wallets.

Users can use recovery phrases to restore access to their funds through other devices. Can I use my seed phrase on any wallet? Yes. However, recovery phrases can only be used on wallets that use the same software and standards.

How Should I Store My Seed Phrase?

Now that you know what a seed phrase is and how it works, make sure to store it in a safe place.

The best way to do this is to store it offline. This will reduce the risk of hacks. You can also split your recovery phrase and store each word in a different location. Many people save their recovery phrases on USB sticks or hard drives. However, you should never store your recovery phrases on a hard drive you use daily.

Some of the best cold wallets come with a titanium seed recovery plate on which you can engrave your seed phrases. This plate protects the wallet from fire and water.

What Does an Average Seed Phrase Look Like?

An average recovery phrase will contain 12 to 24 random words taken from the BIP-39 word list. What is a seed phrase example? An example of a 12-word Bitcoin seed phrase can look like this:

acoustic, balcony, cabbage, dance, edge, famous, game, hair, idea, jazz, kid, magic

These phrases are automatically generated during the setup process.

That said, some of the best hardware wallets use both 12-word and 24-word phrases. For example, the Trezor Model T implements a 12-word recovery phrase, while the Trezor Model One employs a 24-word recovery phrase.

What Are the Risks Associated With Seed Phrases?

The main risks associated with the recovery phrases include the following:

  • They are non-recoverable — Unlike passwords, a crypto wallet seed phrase cannot be recovered. If you lose it, you may lose access to your funds.
  • Human factor — Recovery phrases can be misplaced if not stored properly. They can also be destroyed by water and fire, especially if they are written on paper. Swapping and misspelling the phrases can also lead to recovery issues.
  • Hacks — Recovery phrases stored online are more vulnerable to hacks. Therefore, it is not advisable to store recovery phrases on the cloud or email.
  • Software issues — Crypto wallets use different software; not all wallets will be compatible with the BIP-39 standard. This means that recovery phrases will work only on wallets that use the same software and standard.

How Seed Phrase Recovery Works

You can recover a wallet using a seed phrase in the following way:

  • Create a new wallet. If you use a hot wallet, make sure to download it from a trusted source — its official website, Google Play, or App Store. If you use a cold wallet, you’ll have to install it and connect it to your computer or mobile.
  • Tap the Recover/Import button. This option can be found in the main settings.
  • Enter your recovery phrase. Make sure to put the correct words in the right order. Keep in mind that cold wallets may use physical buttons.
  • Create a new recovery phrase. After entering the recovery phrase, you’ll be able to create a new password or PIN. Once the new password is verified, the wallet will be synchronized with the blockchain. This means that you’ll be able to see your balance and transaction history.

Seed Phrases vs Private Keys

Recovery phrases and private keys provide security. However, these two terms are very different. First, a private key is made of a series of randomized numbers, while a recovery phrase consists of a series of randomized words.

A private key can look like this:

E9873D79C6D87DC0FB6A5778633389F4453213303DA61F20BD67FC233AA33262

A recovery phrase can look like this:

sadness, young, cactus, talk, palace, index, lamp, hammer, daughter, ability, gallery, mango

Secondly, the private key is used to authorize crypto transactions and grant access to crypto wallets. On the other hand, recovery phrases act as a master key. They provide access to private keys, and they can restore lost, stolen, and deleted crypto wallets.

Thirdly, recovery phrases will be compatible with all wallets that use the same software and standard, while private keys will be compatible only with their native wallet’s account.

Conclusion

What is a seed phrase? A string of 12 to 24 automatically generated words. They usually come from the BIP-39 word list, although they can also use BIP-44 and BIP-32 standards. A recovery seed is generated during the creation of a new crypto wallet. Its main task is to restore access to wallets if they get deleted, lost, or stolen.

Unlike passwords, seed phrases are non-recoverable. Moreover, they’ll be compatible only with wallets that use the same software and standard.

FAQs

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