Once you understand the basics of bitcoin, seed phrases are pretty straightforward. A seed phrase “passphrase,” otherwise known as “seed extension” or “extension word,” is a 13th or 25th word that you can specify yourself on top of the randomly-generated 12 or 24 words. These can be particularly dangerous in comparison to the protection you get from multisig because they are capitalization-specific, special character-specific, and space-specific. Both are sequences generated by new crypto wallets which must be protected to keep intruders from accessing your funds. However the two serve different functions, and it’s important to know the difference.
Most cryptocurrency wallet owners prefer to write down the seed phrase on a piece of paper. Cryptocurrency holders who are concerned about environmental factors prefer to write the words on metal blocks. Unlike physical wallets, cryptocurrency wallets are software that helps users access their assets on the blockchain network and stores the public and private keys necessary to interact with the network.
Conclusion: Keep Your Seed Phrase Safe
Without seed phrases, it would be much more difficult to transcribe, record on paper, read without error, export, and import into other Bitcoin wallet software. Unlike a numeric cipher, which consists of long strings of numbers, a seed phrase is a random string of 12 to 24 words, such as “rich”, “one”, “iron”, etc. The use and creation of a string of words, rather than a jumble of random numbers and letters, is intended to facilitate accurate note-taking, make it impossible to decipher and ensure a high level of security. The seed phrase should be considered a “backup” to the private key, proving ownership.
For example MPC wallets like ZenGo store the second key share on their servers. So, theoretically, if a hacker was only able to acquire one half of the key, they would be unable to approve any transactions without ZenGo’s permission. But unlike the popular multi-signature (multisig) wallets, MPC wallets don’t require multiple individual private keys to sign a signature. This distinction may sound semantical, but it unlocks more features and protections that multisig wallets can’t offer.
Differences and Similarities Between Seed Phrases and Private Keys
So you might use this phrase to recover your wallet in the event that you misplace it, damage it, lose it to theft, or it becomes otherwise inaccessible. Seed phrases are sometimes called mnemonic phrases, especially in older literature. This is a bad name because the word “mnemonic” implies that the phrase should be memorized. It is not safe to invent your own seed phrase because humans are bad at generating randomness. The best way is to allow the wallet software to generate a phrase which you write down. No, you cannot change the words in your seed phrase or their sequential order.
Amp up your defenses with measures like password layers or hardware wallets to fortify your crypto treasures. The best practice is to jot down your seed phrase and store it in a secure spot, like a safe deposit box or a protected digital environment. This ensures What is a Seed Phrase that even amidst forgetfulness or hardware mishaps, your crypto investments remain reachable. They serve as a backup and recovery mechanism, ensuring that users can regain access to their funds if they forget their password or lose access to their device.
The Appearance of a Seed Phrase
This information is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax or financial advice from a professional advisor. This might sound like a lot of work, but these methods can help you keep your crypto safe. Build your identity as a certified blockchain expert with 101 Blockchains’ Blockchain Certifications designed to provide enhanced career prospects.
- Seed phrases, a pillar of cryptocurrency wallet security, are highly resistant to hacking.
- Furthermore, if you choose not to use a seed phrase, it’s possible that you could lose control of your crypto altogether.
- There are many types of crypto wallets, such as web-based or hardware wallets.
- Therefore, this phrase needs to be written down and kept in a safe place so you can use it when needed.
- The use of a simple sequence of words is to account for the human error potential when writing down your seed phrase.
The BIP39 word list is made up of a carefully curated collection of 2,048 common English words commonly known as the BIP39 word list and is the standard for most Bitcoin wallets. Seed phrases ultimately allow you to unlock funds and spend them https://www.tokenexus.com/ from your address. If your seed phrase becomes compromised, you must move funds to another address that has not been compromised to regain control of the crypto. As long as they both support BIP39, you can go back and forth quite easily.