What is a Seed Phrase?
In the crypto industry, seed phrase also known as a mnemonic or recovery phrase is a series of 12, 18 or 24 random words that offers the information required to recover a lost or broken crypto wallet.
Simply put, a seed phrase is a master private key or emergency backup in situations that requires access restoration to your crypto wallet which aids the recovery of funds held in the wallet.
Although a seed phrase is similar to a private key, which are alphanumeric sequences that permits users to carry out crypto transactions from their wallets, they differ and should not be substituted.
How Does a Seed Phase Look?
New users may be wondering what a seed phrase looks like, how it’s generated and what it consists of.
Typically, a seed phrase comprises of a sequence of 12, 18, or 24 random words, selected from a predefined list of words. These words are selected in such a way that they can be used to generate a unique infallible sequence of recovery keys.
Seed phrases are generated whenever a new crypto wallet is created, be it a software, hardware or web wallet.
The seed phrases comprise of words pulled from a standardized list of 2,048 English words called the BIP39 standard (a protocol that outlines how crypto wallets are generate a string of words to create a mnemonic sentence). Which are widely used in the cryptocurrency industry.
By converting these words into a binary string, the crypto wallets are able to produce a set of keys that encrypt and decrypt crypto transactions. Each word in the seed phrase actually matches a specific binary number.
The words generated are made so basic to enable the user remember. They do not contain long numbers or special characters and to avoid mistakes, the randomly generated words do not include pairs like “woman” and “women” in a particular seed phrase.
An illustration of a 24-word seed phrase would look like this: rocket, amazing, shy, ostrich, worth, easily, dash, organ, stage, velvet, fox, rare, youth, fury, marble, pioneer, gym, innocent, spell, oyster, enhance, jungle, twice.
The order in which the words were placed when it was being generated must be entered exactly when trying to recover a wallet for them to work.
The seed phrase is used to derive a master private key, which is then used to generate all of the private keys for the wallet’s addresses.
The 2013, proposal by Marek Palatinus known as the “Bitcoin Improvement proposal-39”, has created a standard way for creating, recovering and representing seed phrases for cryptographic keys, which has been widely adopted by several cryptocurrencies and used by many leading wallet software applications.
Recovery Phrase vs. Private Key
Although they are both used for securing, accessing and controlling cryptocurrency wallets, the recovery phrase and private key are used differently and cannot be substituted for the other.
A private key can be likened to an ATM’s PIN combination or a password to an account that’s essential if you need access to withdraw funds. It is used to point or authorize transactions and prove ownership of crypto funds hence safeguarding transactions. They are simply long strings of characters used to sign transactions and control access to crypto funds.
A recovery phrase on the other hand is a recovery password for a crypto wallet in case the owner loses access to his wallet.
A recovery phrase is a more-user friendly way of managing private keys, while a private key is a more secure way of controlling access to cryptocurrency funds.
Basically, a recovery phrase is like a master key to all crypto accounts owned by the user. So instead of having different access keys to recover lost wallets, the recovery phrase serves all the addresses secured by the private keys in your wallet.
Through this phrase, users get to access their blockchain assets even if they are lost, stolen or damaged.
Each time a new address is required, a new child private key can be created from the master private key using a deterministic algorithm.
A recovery phrase (master password) grants you access to all associated currencies in your wallet. While a private key is always hidden inside your wallet so that you don’t get to enter them manually every time given their complicated nature, a recovery phrase needs to be physically written down and managed by you.
Can a Seed Phrase be Hacked?
Since the seed phrase is like a master key to all associated currencies in your wallet, losing it turns into a huge terrible event that could happen to any user in the crypto world. If a seed phrase is lost to a malicious actor, it goes on to mean that the funds cannot be recovered.
Storing a seed phrase on a computer or any device that is connected to the internet makes it vulnerable to hackers, even if the computers are disconnected from the internet or Bluetooth, the chances of being attacked by several malware can compromise the seed phrase.
A seed phrase is properly protected from hackers if it is stored offline, users usually store it physically but that becomes a disadvantage especially if the paper gets damaged.
So yes, a seed phrase is likely vulnerable to hackers especially if its stored online or handled carelessly but in the traditional sense, they cannot be easily hacked because they are a list of randomly selected words.
However, by having a bulky number of words in a seed phrase, if it is stored on a hardware wallet and by upgrading security patches, it becomes difficult for hackers to infiltrate your defenses.
Hackers use phishing to access a seed phrase by impersonating customer care representatives through emails and request for a seed phrase or private key. Users are advised to be cautious and not give away these information as it could dramatically lead to heart wrenching loses.
As the seed phrase serves as a master key to all associated currencies, if a hacker gets a hold of it, it could cause a user to lose everything in their crypto wallet.
What Happens if You Lose a Seed Phrase?
This is one of the worst nightmares any crypto owner could be thrown into as it entails losing almost if not all their cryptocurrencies.
A wallet seed cannot be recovered if lost or stolen. If a user loses his seed phrase, it could mean permanently losing access and control to the cryptocurrency wallet connected to it.
Due to how the words are randomly selected, it cannot be easily guessed by a third party, even the owner doesn’t have a role to play in the selection.
In some cases when a user loses his seed phrase, the cryptocurrency exchanges or wallet providers may suggest account recovery services that could aid in recovering access to your wallet. Although these services are not always available, they may ask you to provide extensive personal data and proof of ownership of the wallet in question.
It is very important that users adhere to strict security protocols in order to safeguard their seed phrases such as using a strong password to protect the associated wallet, storing in hardware wallet, not sharing it with anyone, also to generate a backup of their seed phrase and store it in a separate secure location just in case the original is exposed or destroyed.
How to Ensure the Safety of Your Seed Phrase?
There are several ways to secure your seed phrase, because losing it in the hands of hackers could cause a lot of destruction. Here are a few guidelines on how to secure your sed phrase:
- Do not share your seed phrase with anyone else. This could be challenging given situations where you are physically unable to access the wallet and the funds are needed to save your life, I would say to inform a very close and trusted relative (my opinion though). However, keeping your recovery phrase private is a first step into securing the funds held in your wallet.
- Make use of the traditional method. This involves penning it down on a paper or printing and laminating it and then storing it in a secure location. You could use a steel storage device that is both fireproof or water resistant.
- A password manager is also ideal for securing a seed phrase. A password manager is a software application designed to store and manage online identifications. It stores passwords, usernames, and recovery phrases in an encrypted database and locks it behind a master password. The user only needs to remember the master password instead of numerous different ones. Some examples of password managers include: LastPass, 1Password, Dashlane, Bitwarden, Keeper etc. A password manager adds another level of backup security for the recovery phrases.
- Another way to ensure your seed phrase is secure is by storing it in a cloud-based vault. With a cloud-based vault, you can divide your seed phrase and store it in multiple locations thereby making it more difficult to be gathered by hackers.
By strictly following the necessary required steps, users will be able to safeguard their recovery phrase because losing it means losing their entire fund on the crypto wallet and believe me when I say it is a nightmare no user would want to be in.
