What is a Seed Phrase?

A seed phrase, also known as a Secret Recovery Phrase (SRP) or mnemonic, is a collection of words that allows you to restore your entire crypto wallet. It’s those 12-24 English words that your wallet presented you with while setting it up. If you followed its instructions correctly you should have recorded these words in order somewhere.

This sequence is similar to a master key for your private keys. Your wallet uses it to generate private keys for multiple networks and accounts. This is how you can restore the entire wallet with that single seed phrase.

What is a Seed Phrase for?

A seed phrase is used for providing a backup of your wallet should it become unusable via theft or destruction. Perhaps your wallet got stuck in the washing machine. Or perhaps you were relying on a software wallet on a laptop that doesn’t work any longer. Alternatively, you might just want to change which wallet you use.

In these cases, a seed phrase gives you the option to restore the entire wallet on another device or interface. Your crypto is not in your wallet itself, but on the blockchain. The wallet simply protects the private keys connecting you to those blockchain addresses.  As long as your recovery phrase is the same, the calculation of the private keys will always have the same result—giving you access to all of the accounts connected to that mnemonic.

When setting up a new wallet, it usually gives you the option to set up a new wallet or restore from a recovery phrase. Choosing the latter lets you fill in your 12- 24 words, restoring that entire wallet on your new device or interface. This means that even if your original wallet provider doesn’t exist anymore, you can still enter your words into another compatible wallet to restore your access (although you might want to avoid this for security reasons). 

How Do Seed Phrases Work?

It’s important to note your recovery phrase doesn’t start off as a set of words. It’s actually just a translated version of a long string of numbers called the entropy.

However, the entropy is so long that it’s very impractical to record. To solve this problem, Bitcoin Improvement Proposal 39 (BIP-39) introduced a standardized method to translate that long number into something more easily recorded by a human. Using this method, there are a total of 2048 English words that your seed phrase may use to translate the entropy. 

At this point, you might be wondering; if it’s just a literal translation of a long number, what makes a secret recovery secure? Well, actually, that’s more to do with how the entropy was generated. The entropy must be very long and random, otherwise someone might be able to guess it. As long as the entropy is chosen at random and made up of more than 128 bits, it’s sufficiently secure that no person or computer will be able to crack it.

How Can I Keep My Seed Phrase Safe?

So, now you know that your seed phrase is a backup to all of your crypto wallet. This also means that if anyone else can get their hands on your set of 24 words, they can access your cryptocurrencies. As such, it’s extremely important to keep your seed phrase secure. So what can you do to protect it?

Make Sure You Record It Correctly

First make sure you write down or record your seed phrase correctly. Any error in spelling or word order would cause a different set of addresses to be generated.

Store It Offline

Next, you should never store your SRP on cloud-based services. If the server is hacked, your seed phrase—and therefore your wallet—could become compromised. Similarly, you should never transact while using software wallets on devices using shared wifi networks. You wouldn’t want to share your seed phrase with everyone on the airport wifi, would you? Well, keeping a copy of your seed phrase on an internet-connected device is asking for exactly that. 

Recording your seed phrase on something physical— be that a hardware wallet or a piece of paper—is a much better option.

At this point, it’s important to mention that you should never restore your hardware wallet’s seed phrase into a software wallet. The entire point of a hardware wallet is that it generates your seed phrase completely offline. This means not even the most sophisticated digital spyware could see those words. If you enter that same secure recovery phrase into a wallet that doesn’t have those same qualities, you risk exposing it. In short, if you import your hardware wallet into a software wallet, your secret recovery phrase might be vulnerable to online threats.

Store It Somewhere Away From Thieves, Accidents and Natural Disasters

To follow, you should also bear in mind where you store your SRP physically. If someone steals your SRP sheet, they can easily access your wallet. Thus, no one should know your secret hiding place—not your mom, not your friends, and certainly not your roommates.

Never Share Your Seed Phrase With Anyone

You are the final barrier to your assets. Do not let your guard down, because bad actors will try to socially engineer you into revealing your seed phrase. If someone has access to your SRP they have all of your keys.

Remember - "Not your keys, not your coin."

So now you know all about seed phrases. From what they are, to how they work, and especially how to protect them effectively.

But that’s not the end of your security journey. The ultimate guardian of your secret recovery phrases is you.

Because if not self custody, then why crypto?