A seed phrase is a randomly generated sequence of words that you need to restore your cryptocurrency wallet if you forget the password. This post will cover what this means, when it needs to be used, and how to use it!
What is a seed phrase?
A seed phrase is the private key to your cryptocurrency, in word form.
Let us explain what this means.
In crypto, ‘digital assets’ (cryptocurrency) are recorded on a public ledger called a Blockchain. If you own crypto assets you have a private key to those assets. Your private key authenticates you (using cryptography) as the owner. You can’t access or transact those digital assets on a blockchain (a digital ledger of transactions) without your private key.
Your private key is a 256 bit string of binary code (256 1s and 0s in a certain order).
Even though blockchains are public ledgers and transactions can be viewed, your private key for any transaction you make (like buying a coin) is never revealed publicly. This is what makes it secure.
Turning numbers into passwords
Because humans don’t use the language of 1s and 0s, there’s a technical standard called BIP 39 that everyone uses to turn your private key from the binary language of computing (1s and 0s), into English. BIP 39 is the standard used to do that translation.
When that translation happens, you get a mnemonic phrase (12 or 24 word phrase) in a language humans can understand and recognize. The private key is no longer in 1s and 0s.
In practice, mnemonic phrase (called ‘seed phrase’) is just a phrase made up of either 12 or 24 words generated according to the BIP 39 standard. The phrase and words in it represent the binary form of your private key.
It’s important that humans can recognise and understand the private key to access their cryptocurrency, incase they need to use that key. That’s why we use a seed phrase of 12 or 24 words – we can write down or record words more easily than a long string of 1s and 0s.
Where will you come across a seed phrase in crypto?
The wallet will generate the phrase for you as part of the wallet set up and present it on screen.
What is a seed phrase used for?
Seed phrases are used to recover ‘lost’ cryptocurrency from a cryptocurrency wallet.
Things can and do go wrong with cryptocurrency wallets. Cold storage wallets can be stolen or lost. Digital (hot) wallets can have software bugs or no longer be supported by companies or developers.
Seed phrases allow you to trace and recover any crypto you cannot get access to as a result of using a lost, stolen, or failed crypto wallet.
What to do with a seed phrase
When you first set up a crypto wallet, you create your password to access it. This is wallet layer security, so no one can access your wallet.
The next step will be to access and record (somewhere safe) a 12 or 24 word seed phrase that is generated by the wallet set up process. The wallet should prompt you to do this.
The seed phrase secure’s your actual crypto asset because it authenticates your ownership of that asset. If you ever have problems with your crypto wallet you must have this seed phrase to prove that you own your crypto and can then recover them to another wallet.
If someone else gets hold of your seed phrase, they can steal your crypto assets.
5 tips to keeping your seed phrase secure
Here are 5 tips you should always follow when it comes to your cryptocurrency seed phrase:
- You should never forget or lose your seed phrase. You MUST record it somewhere safe.
- Never share your seed phrase with anyone.
- Record all of the words, in the order they are generated. Double check this.
- As stated above, seed phrase is the word form of your private key which is a string of 256 1s and 0s. The order of the words matter. You must write down each word in order starting with the first word, at that exact order.
- Do not try to change any words around because this will cause your wallet to fail when trying to recover your wallet.
- You will have one seed phrase per crypto currency wallet. You need to keep records of the seed phrase for every crypto wallet you use
- Always keep your seed phrase somewhere separate from your crypto wallet. If you lose both together, your coins are lost with no hope of recovery.
Where to safely store your seed phrase – metal storage wallets
The safest place to store a seed phrase is in a metal crypto wallet.
A metal crypto wallet is a physical device that looks like a cash wallet but is made of metal like stainless steel. The wallet comes with engraved tiles. Each tile features a letter of the alphabet. You arrange the tiles in order to form the words of your seed phrase. You arrange the tiles and secure them inside your metal wallet.
Metal crypto wallets are designed to be indestructible – fire proof, flood proof and shock proof – and many are lockable. This is why they are the best form of storage for your seed phase. Writing your phrase down on paper risks loss, damage and access by prying eyes.
We’ve reviewed and rated the best metal storage wallets on the market for their construction, security and ease of use. The BillFodl wallet comes out on top in our view. It’s durable, sleek and well designed. It’s also a pretty good feeling to have your crypto private key backed up safely in one of these chunks of metal!
And don’t forget – if you’re hesitating about needing a metal storage wallet – you lose your seed phrase and something happens to your crypto wallet, your coins are gone!
How to use your seed phrase with a metal storage wallet
The thing to understand about using your seed phrase is this: You only need to record the first four letters of each word in the phrase.
You can absolutely recover your crypto using just the first four letter of each word. Here’s why:
The words of your seed phrase are taken only from a specific list of 2048 words used in the BIP 39 standard. The words in this list all share one characteristic: the first 4 letters of each word are unique to that word. No two words in the list share the same first 4 characters.
For example, for the word “apple” the first for letters “appl” does not come up anywhere else in the list.
What this all means is, if you have the first 4 letters, you know the rest of the word by looking for those first 4 letters in the BIP 39 word list.
You simply need to arrange the first four letters of each word in order, inside your metal storage wallet. Knowing this saves time setting up your metal storage wallet and some metal storage wallets only provide room to hold the first for letters of each word.
For words that only have 3 letters, you just use record the 3 letters. For example the words “add” and the word “addict” are both in the list. You would use ‘add’ and then “addi” for “addict”.
Your seed phrase represents the private key to your cryptocurrency. You should always keep it secure from hack, theft, destruction or loss. The best way to do that is by storing it in a metal storage wallet like the BillFodl wallet. These are made of titanium so they can withstand almost any disaster! They’re also stylish as well as functional and will protect your crypto assets for years to come.