Ideas For How to Store Your Seed Phrase Securely
Probably the scariest thing about using a self-custody crypto wallet is having to record the seed phrase. If you don’t record it securely enough, it could easily fall into the wrong hands or be hacked. And if you record it too securely, you may end up losing it or forgetting it yourself! Finding the balance between security and convenience can be precarious, so here are a few ideas to help you. Keep in mind that there’s no “correct” way to store a seed phrase, and a lot of it depends on your personal situation and preferences.
It’s also worth pointing out that here we’re purely talking about how to record the seed phrase, rather than what kind of wallet to use. The comparison between hardware wallets, mobile wallets, and browser extension wallets is a topic for another day.
Quick Recap — What is a Seed Phrase?
The seed phrase for a crypto wallet is a secret password that can be used to recover it no matter what happens to any hardware of software. If your computer breaks, MetaMask is uninstalled, or your hardware wallet stops working, you can still access your wallet again using the seed phrase. In the early days of crypto this tended to be a very long string of characters, but nowadays most wallets use 12 or 24 English words, which is easier to record.
Common Storage Solutions
Written on a Piece of Paper
The simplest way to record the seed phrase is just to write it on a piece of paper. The big advantage of this low-tech approach is that it’s safe from hackers. The main way crypto funds are stolen is through hacks or people gaining remote access to your computer. Although writing it down in paper and ink feels inherently insecure, it will actually defeat the vast majority of bad guys who want to get their hands on your seed phrase. Of course, an old-fashioned burglar could still find it, and perhaps the biggest flaw is that paper can easily be lost or destroyed.
Pros:
· Offline and out of hackers’ reach.
· Simple and convenient.
Cons:
· Paper can easily be damaged or destroyed. Ink could fade.
· Could easily be lost or accidently thrown away.
· Not safe from burglars or others who might find it.
Stored on a Computer/Phone/Tablet
This is the way most beginners store their seed phrase, but it’s problematic for a number of reasons. For a start, computer hardware doesn’t work for ever, and when the device eventually fails your seed phrase (and money) will be gone with it. A computer or device connected to the internet is also vulnerable to hackers.
Whether stored as plain text in a notepad file or in a jpeg screenshot, unencrypted storage on a computer is usually not to be advised. Putting a password on the file might help, but it’s still vulnerable to hardware failure (and passwords aren’t infallible).
Pros:
· Most convenient.
· Less likely than paper to be accidently lost or thrown away.
Cons:
· Vulnerable to hackers if the device is connected to the internet.
· If the device stops working or can’t be accessed, you’ll lose the seed phrase.
Cloud Storage
Using something like Dropbox, Google Drive, or OneDrive largely avoids the issue of hardware failure, but certainly isn’t infallible. This method is probably the most vulnerable to hackers, and there’s no guarantee that these services will always be available anyway (companies can go bust and servers can fail). Both screenshots and text files are equally vulnerable in this way.
Of course, you could back up the seed phrase on multiple cloud drives, which would spread some of the risk, but it’s definitely worth encrypting it in some way as well (see below).
Pros:
· Convenient.
· More permanent than paper or an offline device.
Cons:
· Highly vulnerable to hackers. All they need is your cloud storage user name and password.
· Cloud storage services may not last forever.
Engraved on Metal
The advanced version of writing down on paper is to carve it onto metal. There are actually products on the market specifically for this purpose, and a lot of long-term bitcoin holders use this method to protect their vast portfolios. The obvious advantage is that unlike paper, metal can’t be destroyed easily, so floods and fires shouldn’t cause you to lose all your crypto. It is still vulnerable to being found by a burglar or misplaced though. It’s sometimes suggested to putting a seed phrase in a safe makes it an easy target, so you could get creative about where you hide it.
Pros:
· Offline and out of hackers’ reach.
· Difficult to accidently damage or destroy. No ink to wear away.
Cons:
· Not safe from burglars or others who might find it.
· Could be misplaced.
· Too much hassle for most casual users.
· Often costs money.
Additional Strategies
On their own, the four methods above all contain issues, but if you combine them with some additional techniques, the level of security can be greatly increased.
Passwords on Files
If your seed phrase is saved on a cloud drive or physical device, encrypting it with a password is basically a must. Simply place it in a zip file with a strong password and that will defeat the majority of casual hackers. If you have a vast sum of money in the wallet you might want to take further measures, but for the average user this will be sufficient.
Pros:
· Simple and effective.
Cons:
· Possible to forget the password.
· Passwords aren’t infallible.
Clues/Riddles/Code
A great way to boost to the security of your seed phrase is to add an element of homemade cryptography. Swapping one or two words in the seed phrase for a clue that only you would know is a simple but effective way to stump a hacker or scammer. Just don’t make it too cryptic!
If you speak an uncommon language, you could also translate some of the English words into that, and jumble up the letters a bit (so they can’t just put it into Google Translate). This is unlikely to be uncrackable, but hackers are often impatient and won’t want to spend hours trying to figure it out when they have other wallets to hack.
Rearranging the words into a different order would work too, so long as you know the method of reordering them. Simply including one word out of place adds a significant extra layer of security.
Pros:
· Simple and effective.
· Very time-consuming for a hacker to figure out.
Cons:
· Unlikely to be uncrackable if the hacker is motivated.
· After many years you may forget what you did and get bamboozled by your own trick.
Decoy Seed Phrases
Another simple but effective method is to use decoy seed phrases. These could be real seed phrases from empty wallets, or you could just make your own up. If you have your seed phrase in a passworded zip file with an innocuous name like “Holiday Photos”, you could include an unencrypted notepad next to it with a useless seed phrase. When the hacker finds it doesn’t work or opens an empty wallet, they may give up.
Pros:
· Quick and easy.
Cons:
· May only delay the hacker temporarily.
Split Across Multiple Locations
A way to make your seed phrase exponentially more secure is to split it up and store the different parts in multiple locations. Obviously, this could become a bit of a hassle when you need to use the seed phrase, but it makes the task for a hacker or burglar much more difficult. Some people keep one half close by, and store the other half with a trusted family member. Alternatively, one half could be stored in an online drive, and the other half offline. You could even split it in three if your stash is really worth protecting at all costs.
Pros:
· Extremely secure.
Cons:
· Creates a lot of hassle.
· Might require placing trust in others.
· Potential risk of losing one of the two halves.
Multi-Sig Wallet
The ultimate security for a crypto wallet is to require more than one seed phrase (known as multi-sig). Generally, each seed phrase will be held by a different person, and this approach is most commonly used by large institutions. It’s technically complicated to achieve for the average user though, although more and more wallets now offer this kind of service. Explaining how to set up a multi-sig wallet is beyond the scope of this article, but if you’re really serious about security, it’s something you could look into.
Pros:
· Arguably the most robust way of securing a wallet.
· Great for companies and institutions who don’t want all the funds to be at the mercy of an individual.
Cons:
· Complicated to set up and complicated to manage.
· Requires placing trust in others.
Have Any Better Ideas?
Hopefully this article gave you some ideas about how you can store your seed phrase better. The list certainly wasn’t exhaustive, so if you have any ideas of your own, feel free to post them in the comments!
Follow DeFi Decrypted for Daily Yield Updates
We offer a daily yield update service on Twitter, Telegram, Instagram that helps you stay on top of the best that DeFi has to offer!
