These 9 Facts Will Help You Understand the Importance of Seed Phrases
Security is on everyone’s mind when it comes to their cryptocurrency. Therefore, you need to know about the most crucial part of your digital wallet: seed phrases.
Even though security is an essential topic for our cryptocurrency, seed phrases are still different. Seed phrases back up all your information for recovery purposes if you misplace or lose your device.
Seed phrases are the most critical aspect of your digital wallet. If someone has access to those and the device without a secondary form of authentication like fingerprint scanning installed, then anyone can send funds on behalf of that person’s account. So remember these nine facts about seed phrases and why they’re so vital for some people out there!
What is a seed phrase?
A seed phrase is a series of words that give you access to the cryptocurrency associated with your wallet. Of course, you can lose or delete your wallet, but as long as you have this key/password for it, then all cryptocurrencies within will be accessible!
However, if you lose your seed phrase, that is the only way to recover your information and access all cryptocurrencies in it. Let me stress; you cannot lose your seed phrase! Recovery isn’t possible. We’ll talk about a case study example later. So, how do seed phrases work?
How does a seed phrase work?
In conjunction with the seed phrase software, a seed phrase generates a seed with a list of keys. These seed phrases can be either offline or online seed phrases (cold or hot, discussed later). When you backup your seed, it’s the seed phrase and not the private key that’s backed up.
If you want to back up your seed (phrase and all), you’ll need to use an offline seed phrase. All backups will generate a new seed by using the original one as a starting point and adding another word to it until there’s no more space. If you’re looking for one that starts with “123”, then as soon as there are three (3) words used (i.e., 123, ABCD), then it stops and generates the following seed phrase.
If you want to back up your seed phrase and seed, you’ll need to use an online seed phrase. This seed phrase will ultimately show you your seed before displaying the seed phrases used to recover all wallets associated with the primary. Again, this seed is vital because if someone finds it along with the device itself, they can access all the seed phrases.
So, a seed phrase seems critical. Can someone hack it?
Can someone hack my seed phrase?
Although seed phrases are not encrypted, they are composed of non-sequential words, making it difficult (but not impossible) to brute force the seed phrase. However, since seed phrases are not encrypted, seed phrases can be accessed by other people who know the seed. Therefore, you must keep it secret, much like a password.
Whatever process you use to generate your seed phrase, use the fewest steps possible between seed phrase creation and getting it in your hands.
Only your eyes should see it.
How are seed phrases generated?
There are a variety of seed phrase generation methods that you can use. One popular seed phrase generation method is to use a song as a seed phrase. In this seed phrase generation process, the first line of the song is used as the seed phrase, and each substring from the following lines of the song is appended to the seed phrase until it reaches 256 unique characters. The seed phrases generated with this method will not be a sequence of non-sequential words, but it’s important to note that this method can create a seed phrase up to 24 characters long.
Seed phrases must be easy for the user to remember and difficult for an outside party to guess. Therefore, these seed phrases are known as mnemonic seed phrases.
Do all wallet vendors use the same method to generate seed phrases?
Not all seed phrases are created with the same method. For example, the seed phrases generated with methods that use a song as the seed do not have non-sequential words, but they’re easier to remember and can be longer than seed phrases produced by ways that don’t use songs as seeds. One example of seed phrase generation methods that don’t use songs is where users can select their seed phrase generation method or where seed phrases are randomly generated. However, the seed phrase is always a series of recognizable words.
Example: DoorFileSandwichCatBulldozer
That phrase isn’t easy to remember, but you can always use a memory technique to recall it, and that’s the point. The seed phrase must be easy for you and hard for them (the adversary).
So, once I generate my seed phrase for my wallet, am I stuck with it?
Yes.
However, if you can shift to a new wallet, you will generate a new seed phrase. It can’t be easy to modify the seed phrase even by you. That’s what gives it its security. So, make a choice you’ll be happy with. It’s not a bad idea to take time to decide your seed phrase.
Plan it out.
What’s the difference between a hot and cold seed phrase?
There are two types of seed phrases: cold and hot. You can store hot seed phrases on computers, phones, and internet-connected hardware such as routers. Cold seed phrases are stored offline, such as paper or metal, or devices like USB drives or SD cards.
Cold seed phrases are typically considered more secure because they do not require an internet connection to access the keys they generate. In contrast, hot seed phrases do need the internet to access their keys, and some hot seed phrases store the seed in plain text.
Seed phrase storage
Much like passwords, there are many ways to store your seed phrase so that you have access to your seed phrase when using it to secure your funds.
You can store some seed phrases on the seed phrase generation device itself if this method is physical, such as paper seed phrases that are printed on a piece of paper or metal seed phrases engraved like an ID card. Other seed phrase storage methods include seed phrases being randomly generated on a device and stored in its memory.
You can physically store these seed phrases, encrypted seed phrases, which are seed phrases that are printed or encrypted with a password to secure the seed phrase from anyone who doesn’t know the seed phrase generation method or password required to decrypt it.
However, encrypting your seed phrase is unnecessary. Instead, you’re adding another step that is a repeat of the last step. And you’ll have to store that passphrase to get to your seed phrase to then get to your wallet.
How long is the average seed phrase?
Seed phrases are 12–24 simple words. Choosing the length is up to you. Of course, the longer, the better, but always be sure it is a phrase you will remember. Even if you engrave the passphrase, anything could happen, and you might need to rely on your memory.
Do not store your seed phrase on a device connected to the internet!
A case study on losing your seed phrase
Peter Schiff is a Wall Street veteran and investor who has been hosting The Peter Schiff Show since 2008.
He also authored four New York Times bestselling books:
- Crash Proof: How to Profit from the Coming Economic Collapse
- The Little Book of Bull Moves in Bear Markets: How to Keep Your Portfolio Up When the Market Is Down (a Favorite of “Dr. Doom”)
- Bull’s Eye Investing: Targeting Real Returns in a Smoke and Mirrors Market
- The Real Crash: America’s Coming Bankruptcy — How to Save Yourself and Your Country.
Shiff was a strong opponent of Bitcoin, but an investor constantly tests the waters to some extent. And he invested in BTC. So, on a faithful day, January 20, 2020, he came out and made a public statement that his wallet with blockchain.com had been corrupted. Three days later, the truth came out. Shiff mixed up his PIN with his seed phrase.
Anyone can make a mistake. So, take extra special care of your seed phrase because no one can help you if it’s lost.
Where to go from here?
Seed phrases are used to access cryptocurrency wallets, so you must take the time to choose a seed phrase that will be secure and easy for you to remember. Seed phrases can also be encrypted with passwords or printed on paper to increase security. Unfortunately, if your seed phrase has been lost, there is nothing anyone can do since we cannot recover seed phrases.
Finally, you are the weakest link in the chain of custody for your crypto. It’s hard to hear, but we need tough love sometimes to amplify a critical point. And I can’t stress enough how vital your seed phrase is to you.
Choose wisely.
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