What is a seed phrase?

✔️ A seed phrase is a collection of words you have to write down when making a wallet.

✔️ The purpose of a seed phrase is to be able to get a hold of your coins if you can't login anymore or lost your phone.

✔️ If you lost your seed phrase, make sure you bring your coins to safety as soon as possible.

✔️ If someone else has your seed phrase they can steal all your coins. In that case, move all of them right away.

✔️ Use your seed phrase as if it was the key to your vault.

What is a seed phrase?

A seed phrase is a collection of randomly generated words that are presented to you when you create a wallet. It does not matter if you are on an exchange or if you start using a wallet like MetaMask or a hardware wallet, you will always get a seed phrase.

Other terminologies for the seed phrase are seed recovery, recovery seed or your recovery sentence. Often it irritates a bit when you must write that whole mess down when you have not even done anything yet, but this phrase is SO important that you better take some time for it.

Fortunately, most wallets do it so that you must write it down first when creating it and then repeat it, so the site "knows" that you must have written it down, otherwise you could not reproduce it. Very smart!

How do you use a seed phrase?

If you have lost all data from a wallet but you still have your seed phrase, you can still recover all your coins, which is why recovery seed is a good name. This is an essential part of your crypto adventure, so keep your seed phrase safe, just like your bank card PIN. You do not give those away either for obvious reasons.

It is most convenient if you have a notebook in which you keep all the details of all your wallets. So, when you start a wallet, take that notebook, and write down your login information and your recovery seed. Keep it in a safe place, so that no visitor can just steal all your coins by taking it or fire or water can get to it. Small detail: text written with pen can become blurred over time, text written with pencil remains clear. If you see that text becomes blurred, make a copy.

What a seed phrase can do

For example, if MetaMask generates a wallet for you, you can think of this recovery phrase as the overarching password that gives you access to all private keys (which you can use to spend coins) in this new wallet. With one seed phrase, you can create endless amounts of private keys all under the same seed phrase. You can therefore regard the seed phrase as the father of your private addresses in the well-known genealogical tree diagram. With your private key, you can in turn create multiple public keys for privacy.

It sometimes happens that you lose something that belongs to your login credentials, such as a hard drive breaking down or a phone with your 2FA being lost. Then you may not be able to log in anymore, but you can still access your funds because you have the recovery seed. Using your seed phrase, you can then prove that these coins are yours.

The term recovery phrase might cover the load a little better. So, you can restore your account using what the wallet sees as your digital signature. Only you know what words are in this sentence, and therefore that account belongs to you. Thus, the recovery seed links your digital identity to the wallet without you having to provide any personal information.

What to do if your seed phrase is lost or stolen

No matter how careful you are with your notebook, it is always possible that it could be taken, no matter what. If that happens, you should store all your coins somewhere else before they are stolen. The best thing to do then is to create a new account somewhere and send your crypto there quickly. If it involves an exchange, let them know about it as well so they can take it into account.

Some people add another statement to a seed phrase, such as:

"These twelve words give me access to all my Bitcoins. Keep this paper safe, just as you would keep a pile of jewelry safe. It was created with (name wallet) and generated on (date) with (software version)."

With such a sentence, you, or possibly next of kin, can always access your Bitcoins a lot easier, in case something happens, or you forget all sorts of things over the years.

Where did this idea come from?

In 2013, the Bitcoin community came up with Bitcoin Improvement Proposal 39 (BIP-39). Before then, it was a long string of randomly generated numbers that was difficult to use because errors could be made both when writing them down and when refilling them.

BIP-39 suggested using common words that everyone knows in any language. Words of four letters or more, such as friend, garage, bread, machine. Every single word in this list starts with different initial letters. There are 2048 standard words chosen for a seed phrase. One advantage of this is that if a word is written down poorly you can probably still guess it, but if a seed phrase were made up of only numbers, one poorly written number could render the whole seed useless. Which one is it?

In Bitcoin, the seed phrase consists of 12 words, with the last word being a derivative of the first 11. Behind the scenes, the seed phrase secretly still consists of an enormously long string of numbers, but this system just worked better.

Another proposal, BIP-44, was made in 2014. An additional field was added to the seed phrase representing the crypto type, for example Bitcoin or Ethereum. The same seed phrase hereby generates a different wallet on a different blockchain.

Note if you want to use a seed phrase for a very long time

This can have implications for your wallet, as software can change over time. For example, if you have a pure Bitcoin seed phrase, you may also need to add the type of currency (Bitcoin) and the software version used when your seed phrase was created. This is rare, but just so you know. Donkey punch: a seed phrase can usually only work with the same wallet software that created it.

Some blockchains use more than 12 words, so they get to 512 bits. They then usually use 24 words and a control word, as reported above. This yields 2^132 possibilities for a word list with 2048 words and 12 words used and many more for 25 words.

If you use 12 words, the possibility of this being guessed by brute force (trying it out one by one) is virtually impossible, since you are more likely to pick out the correct one out of all the grains of sand on earth than you are to guess these 12 words, let alone 25. Therefore, our opinion is that a seed phrase is "pretty safe." Incidentally, this may change with the advent of quantum computers, which work quite differently.

How to store your seed phrase

There are several ways to store your seed phrases in a safe place. The most common ones we have already told you about. Write it down in a notebook, which you treat as if it were a package containing all your money. You can work with several safe locations, but the more back up, the more risk. Use acid-free paper if you need to keep it for a very long time, use pencil and do not let the notebook bake in the sun or so.

These days you can also take more punitive measures, such as engraving your seed phrase(s) in stone, metal or other strong material, the water- and fire-resistant variety. You usually keep something like that in a safe. The more you have invested, the more important your seed phrases become. There are commercial and convenient options for this, such as the Cryptotag of de X-Seed. This works fine.

Technically, you could also store all your seed phrases on a USB stick or something similar, but always remember to do so at a computer that is not connected to the Internet at both completion and regeneration, preferably never connected. Remember, though, that technology ages and USB sticks are vulnerable.

Do and do not

Whatever you do, never make an online back up. Do not put them in the Google Docs, not in the cloud, not on your computer connected to the internet in a file, use paper or a better offline way. If it is online, you only have to get hacked and all your seed phrases are known, and all your cryptocurrency can be stolen!

An additional safeguard is to add a password, which is also called seed extension or extension word. Of course, it is also quite iffy if you have a large fortune on a simple seed phrase. If someone knows this, they can load up everything. It is described as "something you have" (seed phrase) and "something you know" (password). These two-factor seed phrases have the usual dangers, such as where to stick that password with the same considerations, of course.

Optionally, you can use a mnemonic phrase as your password. This is very easy to remember, but enormously difficult to crack. Of course, if you see the phrase PamtimIaamowat666 lined up, no bells are going to ring. But if I tell you, it is a mnemonic phrase consisting of: Please allow me to introduce myself, I am a man of wealth and taste 666, you will understand it immediately. That is easy for a human being to remember.

Summary

Your seed phrase is your lifeline on your crypto ship. You must never lose it, and if you do, you must make every effort to get your coins to safety via your private keys as soon as possible, after which you will be given a new seed phrase for a new account to be created.

The same goes for theft. In that case, move your crypto to a wallet that is still secure before any transaction takes place.

This is not the most fun thing you have to deal with in the crypto world, but it is a very important one!