What Is a Seed Phrase and How Can You Store It Safely? | Grow and and manage your tribe

NEWSLETTER

COMMUNITY

STOCKS

CRYPTO

TECH

DESIGN

What Is a Seed Phrase and How Can You Store It Safely?

Zoya Khan

January 29, 2022

A cryptocurrency wallet generates a series of words that gives you access to the crypto in that wallet. This series is known as a seed phrase.

A wallet is similar to a crypto password manager, and a seed phase is like the master password. In case your wallet is lost or deleted, you can have access to all the crypto in that wallet if you have the seed phrase generated by it.

Self-sovereignty is a principle of cryptocurrency. It means that one should have access to their cryptocurrency without proving identity or depending on a bank or other intermediary to keep it safe. Cryptocurrencies like Ethereum and Bitcoin use blockchain technology to follow this principle. The blockchain stores and secures the crypto using a peer-to-peer network of computers.

How does the blockchain understand which crypto is yours?

A string of words or the seed phrase gets generated when you first set up a crypto wallet - a software wallet like Metamask or a hardware one such as Ledger. The seed phrase creates the private key that helps you spend or send your cryptocurrency.

Since long number strings are difficult to remember and transcribe for humans, the seed phrase is a series of only 12-24 simple terms such as “fabric”, “energy”, “lucky”, “trash”, “stereo”, etc. It unlocks your wallet and the private key associated with all the crypto in it. It is vital to keep the seed phrase safely as it is private information known to only you. If you haven’t saved your seed phrase and lose your wallet, you will lose access to all your cryptocurrency too.

How does a seed phrase work?

A seed phrase gets generated once you create a crypto wallet. Your wallet uses this seed phrase to generate a private key that enables you to spend and send your cryptocurrency. Since humans remember and interact well with a series of numbers, the seed phrase is present in this form.

Each seed phrase comes from a list of 2048 words. Once the idea of the seed phrase got adopted, it established a certain standard known as deterministic standard. This standard is now widely accepted by almost every wallet, where one seed phrase controls all the private keys present in that wallet. All the wallets become inter-compatible through this standard. It means that just by entering your seed phrase in your new wallet, you can switch between different ones, and all your cryptocurrency will be available in the new wallet. The seed phrase can also recreate your wallet if you lose or delete it. That is one of the reasons why it is crucial to protect your seed phrase from hackers or phishing attacks.

How can you store a seed phrase safely?

There are several ways to determine the best way to secure a seed phrase, and it varies depending on the amount of crypto, the security value, etc. Out of the various strategies, a powerful one is to secure your seed phrase by splitting in between safe deposits in multiple locations. But this is not a convenient option. That is why some people opt for specialised services to get their seed phrase engraved on durable materials such as stainless steel, etc. Simply writing down your seed phrase or making copies of it and storing them in a safe place is usually considered a good option. You can also store the encrypted version of your seed phrase in the cloud using Google drive, etc. But it is advisable to save your seed phrase somewhere offline as well.

You have access to your crypto as long as you have the seed phrase. So if you lose your hardware wallet or break a device that has a software wallet, you can gain all your cryptocurrency in a new wallet simply by entering your seed phrase.

What happens if you lose your seed phrase?

You lose access to all your cryptocurrency if you lose your seed phrase, forget where you wrote it or die without passing it on to someone. Your crypto will remain safe on your blockchain until someone steals it.

How can you differentiate between private key and seed phrase?

You can send or spend Ethereum, Bitcoin or other cryptos through the private key, which is derived algorithmically from the numbers represented by the seed phrase. The seed phrase provides access to your crypto wallet and all the private keys present in it.

A crypto wallet can get considered as a password manager for your cryptocurrencies. You have access to all the associated crypto in your wallet, as long as you have the master key or the seed phrase.