What is a Seed Phrase in Crypto, and Why is it Important?

By Philip Hoey
Updated 24 May 2024

Key Takeaways

  • Most crypto wallets use the BIP39 standard to define seed phrases.
  • If you need to restore your crypto wallet, you can use your seed phrase.
  • Your seed phrase is sensitive and must be backed up and kept confidential.
  • It’s not the safest approach to write your seed phrase on paper.
  • While adding a “passphrase” could enhance security, it’s an advanced feature that may pose potential risks.

What is a Seed Phrase?

A seed phrase is a group of words chosen at random that include vital information for gaining access to or recovering Bitcoin from blockchains or digital wallets. In order to secure their safety, crypto wallets produce seed phrases and advise users to write them down on paper. This method is useful in the event of a hardware failure or corruption of files. The individual can then use the piece of paper to regain access to their Bitcoin by reinstalling the wallet program. Other names for seed phrases include backup seed phrases, seed recovery phrases, and mnemonic phrases.

What is the Difference Between a Seed Phrase and Private Keys?

While they are similar, the private key and recovery phrase have separate roles in protecting Bitcoin wallets. In the event that the owner forgets their login information, they can restore their Bitcoin wallet using the recovery phrase. The secret key, however, is utilized to locate a blockchain address and protect activities. A private key enables the user to conduct cryptocurrency transactions by demonstrating ownership.

The recovery phrase serves as a master key to open all associated cryptocurrency accounts. It enables full control over digital assets by granting access to all private keys kept in the original wallet. Users can recover digital currency using this phrase even if they misplace or break their physical hardware device. A seed recovery phrase enables users to access their cryptocurrency accounts from any wallet of their choice, similar to having a universal charger for several phone models.

What is the BIP39 Standard?

BIP39 is a set of guidelines that direct crypto wallets to generate a sequence of words to form a mnemonic sentence. These words are then transformed into a binary seed by the wallet, which produces a set of keys for encrypting and decrypting cryptocurrency transactions. Essentially, BIP39 comprises the mnemonic sentence and the binary seed. The objective of BIP39 is to transform the sentence into a binary seed.

How Does a Seed Phrase Recovery Work?

When you create a crypto wallet, a recovery phrase is generated automatically. This phrase represents a lengthy sequence of random numbers, which the wallet employs to generate the private keys that enable you to send and spend cryptocurrency.

  • Recovery phrases are presented as words instead of a string of random numbers because humans can remember and interact more effectively with a series of words. However, relying solely on memory to store recovery phrases is not advisable. To learn better methods, refer to the section on securing recovery phrases below.
  • Each recovery phrase is generated from a pool of 2,048 essential words. Using a recovery phrase was widely embraced following the Bitcoin Improvement Proposal 39 in 2013. The proposal introduced a standard for a “deterministic wallet,” which most wallets utilize. This standard specified that a single recovery phrase should manage all private keys in the wallet.
  • The standard also enables compatibility among significant wallets. Suppose you decide to switch to a new wallet. In that case, you can simply enter your recovery phrase into the new wallet, and your cryptocurrency will be accessible there.
  • If you accidentally lose or delete your wallet, you can recreate it using only your recovery phrase.
  • Ensuring the safety of your recovery phrase from hackers, phishing attacks, or loss is essential.

What Does a Seed Phrase Look Like?

A seed phrase is a set of random words generated from a list of 2,048 simple words. Unlike traditional passwords consisting of long, complicated strings of numbers and letters, seed phrases are 12-24 simple, random words like “bald,” “first,” “grow,” “sing,” and “word.” This makes it easier to write down and remember while reducing the risk of making mistakes. Additionally, the number of possible seed word combinations makes it impossible for anyone to crack it through brute-force attacks.

























What is a Seed Phrase Passphrase?

You can add an extra layer of security to your seed phrase with a “seed extension,” also called a “passphrase” or “extension word.” You can choose your own 13th or 25th word in addition to the randomly generated 12 or 24 words in your wallet.

Although not commonly used, it provides an additional level of protection. But just like the original seed phrase, you’ll lose access to your crypto if you forget or lose the extension. Remember that the initial seed phrase is already secure enough for most crypto enthusiasts, so this option is unnecessary for everyone. However, knowing it’s available if you want to use it is good.

Where Can You Use the Seed Phrase?

Seed phrases are a crucial aspect of managing your crypto assets. Typically, you only require the seed phrase when recovering your crypto wallet without any other credentials. One of the most compelling aspects of seed phrases is that you can use them only for specific purposes. Here are some situations where you may need to use your recovery phrase.

Generating a Crypto Wallet

When setting up a crypto wallet, you’ll be introduced to the concept of a “seed phrase.” Whether you’re creating a hardware, mobile, or desktop wallet to store your crypto assets, you’ll be prompted to generate a seed phrase consisting of 12 or 24 words in a specific order. It’s important to note this seed phrase and keep a secure backup.

Switching a Wallet

As a crypto owner, there may be times when you need to switch to a different device or application for your crypto wallet. For instance, if you have set up a wallet in an app on your smartphone but urgently need to access your funds from a desktop, you can utilize your seed phrase to access your wallet on the other device.

Restoring a Wallet

Seed phrase is crucial for recovering crypto wallets; every example and guide emphasizes this point. Losing access to a crypto wallet can occur in various ways, such as accidentally deleting the app or damaging hardware wallets. You can use the seed phrase to access your funds in such cases. For instance, if you delete the crypto wallet application, you can recover your wallet using the seed phrase. Similarly, losing your device is not a cause for panic because you can restore the wallet on another device using the seed phrase.

How Can You Store Your Recovery Phrase Safely?

To ensure you always have access to your crypto, it’s vital to safeguard your seed phrase. Storing it digitally, even with a password, is risky as it could be exposed to hackers or thieves. Although memorizing it is the safest option, it could be better. To increase security, use old-school, low-tech methods like pen and paper. Write down your seed phrase and keep it safe from disasters like fire or flooding.

Consider investing in a safe with varying degrees of fire and water protection for maximum protection. However, a steel wallet is a smaller, less expensive alternative if that’s not an option. These wallets come with lettered tiles that can be arranged to spell out your seed phrase, protecting them from fire, flood, rust, and more.

What Happens if You Lose Your Seed Phrase?

The worst thing that can happen to cryptocurrency owners is losing their seed phrase. If you lose or forget your seed phrase, there’s no way to recover it. Sharing your seed phrase or entering it on a website has no benefits; it only puts your crypto assets at risk. Writing a recovery phrase on a sticky note is also not advisable because it can be easily stolen. The safest way to store a seed phrase is by writing it down and keeping it secure. It’s also essential to have a backup copy of the seed phrase reserved somewhere resistant to damage from natural elements. Seed phrases are generated randomly, which makes them nearly impossible to guess. 

Can Seed Phrases be Hacked?

The security of your seed phrase is crucial to protecting your cryptocurrency from hacking. Your seed phrase can only be vulnerable to hacking if you make an error, like storing it on your desktop or Google Docs. If your seed phrase is recorded on paper or in a steel wallet, no one can access it without your permission or steal it. However, you must remain cautious of malware and phishing scams that trick you into revealing your seed phrase. Don’t fall for any request to disclose your seed phrase, no matter how legitimate it might seem.

What are the Advantages of a Seed Phrase?

Using a seed phrase for your cryptocurrency wallet can offer several benefits and reasons to consider it:

  • It protects against online and offline attacks, making it more secure.
  • Seed phrases are typically free, making them accessible to cryptocurrency users.
  • It allows you to switch wallets easily, whether you lose access to your current wallet, delete it, or want to upgrade to a new one.
  • By having a seed phrase, you can prove that you are the owner of your cryptocurrency assets, regardless of any unforeseen circumstances.

What are the Disadvantages of a Seed Phrase?

Although using a seed phrase has numerous benefits, there are minor drawbacks.

  • It is essential to safeguard your seed phrase.
  • Remembering the seed phrase can be challenging.
  • Users cannot select the seed phrase themselves.
  • Changing the seed phrase can be difficult in certain situations.

Can you Change an Existing Seed Phrase?

If you want to change your seed phrase, it’s more complex than changing a password for an online account. Instead, you’ll need to generate a new seed phrase and then transfer your assets to the address associated with it. Since seed phrases are used to unlock your funds and allow you to spend them, keeping them secure is crucial. If your seed phrase becomes compromised, you’ll need to move your funds to a new address that hasn’t been compromised to regain control of your cryptocurrency.

Final Thoughts on What a Seed Phrase Is

It’s essential to recognize the significance of seed phrases. Virtually every wallet generates one, adding an extra layer of protection that should be addressed. Failure to use a seed phrase may result in losing control of your cryptocurrency entirely, so protecting it should be a top priority. Losing or having your seed phrase stolen could result in the complete loss of all assets in your wallet. It’s vital to keep your seed phrase secure and out of sight.

Never share it online, and keep it in a safe location where it won’t be damaged. It’s also wise to save a few copies in case one is lost or damaged. Remember, once crypto is gone, it’s gone for good, so take the necessary steps to protect your investment.

Frequently Asked Questions

Can I Create my own Seed Phrase?
Making up your own seed phrase is not recommended because people need to improve at generating random sequences. The safest way is to let your wallet software create and write the term. Because seed phrases use actual words, they are easy to correct if you make an error.
Can Someone Guess my Seed Phrase?
Seed phrases consist of a series of words that seem easy to guess. However, with current technology, guessing a seed phrase randomly is nearly impossible. Although some words are not random, a 12-word seed phrase with 128 bits of security is highly secure.
What Happens if a Seed Phrase is Stolen?
You can transfer your assets to a new device if you lose your seed phrase. However, if it's stolen, someone could use it to steal your assets (similar to if someone hacks your seed phrase while using a hot wallet). That's why keeping your seed phrase safe and well hidden is essential.
Who Generates the Seed Phrases?
Cryptocurrency wallets offer a program that generates seed phrases and invites users to write them down on a notepad for storage.
Can two Wallets Have the Exact Seed Phrase?
Having multiple wallets with the exact seed phrase and derivation path is possible. A wallet doesn't store your Bitcoin; it just keeps the keys that let you access it.
What is a Seed Phrase?

What is a Seed Phrase?

By Philip Hoey - min read
Updated 24 May 2024
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