What is a Seed Phrase

No matter how well-encrypted a file is, there’s always a risk of hacks, glitches, and cyberattacks. For example, cryptocurrency trader Bo Shen lost $42 million in digital assets after information about his seed phrase leaked online. Cryptocurrency wallets typically reveal the seed phrase during the set-up process and instruct the user to write the words down on paper. For additional security, people may need to reenter their recovery phrase to double-check they recorded it correctly before entering their wallet.

The seed phrase’s primary purpose is to birth the private master key—the component that makes access to a crypto wallet and transaction authorization possible. The seed phrase is basically your crypto wallet recovery password, and precision in recording this phrase is non-negotiable. Should you misplace your device or become a victim of theft, this series of words restores access and helps recoup your digital valuables.

Are All Seed Phrases the Same Length?

That’s why the wallet software creates a “seed phrase” (or “mnemonic phrase“)  to represent the “seed“. And this master private key is what’s used to generate “child” private keys, as well as their public keys, allowing a wallet to generate as many key pairs as needed. In the early days of Bitcoin, a wallet only generated one private key, which meant there was also only one public key and one address. Write it down (in the proper order!), and guard that paper with your life to ensure it never falls into the wrong hands. This includes keeping the paper containing your seed phrase safe from fire, flood or anything else that could render it unreadable.

What is a Seed Phrase

Both hot wallets and cold wallets can use a seed phrase for recovery. For example, MetaMask (hot browser extension wallet),  Exodus (hot mobile wallet), and Ledger (cold hardware wallet) all use seed phrases for recovery. This explainer series on crypto wallets will attempt to make this journey a little less mind numbing. In this article, we will start with explaining the seed phrase debate and will follow up with a hot vs. cold wallets breakdown and then a full wallet security guide.

What happens if I lose my seed phrase?

String of text that designates the location of a particular wallet on the blockchain. A digital currency that is secured by cryptography to work as a medium of exchange within a peer-to-peer (P… You’ll often hear the terms mnemonic seed or mnemonic phrase used to describe the same idea. Some believe that these are poor descriptors, however, as they imply that the phrase needs to be memorized. The likelihood of someone guessing your seed phrase is basically zero. The INX Digital Company inc. is an expert in the field of finance, crypto and digital securities.

While this protects the phrase from online threats, it can easily become unreadable over time through natural wear and tear. For this reason, some use a prefabricated metal plate, also called a seedplate, with an etched version of the seed. But if they are stored in the same location of the wallet, they become subject to the same risks such as fire, natural disasters and theft.

Recovery Using a Seed Phrase

Unfortunately, this shows that recovery is only possible if they self-custody and misplace your wallet or the recovery phrase. They would be worthless if there were a fix for a deleted seed phrase. Just let a stern warning serve as a reminder of how crucial it is to protect the seed phrase through all costs.

Traders must use their password or PIN to enter their wallets, but these security measures aren’t a part of the wallet’s private key like the seed phrase is. Traders also use seed phrases to restore their cryptocurrency wallets. Suppose someone breaks their smartphone that they used to access their MetaMask wallet. To reclaim their assets, they can redownload the MetaMask software app on a new mobile device, https://www.tokenexus.com/what-is-a-seed-phrase/ select “Import Existing Wallet,” and enter the seed phrase to restore access to their cryptocurrency. Sometimes called a “mnemonic phrase” or a “recovery phrase,” a seed phrase is a list of 12–24 words that grant crypto wallet owners access to their digital assets. While decentralized cryptocurrencies open new financial possibilities, Thomas’s circumstances highlight the security risks of self-custody.

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This series of words listed in a specific order is the wallet’s “seed phrase“. Think of the master private key as a (single) “parent” private key that can create lots of “child” private keys. This creates a sort of tree structure where “child” keys are derived from a “parent” key. Though you may keep your cash inside your wallet, crypto wallets function very differently. It’s not just enough to have backups; you must regularly review and update how you store your seed phrase. This ongoing process ensures that your backup methods evolve with your circumstances and remain robust against potential threats, like human error or environmental changes.