Imagine you have a castle filled with treasure. You enter the castle through a door every day, and you hold a secret code that helps you enter the castle when the door malfunctions or is damaged. But what if you lose the secret code? Alas! Your treasure is gone forever. In cryptocurrency, this secret code is known as a seed phrase.
What is a seed phrase?
A seed phrase is a set of secret recovery words automatically generated by your crypto wallet. It includes either 12, 18, or 24 words that serve as your wallet’s private keys. The role of a seed phrase is essentially to act as a backup tool, in cases where you lose access to your crypto wallet, device damage, the wallet app gets deleted, and others.
In general cases, you do not need to enter your seed phrase every time you use your wallet. Before we dive into knowing more about a seed phrase, it is essential to understand the difference between a seed phrase and private keys.
If you ever ask yourself an example of a seed phrase, here is what it looks like: lemon apple green window biscuit plant bottle pen table crisp shadow food. This is an example of a 12-word seed phrase, a mix of random words that are not logically connected.
Key differences between a seed phrase and a private key
In plain terms, a seed phrase is the central part of accessing a crypto wallet, especially in the above mentioned situations. Private keys are the keys that come under the seed phrase.
For instance, when you create a MetaMask wallet, a seed phrase is automatically generated. Inside the crypto wallet, you can create multiple wallet addresses/accounts by clicking on the “Add account” option. Each of these accounts has private keys, and that’s exactly where these keys are used. In other words, each account has an address plus a private key.
What if a user forgets the seed phrase?
The simple answer to this question is: “You are in trouble”, but only when the
- device carrying your wallet gets damaged,
- you reset your device,
- your device gets stolen or lost
- You switch to a new device
- You accidentally delete the wallet app
- Your wallet gets corrupted
In addition, multiple other situations can also lead to permanent loss of your fund if you do not save your seed phrase.
Now, it is important to note that you should save your seed phrase in a safe zone. As we are living in a digital world, some of us might use Notes or other apps on smartphones to save passwords or other relevant information.
But what if your device stops working or is permanently damaged? That’s where the real risk is. If you lose a password to your Google Account that you saved, you can recover your account using a new password. However, this tactic doesn’t work for a seed phrase. This is why you should always WRITE DOWN YOUR SEED PHRASE in a paper.
Do users need a seed phrase to send crypto?
You do not need a seed phrase to send cryptocurrencies. Sending crypto involves a set of other requirements, like a wallet, a password, or a biometric to open the wallet, and others. You should use the seed phrase only when you set up a wallet and need to recover a wallet, restore access, and in several other “trouble” situations mentioned earlier.
Can users create a seed phrase?
A wallet user cannot create a seed phrase. When you create a crypto wallet, it automatically generates a seed phrase. Trusted crypto wallets use the BIP39 standard to enhance the string of randomness of words and compatibility, meaning, you can use your seed phrase universally across multiple wallets that has same standard.
Usually, when you create a new crypto wallet, the app will show important options like Create new wallet, Generate recovery phrase, and Create seed phrase. Once you go through this process, the wallet will generate a seed phrase containing 12, 18, or 24 words.
Is a 12-word seed phrase safe?
A 12-word phrase is widely considered safe, secure, and sufficient for most users. More than the number of words, the real safety depends on how well you protect it. Always write down your seed phrase in a book and never share it with anyone.
However, a 24-word seed phrase helps to ensure additional security for large crypto holdings. So, the real risk comes not in the word count of the seed phrase, but in human error.
Before we conclude, there is a term that people usually misunderstand: seed phrase generator. People new to crypto might think seed phrase generator as an app or specific tool for generating a seed phrase. As mentioned several times before, your wallet app is the seed phrase generator, and there is no specific tool for it.
However, developers, security professionals, and custodians use open-source or offline generators to create a seed phrase.
In short, a seed phrase is a recovery phrase that includes a set of random 12, 18, or 24 words that protect your wallets, unless you fail to save it properly. In a research, several blockchain analytics firms found that lost seed phrases cotributed 11%-18% of mined Bitcoins that are considered lost. That said, seed phrases are an integral part of your crypto wallet, and the entire crypto journey.
