Back to blog

What Is a Seed Phrase & How Does It Work?

Sep 6, 2022

What is a seed phrase?

A crypto seed phrase is a phrase made up of a number of random words. It allows you to recover access to your crypto wallet.

In fact, it is usually also called the ‘recovery phrase.’

As mentioned, it is a group of words – usually 12, but there are also 24-word recovery phrases – that don’t form a sentence that makes sense: they’re simply put together randomly.

Many times, and especially for those who are new to the crypto space, the seed phrase is confused with another pivotal element of crypto wallets – the private key. But it is important to notice that recovery phrases and private keys are not the same things. In a private key vs. seed phrase comparison, you should consider the recovery phrase as a sort of master password, while a private key is what allows you to sign transactions in order to confirm that a specific transaction comes from a specific wallet. Basically, the private key is what allows you to prove the ownership of a wallet, without disclosing the identity of the owner.

The seed phrase has a completely different function. Consider those cases in which you use a crypto wallet on your device and the device suddenly dies, or you lose it, or you simply need to use a different device for some reason: it will be sufficient to get access to the wallet provider and use the seed phrase to recover your accounts and crypto funds.

Where is my seed phrase?

When you sign up for a new crypto wallet, the provider will show you the associated seed phrase. You’ll have the opportunity to watch it and write it down, to know which phrase is associated with your wallet, and save it securely.

Moreover, you’ll have the opportunity to check it again if needed. According to the wallet you’re using, you’ll find a specific section where you’ll be able to recheck the recovery phrase and unblock it by using the password you chose for the wallet.

The popular DeFi wallet Metamask allows you to recheck your recovery phrase from its settings.

Please, consider that a recovery phrase is linked to the entire wallet – you won’t have a different recovery phrase for each account.

Seed phrases are pivotal to good management of your crypto funds – especially those that are perceived as a store of value, whose price impressively increased in a few years, like Bitcoin.

As we’ll see later, the crypto space is full of sad stories of people who lost huge amounts of money because they forgot their private keys and seed phrases – avoid being one of them!

How do seed phrases work?

Seed phrases are released by the wallet provider randomly, according to specific algorithms.

Once you get your recovery phrase, if you want to get access to your crypto funds from another device, you’ll just need to insert the phrase using the words in the exact order in which they were shown.

Should I back up and secure my seed phrases?

It’s always better to write down your seed phrase on a piece of paper and use it as a crypto seed storage since it’s completely offline, but it’s easy to lose it. So, there are services – like seed phrase storage services – that allow you to secure and back up your seed phrases safely.

Where do seed phrase words come from?

Seed phrases are, in reality, created from large random numbers. Consider that a word is formed from every 32 bits and chosen from a list of random words.

You see words and not numbers because it’s easier for people to deal with words, and this reduces possible mistakes. Actually, some traders and investors prefer to remember their seed phrases, in order not to have to write them – this system would be even more complicated if crypto owners would deal with numbers.

Is it possible for someone to guess my seed phrase?

It’s really improbable that someone can guess your seed phrase, since the number of words that form the list chosen to produce them is very large, and there are countless combinations.

Can I restore my seed phrase on a device from a different manufacturer?

As long as the device you use supports the wallet provider you chose, you can restore your seed phrase and recover your crypto funds.

Can you change an existing seed phrase?

Absolutely not. To give you a practical example, a seed phrase for a Bitcoin wallet is generated from a list of 2048 words – this idea was adopted after a Bitcoin improvement proposal – the BIP39, which makes reference precisely to a ‘mnemonic code’ – in 2013. The words to generate a seed phrase are picked randomly according to specific algorithms, and this is done for security reasons, so it’s not possible to modify this mechanism.

35 of the 2048 words used to generate seed phrases. Source: GitHub.

What is a seed phrase passphrase?

It’s an option offered by some providers that allow you to set a phrase – in addition to the seed phrase, not as a substitute – to increase the level of security of your wallet.

What about seed phrases on Freewallet?

If you use Freewallet, you don’t need to secure your private keys or seed phrases. This happens thanks to the security measures taken by the platform, which stores this data for you.

Freewallet homepage.

Using a cold storage system, Freewallet manages to guarantee security: cold storage is that kind of storage that works offline, thus preventing attacks from hackers and any other type of threat.

Actually, even if seed phrases and private keys give you access to your funds in case of emergency and confirm that you’re the owner of the wallet that generates transactions, storing them is hard work and requires a lot of responsibility.

If you’re in the crypto space, you may know the story of Stefan Thomas, who lost millions of dollars because he couldn’t remember the password of his wallet. As reported by The New York Times, according to data shared by Coinalysis, around 20% of the supply of Bitcoin is simply lost because of people who forget passwords and seed phrases.

So, even if keys and recovery phrases allow you to be completely autonomous and favor full decentralization, you should always consider a good compromise between autonomy and security – always according to your needs.

Bitcoin reached an ATH of over 60,000 USD in 2021, and this makes even more sad the story of Brad Yasar, an entrepreneur who managed to mine thousands of Bitcoins in the early stage of the first crypto ever created. After easily mining the coin, since there wasn’t the competition we witness today, he lost his passwords – losing millions of dollars.

Source: CoinMarketCap.

Conclusion

The seed phrase is maybe the most important element to managing crypto funds, for the simple reason that it allows you to recover access to your funds independently of what happens to your cold and hot wallets.

But this also means that you can’t lose them, and this requires a lot of responsibility and attention. That’s why many traders and investors choose platforms like Freewallet and storage services: even if this can imply a loss of autonomy, it further increases security – especially if you’re one of those unlucky crypto owners that might lose their seed phrases and private keys!

It’s always up to the crypto owner to choose the option that better fits his or her needs.

Rate: