Crypto Seed Phrases: The Keys To Your Decentralized Finances | by Liquid Loans | Nov, 2023
Crypto seed phrases (or backup phrase) are lists of 12 to 24 random words that generate the private keys which protect your wallet. It’s the only code you need to create, import, or recover a self-custodial wallet like Metamask. The crypto seed phrase is hidden because, for security reasons, no one should know it other than you.
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That’s a made-up example of a crypto seed phrase that you’ll see when creating your crypto wallet. Those words create a secret passphrase that allows you to import your wallet.
It means you can access your wallet funds from any device, even if you’re not the owner.
One of the seed phrase benefits is that you don’t need an identity or KYC process to create crypto wallets.
A seed phrase is a master private key of ~78 digits (256 bits) converted to a list of words. Unlike digital ones, crypto wallets aren’t storage units. They are code (keys) that allow you to use the associated funds to a blockchain address. Crypto seed phrases hold the codes for all addresses you create on that platform.
“Can You Choose Your Own Crypto Seed Phrases?”
Maybe on some apps, but it won’t be as safe as random generation.
“Can My Seed Phrase Be Guessed?”
***The Short Answer is No***
A 12 word crypto seed phrases yields 2048¹² possible combinations. Guessing a combination would take billions of years.
“Can You Use Your Seed Phrase on Any Wallet?”
Yes, even from different apps.
For example, you create your first Metamask wallet. It generates a public address, a private key, and a seed phrase. No matter which network you use, this data doesn’t change.
However, you can import or create a second Metamask account with different balances. This account has a different public address and private key, but the seed phrase is the same.
If you enter that seed phrase on another device, you’ll import both accounts.
When importing with a seed phrase, it’s important to know your wallet returns to a default state:
- All tokens and amounts you sent won’t show
- Custom networks and transaction history won’t appear
Even if it’s the same device, you’ll have to manually add tokens and networks again. If you don’t remember, you can consult a blockchain explorer. Enter your wallet address to display your full transaction history.
To find your crypto seed phrase, look for it in the settings of your particular wallet application.
Before you look anywhere, make sure you’re using a non-custodial or self-custody wallet. You will know you are NOT using a non-custodial wallet if:
- The platform asks for email addresses, legal information, or KYC files for account approval.
- The platform doesn’t immediately show the mnemonic phrase after creating the account.
- The platform doesn’t allow you to switch or add custom networksYou will be given a seed phrase upon creating your non-custodial wallet. But if you need to find it again, you can look for it in the settings:
- From settings, go to Security/Privacy
- Find an option to Reveal Secret Recovery Phrase
- Enter the password you created on registration to reveal it
The more you invest in crypto, the more important it is to protect seed phrases. Some people underestimate security because they forget how prone we are to make mistakes. But you won’t have to take unnecessary risks if you prevent them first:
Seed Phrase Revealed On Compromised Devices
Security is inconvenient, even bothersome. If you underestimate the risk of losing your wallet, you might remove security steps for more convenience. You have no 2FA authentication code, there’s no screen lock, you use similar passwords for everything, and you save many codes on your screenshot gallery.
How easy is it for someone to find out your secret phrase? Maybe someone steals it, maybe you reveal them accidentally, maybe you lose your phone. So much can go wrong, yet it takes so little to protect your wallet.
Seed Phrase Stolen By Impersonator
Ironically, there might be more impersonators than real platforms today. With a bit of knowledge, scammers can create swarms of account bots to fake influencers, support teams, and autoresponders. All of them ask you to either send crypto or re-enter your seed phrase.
Real platforms won’t request this information for many reasons:
- Support teams aren’t responsible for transaction or account errors.
- On self-custody wallets, no one has (nor needs) admin key rights other than you. “Support teams” can’t do anything you can’t do already. It’s ok to ask for help, but not to share account access.
- Why would someone ask you for private information that you didn’t need on registration?
- Real platforms don’t know your social media profiles or email address.
- Similarly, influencers don’t share their contact information in comments.
Because it’s not always obvious, it’s still a risk.
Seed Phrases Stolen on Fake Website
Another method used to try and steal your seed phrases is a rotten seed phrase, or fake website. Scammers will develop their own websites to mimic the website of Metamask, for example.
The fake website is designed with the intention of extracting your seed phrases and using it to steal your assets. To avoid this, make sure you are on the correct website of your wallet.
Seed Phrase or Private Keys Lost
Security can sometimes be so inconvenient that you lose access altogether. Maybe you lost the paper where you wrote your recovery phrase, or maybe you’ve broken the only device that held your codes. Or you’ve forgotten where you left it.
You can create copies of your codes in case you lose them. But there’s still the chance that someone finds them and uses your wallet. The best way to prevent it is to store your phrase the right way from the start.
The ideal way to store a recovery phrase and any code is only using your memory. They’re called mnemonic phrases because they’re easier to remember than a random 256 bit string. But how do you remember multiple wallets, some with even 24 words?
Use Physical Storage
If you only use physical storage, no hacker can ever break into your wallet. No exchange can freeze your funds, and no one who steals your phone can do anything. This storage type has two risks:
- How secure is the storage?
- How safely do you keep it to avoid forgetting, losing, or breaking it?
It may first seem a good idea to have copies of your seed phrase. But because that makes them easier to find, you might want to add another security layer.
Print And Backup Your Codes
Because hardware wallets still can connect to hot wallets and the Internet, paper wallets are still the safest. They’re also inconvenient because they can break or become unreadable. You also have to manually type codes every time.
Just because you shouldn’t store online, that doesn’t mean you have to use pen and paper. For example, you can make a screenshot of your codes and print a few. You can also print the QR code of your private keys, so no one would know at first what it means.
You can also use QR generators to customize the text and misdirect. For example: “Send Bitcoin here: (your private key instead of public).” If you can keep your seed phrase safe, it’s safer to copy private keys instead.
Understand How Crypto Security Works
To protect your coins, you need to understand how blockchain security works. Wallet security can’t protect you from mistakes you make. Because unlike traditional finance:
- You’re 100% responsible for your crypto assets and wallet privacy. If you’re not, then someone else can put you at risk, whether it’s a scammer or your trusted exchange.
- There can be user support, but not done-for-you technical support. If someone wants to access your wallet to fix issues for you, they’re trying to steal and lock you out.
- You never have to re-enter the seed phrase unless you’re using another device or re-installing the same one. Some phishing websites will create fake error screens to capture your Metamask seed phrase.
- Not even multisig wallets require you to share private keys.If you ever want to take the risk, create instead a dummy wallet with zero balance and a new seed phrase.
It’s easy to confuse the seed phrase and private key because most people use a single account. Every private key is a different wallet. The seed phrase is the “master” private key that gives you access to all different wallets from one.
To add to the confusion, the seed phrase and private key have different formats. But it’s possible to convert the seed phrase to private key format. It’s just not practical, so we use 12–24 words instead.
Simply put, your seed phrase gives access to all private keys. And each private key has a different balance on every network used:
- If you add or remove accounts (thus private keys) on Metamask, you’ll find the same accounts when importing seed phrases.
- You can import private keys from other device wallets and link to your seed phrase.
- You can import the same seed phrase on different devices
It’s not the same to lose your recovery phrase as losing all your account data:
- If you know the password, you can reveal and copy the phrase again. If you added different devices, each device has a different password.
- If you don’t know the password but have the private key, you can still access your account. Create a new wallet with a new seed phrase and import your key.
If you can access the balance but can’t recover your recovery phrase, it’s recommended to move funds to another wallet with a new one.