What Is A Seed Phrase

Over the years, cryptocurrency owners have constantly lost their seed phrases. This led to rather unpleasant consequences, as users could not access their crypto. And when you are just a few words apart from your BTC or other altcoins, it’s double insulting to lose. Now let’s talk about the seed phrase, what it means for crypto holders and their wallets, how it actually works, and what possibly could happen if people forget it.

What is a seed phrase?

Seed phrases are also called recovery phrases. They are sets of words crypto wallets automatically create to provide you with access to your cryptocurrencies. Crypto wallets are used to store private keys, while seed phrases are the master passwords to them. Even if your wallet is removed or lost, the associated seed phrase will help you to restore it.

It’s made of a string of 12 to 24 random words ( such as “poet”, avocado”, “stereo”, “apple” and “void”). The seed phrase gives access to your crypto, so it’s essential you store it correctly. Losing it would also mean losing your cryptocurrency if the wallet is deleted or the ordinary password is forgotten.

Cryptocurrency is at its core about freedom and sovereignty, the empowerment of individuals, and the seed phrase is an essential part of it. Due to it, you can access your crypto with no KYC and you won’t have to rely on a centralized institution. But with more freedom, comes more responsibility, the task is to keep the seed phrase exceptionally yours.

The way a seed phrase works

You receive a seed phrase right when you create your own wallet. It also forms the private keys which are used to spend your crypto.

A set of randomly picked words was chosen by Bitcoin developers back in 2013 because it's easier for people to remember compared to random numbers. But as we’ll explain later on, just relying on your memory is a bad idea.

The seed phrase is randomly chosen from a list of 2048 words as established by the Bitcoin Improvement Proposal 39 from the “good old days” of crypto. 

How to store the seed phrase securely

It is very important to keep your seed phrase in a safe place. Dozens of horror stories exist telling of people who lost all of their cryptocurrency, like poor Stefan Thomas an early Bitcoin miner that can’t find or remember the seed phrase to over $200 million Bitcoin. Imagine all the sleepless nights if that were you?

One of the options to keep your seed phrase is to spread it around in various safe private locations. However, many people find this method inconvenient and excessive. The most usual method to store the seed phrase is to simply write it down and keep copies in safe places. You can also engrave it into a durable material such as stainless steel, waterproof paper, or even fireproof safes. There are tons of accessible ways to increase security if needed.

What happens if I lose my seed phrase

If your house floods and the piece of paper on which your seed phrase was written gets ruined, if you simply forget where you wrote it down, or if you pass away without sharing it with anyone, then we have bad news for you, your crypto is lost.

Your cryptocurrency won’t disappear, it’ll just stay on the blockchain but you won’t have any way to access it. So please, store your seed phrase safely.

The difference between a seed phrase and a private key

Private keys are meant to spend your coins and tokens as they sign transactions you make. These are algorithmically derived from your seed phrase, which can also be represented as a long string of numbers. With the seed phrase on the other side, users can access all private keys in the wallet.

Storing your seed phrase with a third party

There is an option to count on a third party to store a seed phrase for you. This way you won’t risk forgetting where you captured the phrase. When buying crypto on a centralized exchange (such as Coinbase) the company will store the seed phrase unless you move the coins to another wallet.

However, there’s a catch. Firstly, users storing their keys with a third party are at a higher risk of hacks, as their data is often held on an online server. This is a huge problem, unfortunately, theft of users' funds still happens too often in crypto.

Secondly, you won’t be in control of your funds. As the saying goes “not your keys, not your coin”, for many users crypto is all about cutting out the middleman.

Seed phrases may seem a difficult concept to grasp for people new to crypto, but the bottom line is, that the seed phrase is essential in crypto and if you lose it, you can wave bye-bye to your funds. So it is very important to store the seed phrase secretly and wisely away from harm’s way. Hope, our article will help you to keep it and never forget it. ‘Till next time!