What Is a Seed Phrase?

A seed phrase goes by a few names, including a recovery phrase, a secret recovery phrase, and a mnemonic phrase. When you set up a new crypto wallet like Ethereum and Bitcoin, your wallet software generates a cryptographic key, your seed phrase, and displays it only once to save. It’s essential to write it on paper, as hardware devices can fail, and keep it in a very secure storage location.

The number of words will either come in a 12-word or a 24-word sequence, with both secure, although the 24-word sequence has a larger entropy pool. These random words are randomly selected from the 2,048 words specified by the BIP39 standard. It’s also not wallet-specific, so if you created it in one wallet, you can use it in another compatible one.

A seed phrase sits at the top of the wallet’s security chain. It also generates a master private key, which in turn controls all the private keys for every wallet address in your account. The private key’s function is to move your funds and sign transactions. The final layer consists of wallet addresses, which you share with others to receive funds into one of your wallets. The master private key must also not be shared, although the seed phrase is the only one that needs to be backed up and stored safely.

To simplify the explanation with an analogy, the seed phrase is your master key to a building, allowing you to unlock any room. Each room in the building has a private key; having only one room key will only allow access to that one room. The wallet addresses are like your room number and the identifier that people can use to send funds. It’s important to understand the crypto terms and differences, as they sit at different levels in the system.

A seed phrase is not a password; it is a mathematical root that lets you generate private keys. The order is seed phrase → master private key → individual private keys → public wallet addresses. The seed phrase is your key to your entire wallet, including any addresses generated by it. Most wallets generate new addresses for every transaction you make; backing up the private key just protects that address. The seed phrase protects each address created in the wallet.

Both hardware and software wallets use recovery phrases. However, some platforms, such as centralized exchanges, do not provide their users with seed phrases. This is because in these instances, the crypto exchange platforms hold the keys, not the wallet owners. That is why the saying “not your keys, not your coins” came about: If you do not hold the seed phrase, you do not truly control your funds. Unlike traditional banking, there is no central authority, customer support line, or password reset; self-custody means the responsibility rests entirely with you.

If someone gains access to your seed phrase, they gain complete control over your crypto wallet. They can use that recovery phrase across any compatible wallet and take all your funds. They don’t need your password or even to use your wallet app. Once the funds are gone, there is no way to retrieve them. Both the police and Action Fraud / the National Crime Agency (NCA) have very limited ability to recover stolen crypto assets, which is why no one else must have access to your seed phrase.

If you realize you have a compromised seed phrase, follow these steps:

• Act immediately and create a new wallet, then generate a new seed phrase.
• Speed matters here; you have to be quick in transferring all your funds to the new wallet. The person who has your seed phrase will move the funds as soon as they can.
• You can’t use a compromised wallet; it’s essentially dead, as the attacker will very likely return.

If the funds have already left the wallet, recovery is highly unlikely. While you can report it to Action Fraud (UK), the chances of retrieval are very low.

We conduct our extensive tests on seed phrases for both physical and digital vulnerabilities.

Digital Vulnerability Mapping

By mapping out attack surfaces, we ensure that each recommended method leaves no digital footprint, thus eliminating remote hacking and seed phrase leaks in the cloud.

Physical Stress Testing

To determine whether paper and metal media protect seed phrases from water, fire, and degradation, we analyse materials in relation to local environmental hazards.

Human Error Assessment

When setting up a seed phrase, we measure setup friction, such as users transposing or misreading words, even in their own handwriting, during times of crisis.

Single-Point Failure Isolation

We verify whether backup setups are in place to prevent a single disaster from destroying the only physical copy of a user’s seed phrase.

Securing your cryptocurrency seed phrase means protecting against three potential failures: loss, theft, and destruction. Whatever storage method you choose should account for all three risks.

Write It Down on Paper In the Correct Order

The seed phrase must be written exactly in the order shown. Switching words 7 and 11 makes it unusable. Next to each word, write its number. Verify it against the screen before safe storage.

Avoid Digital Storage

Do not take photos, screenshots, email it to yourself, or save it in your notes app or cloud storage. This is one of the most important steps in blockchain security. Digital seed phrase copies are vulnerable to attacks such as malware, phishing, and data breaches at the storage provider.

Store the Physical Copy Securely

Minimum requirements include fireproof and waterproof containers. Either a safe, bank safety deposit box, or a purpose-made metal seed phrase storage solution offers the most protection against physical damage and theft. Always consider what would happen if a building were destroyed and the seed phrase recovery.

Consider a Second Copy In a Separate Location

Storing a second copy in a separate location adds an additional layer of protection. A single copy kept in one place can be lost to fire, flooding, or theft; keeping copies in different locations ensures one disaster cannot eliminate access to your wallet. Both copies require identical physical security.

Thanks to our experience in the industry and our research on user feedback, these are the most common mistakes when storing your seed phrase that we came across:

• Taking a Screenshot at Setup: A screenshot typically syncs to cloud photo libraries in iCloud or Google Photos and is accessible to those with access.
• Storing It In a Password Manager: A password manager is a single point of failure; if its password is compromised, all stored seed phrases are at risk.
• Splitting the Phrase and Storing Halves Separately: Splitting the phrase dramatically reduces the possible combinations needed to brute force the remaining words if one half is found, so always store it whole.
• Entering It Into a Website or App That Requests It: No legitimate service or wallet app will ever ask you to enter a seed phrase into a website; any such request is a phishing attempt.
• Only Making One Copy: As physical copies can be destroyed, a one-copy location is the largest single failure point.

Securely storing and managing seed phrases doesn’t have to be complex, though it requires discipline in keeping them offline. While a seed phrase offers greater financial freedom in fund management, it doesn’t come with corporate customer support. Never share the phrase; don’t store it online, and always keep two copies in case one is destroyed; otherwise, access to your funds is lost forever.