SEED PHRASES EXPLAINED
Seed phrases are used by hierarchical deterministic (HD) wallets, also known as seed wallets. The difference with a non-seeded wallet is that a seeded wallet doesn’t create your private keys first. A seeded wallet creates a random number and combines it with other data, known as the “seed”. This seed is encrypted twice. First, the seed is run through a one-way hash function (ie. encrypted) to create your private keys. [3] Second, the seed phrase is encrypted using Mnemonic code encryption to create your seed phrase. Mnemonic code encryption encodes the “seed” into 12 to 24 random English words resulting in an easy-to-read seed phrase. [4]
The purpose of your seed phrase becomes clear when you lose access to your wallet. You can use it to create a copy of your wallet on another device. For example, when you lose your phone and need to reinstall your mobile wallet application, you can simply enter your seed phrase. The wallet software will decrypt the words to find the “seed” again and hashes it again to recreate your private keys.
As you can derive from the above, your seed phrase is not the same as your private keys. The private keys are derived from the “seed”. In other words, your seed phrase doesn’t allow you to control your cryptocurrencies and other crypto assets. That’s the job of the private keys. [5]
So, why do all this effort and not just give users a copy of their private keys to recover a wallet? Well, the simple answer would be convenience. The private keys are complex alphanumeric strings and thus are hard to reproduce. A seed phrase solves this issue by providing an easy-to-read string of random English words, making it easier to recover your wallet.
SEED PHRASES AND SECURITY
By entering a seed phrase you can create a copy of your wallet. In other words, EVERYONE who has your seed phrase can recreate a copy of your wallet. A common scam in the crypto-industry is trying to trick people into revealing their seed phrase. Just go on telegram and ask for support in a large group. Within a minute you’ll get about 5 messages offering help by stating that they need your seed phrase to “recreate the issue“. If you would reveal your seed phrase to this scammer, the scammer can create a copy of your wallet and can steal all your assets.
To put it bluntly, NEVER reveal your seed phrase to anyone. The safest way is to write it down on a piece of paper and store it in a vault or safety deposit box. You could increase the security by writing your seed phrase on two different papers and storing them in separate places. That said, do remember where you keep it. If you would lose your seed phrase, you have no way of recovering your crypto wallet.
SOURCES
- Coindesk: What Is a Seed Phrase? | Author: Marcel Deer
- Cointelegraph: What is a seed phrase and why is it important? | Author: Arnold Kirimi
- Mastering Bitcoin: Chapter 4. Keys, Addresses, Wallets | Author: Andreas M. Antonopoulos
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