Often neglected and written down as an afterthought (if at all), seed words are the most important part of your wallet. Here’s a brief introduction to what they are and how they work.
Your seed words are a combination of usually 12 or 24 different words that you write down when you first initialise your cryptocurrency wallet. You don’t get to choose your own words, instead they are randomly chosen for you from a predetermined list of 2048 words. This is known as the BIP39 standard and almost all current hardware and software wallets use it. This means that your wallet is portable and can be transferred to any BIP39 compatible wallet.
Above: Entering seed words to restore a software wallet
If you view your seed words as a backup to your wallet and password / PIN then you won’t go far wrong. You can lose access to both your wallet and password and you will still be able to recover your original wallet and it’s contents using your seed words. Similarly if you re-initialise your wallet or create a new one you’ll be given new seed words but you’ll still be able to retrieve your original wallet if you use your original seed words.
This makes your seed words the most important part of your wallet, so treat them with care. Don’t share them with anyone and make sure you store them securely too. Do not photograph them on your phone or save them to a document on your computer as this is inherently insecure.
Above: Recording 24 seed words from a Trezor Model T hardware wallet
Do You Need a Password to recover a wallet with Seed Words ?
A common misunderstanding is that to recover a wallet using your seed words you will also need the wallet password. This is incorrect. The seed words are the only things you need to recover a wallet and its contents. Many people think this makes the wallet inherently insecure because all a thief would need to do is get the right combination of seed words. That’s correct, but it’s also practically mathematically impossible.
Example: Let’s say you have a 12 word seed. Each of those 12 words can be 1 of 2048 different words. This means that the odds of anyone guessing your seed words are 12^2048 (12 to the power of 2048). I put this equation into DuckDuckGo and this is what I got. So far, there has not been a single case of a wallet being hacked this way.
Use a Passphrase for Additional Security
If you want to protect yourself further your can create an additional passphrase on your wallet. If you lose access to a wallet that has a passphrase then you will need both the seed words (to recreate the wallet) and the passphrase (to access your funds).
If you’ve lost access to your wallet and need to recover your seed words please contact us. Learn more about our seed words recovery service.