Unlike physical wallets, cryptocurrency wallets are software that helps users access their assets on the blockchain network and stores the public and private keys necessary to interact with the network.
There are two broad categories of cryptocurrency wallets: hot and cold wallets. A hot wallet is a wallet that is connected to the internet. A cold wallet is an offline wallet that is not connected to the internet. A cold wallet is also referred to as a hardware wallet.
Seed Phrase is a concept that refers to a string of words cryptographically generated from the private key of a cryptocurrency wallet.
The Seed Phrase is a unique phrase of 12 or 24 words created to give users control of and access to their assets. It is also used by cryptocurrency wallet users to regain ownership and access to their assets on the blockchain network.
A cryptocurrency wallet contains software. This software exists to generate Seed Phrase for users to use when they need it. It is not recommended to store Seed Phrase on internet-connected devices. This is because internet-connected devices are considered more unreliable than offline wallets. Seed Phrase is not only used for cryptocurrencies. It can also be used for the recovery of a token portfolio.
How Does Seed Phrase Work?
Crypto wallets are a bit like a case. Just like you need a password and key to open a safe, you need a private key to access a cryptocurrency. These private keys are known as seed phrases and are required to access the wallet. The seed phrase, also called the recovery word, loses access to the wallet if it is lost. Therefore, it is important to protect the seed phrase and store it securely, either on a physical device or on a digital platform, such as a password-protected app. When you create a crypto wallet, a seed phrase is generated and usually contains 12 or 24 words. These words are chosen in accordance with the BIP39 standard, which contains 2,048 English words. Many leading crypto wallets offer 128-bit encryption and each word of the seed phrase is unique to ensure the authenticity of the wallet.
For instance, the seed phrase of the MetaMask wallet is created from mnemonic phrases thanks to the BIP39 protocol and converted into a BIP39 seed phrase. This seed phrase represents an important piece of information that can be used by the user to restore the MetaMask account when it is registered. Through the seed phrase, the user can access all their tokens, addresses and previous transactions. Therefore, the seed phrase must be stored and saved securely.
What Does Seed Phrase Look Like?
A seed phrase is taken from a list of 2,048 words. Unlike a numeric cipher, which consists of long strings of numbers, a seed phrase is a random string of 12 to 24 words, such as "rich", "one", "iron", etc. The use and creation of a string of words, rather than a jumble of random numbers and letters, is intended to facilitate accurate note-taking, make it impossible to decipher and ensure a high level of security.
How Should Seed Phrase be Stored?
Access to cryptocurrencies can be lost if access to the cryptocurrency wallet is lost or if it is not ensured that the seed phrase is stored in a secure location. It is impossible to change the seed phrase. Most cryptocurrency wallet owners prefer to write down the seed phrase on a piece of paper. Cryptocurrency holders who are concerned about environmental factors prefer to write the words on metal blocks.
Too many of the threats to the seed phrase are digital in origin. Therefore, it is not recommended to store seed phrase on digital media such as electronic devices, email accounts, etc. A copy of the seed phrase should be stored offline or in a safe.
What Is the Difference Between Seed Phrase and Private Key?
A private key is a digital signature stored within the crypto asset wallet that allows the user to access the cryptocurrency through the blockchain network and authorize transactions. A seed phrase is a backup that helps restore access to the cryptocurrency wallet in case access is lost. Through the seed phrase, access to the private key can be regained, thereby regaining control of the cryptocurrencies on the blockchain network.
In other, simpler terms, a private key is a password used to access a website. A seed phrase is a "secret question" option that allows the password to be recovered in case it is forgotten.
