Digital assets are protected by access keys. The blockchain world uses a solution similar to a bank PIN. Private keys allow you to use your funds. Their loss will create serious problems for the wallet owner, and the cryptocurrency will be blocked. To restore access, there is a seed phrase – a set of random words. It is generated the first time a cryptocurrency wallet is used.
What is a seed-phrase
In the banking industry, when a PIN is lost, a secret question is used to restore access. This is also how a mnemonic or seed phrase works. It provides access to the wallet in case of problems with the private key and is a combination of words, the number of which is different – 12, 18 or 24.
There are 2048 variants in the total list. Usually, the secret set is generated once when setting up a cryptocurrency wallet. If you skip this step, you will not be able to create a code in the future.
After generating the phrase, it must be saved. The protection of this information is related to the security of the cryptocurrency wallet. Knowing certain words, you can get access to coins.
What is a private key
The right to cryptocurrency is encrypted with a sequence of characters. A private key is a long random set of letters and numbers that is used to encrypt information. It is impossible to memorize it, so you should not even try, and it is better to store it in a safe place.
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Without the key, it is impossible to transfer or receive cryptocurrency. If the secret information becomes available to anyone, it is worth forgetting about your assets.
To store the key, they use:
- Hardware crypto wallets are a reliable option.
- Paper on which the key is written down.
- Mobile or computer versions of cryptocurrency vaults.
- Web wallets are a poor solution because the site has poor security.
It is best to store information on a medium that is not connected to the internet. To recover funds in case of loss of the private key, mnemonics are used.
Principle of operation
Seed-phrase is a set of numbers encoded through words. Several dictionary standards are used to compose it. Popular ones are given in the table:
| Standards | Comments |
|---|---|
| BIP32. | Tree-based generation of private keys from a master key. Represents 13 words. |
| BIP39 | 12 to 24 values, which are then translated into a 64-byte hash. |
| BIP44 | Uses 12 words, matches the BIP39 standard with the same set. |
BIPs are suggestions for improving the Bitcoin network.
Popular cryptocurrency wallets provide the ability to recover keys with a mnemonic phrase. You can access your funds using any storage regardless of its type (support for a specific version of BIP is required).
Steps to generate:
- Creating random numbers – entropy.
- Translating them into words.
- Creating mnemonics from code.
Creating random numbers
The source for the mnemonics is entropy. This is a large value that no one has yet created and will not be able to do so in the future.
Entropy requirements:
- Multiplicity of 32 – for further division into parts and conversion into words.
- Length – between 128 and 256 bits. No one else will be able to generate the same number.
A random value generator is used to create entropy.
Conversion of numbers into words
The resulting entropy can be converted into mnemonics. A control number needs to be added to reduce errors. This is done by hashing, the SHA256 algorithm is used.
At the end of the unique number, 1 hash bit is added for every 32 bits of entropy. The resulting value is split into groups of 11 bits each, represented in decimal form, and used for secret word matching.
There are 2048 positions in the BIP39 list. A number of 11 bits in decimal format can be in the range 0-2047.
A mnemonic phrase is created from the code
The conversion of the numeric expression is performed by the PBKDF2 function. The hashing of the set of numbers is repeated several times until the required result (256 bits). A mnemonic phrase is created, which can be used for data recovery.
Each word has a unique first 4 letters, not repeated anywhere else in the list.
How to recover when lost
When restoring access to your assets when you lose your key, you need a mnemonic phrase for your cryptocurrency wallet. It will generate all passwords.
With the help of a seed-phrase it will be possible to use cryptocurrency anywhere. To do this, it is necessary:
- Remember the set of words that encoded the main master key.
- Have access to the Internet.
- Use any wallet with support for BIP of a suitable type.
It is virtually impossible to pick up the secret words. The computing power of the most productive computers will allow to do it after many years. There is not a single case of restoring access by matching.
How to secure a mnemonic phrase for a wallet from loss
Secret words are used to access cryptocurrency. Their loss means a complete lack of control over their digital coins. There are known cases when a person mistakenly put the cid phrase for storing Bitcoin on public display, and in a few minutes the assets disappeared.
For storage, you can use:
- Paper – write down the information on a sheet, store it in a dark place with constant temperature and humidity.
- Metal – special plates made of steel are used. By the method of engraving, the first 4 unique letters of each word are applied to them.
- Hardware cryptocurrency wallets. There is a risk of losing the device or its breakage.
- Encrypted USB drives.
Several options can be used at once, thanks to which the security of the secret key increases.
What’s best not to do with a seed phrase
Dangerous storage methods that are best not to use:
- Email, messengers. There are known cases when users lost money in this way.
- Cloud storage.
- Online cryptocurrency wallets. Seed-phrase is stored on servers that can be hacked and gain access to users’ coins.
It is not possible to memorize the words, as human memory is capable of surprising, including in an unpleasant way. The security of storing Bitcoin and other cryptocurrency is in the hands of users.
Frequently Asked Questions
🤔 Where can I get a mnemonic?
When you first set up a cryptocurrency storage seed phrase is generated automatically.
❓ Is it possible to come up with a seed-phrase on my own?
It is recommended to use in-house tools of cryptocurrency wallets. Theoretically, you can use services for generation, but security in this case is not guaranteed.
💻 Is it realistic to find a mnemonic phrase with a full list of 2048 words?
Theoretically it is possible, but it requires significant computing power of the computer and a lot of time.
📝 Does the metal plate only allow for 4 letters of each word?
Yes. The first 4 letters of each value in the BIP39 dictionary are unique, they correspond to only one value.
📄 What should I do if I lose the paper with the recorded words?
If you accidentally open access to your wallet, the best thing to do is to transfer the coins to another place. Otherwise, nothing can be done, access will be lost forever.
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Author: Saifedean Ammous, an expert in cryptocurrency economics.
