Seed phrase: the primary key to cryptocurrency security

The issue of security is key for owners of digital assets. Unlike traditional assets and bank deposits, cryptocurrencies cannot be insured, and if a password is lost, access to them cannot be restored.

The most crucial principle of cryptocurrencies is "non-custodialness" — an approach in which the user himself owns the private keys to his wallets, and there is no operator or service to which one could "ask to restore access". The central element of such storage is the seed phrase. It is what gives access to the wallet and to assets, and it must be stored as reliably as possible.

What is a seed phrase?

A seed phrase is a mnemonic sequence of pseudo-random words that allows you to restore access to digital assets in a non-custodial wallet.

The number of words in the sequence may vary depending on the wallet's format. The most common seed phrase lengths are 12, 18, 20, and 24 words. Essentially, a seed phrase is the master key to access the crypto wallet, like the code to a safe.

Note: In documents and articles, you can find various variations of the name "seed phrase", such as:

• Seed;
• Mnemonic password;
• Mnemonic, initial, backup, or password phrase;
• Recovery phrase.

Varieties of seed phrases

There are several standard formats of seed phrases:

1. BIP32. The first format allows generating multiple keys and describes the structure of hierarchical deterministic (HD) wallets.
2. BIP39. Perhaps the most common and standard format uses a fixed dictionary of 2048 words. BIP39 allows generating seed phrases of 12 or 24 words and supports expansion to 13–25 words using a passphrase.
3. BIP44. A format similar to BIP32, but used for altcoins created based on the Bitcoin protocol, such as Ethereum, Dogecoin, Bitcoin Cash, Litecoin, and similar.
4. SLIP39, also known as Shamir Backup. Allows splitting a seed phrase into multiple parts, increasing storage security. The SLIP39 format supports only a limited number of wallets, such as Trezor and Electrum.

Note: the abbreviation BIP means "Bitcoin Improvement Proposal", and the number is its sequence number. The generated seed phrase remains unchanged, and its format is not compatible with other seed phrases. This means that you cannot change the format of a seed phrase, for example, from BIP39 to BIP44.

Seed phrase features

A seed phrase provides wallet backup. Even if the user loses the device or access to the wallet, they can restore it using the saved seed phrase.

In addition, the seed phrase provides complete control over assets. This guarantees that no one except the owner can dispose of their cryptocurrency, provided that the seed phrase was not compromised earlier.

Another key feature is independence from specific applications. This means that if a wallet is blocked or its support ends, you can access your funds through another application.

Finally, another special property of a seed phrase is determinism. This means that one seed phrase generates the same unique set of keys.

How to create a seed phrase?

There are several ways to create a seed phrase. The simplest and most popular is automatic during wallet creation in the application. Many crypto wallets can independently generate a seed phrase and even offer a choice of 12–24-word mnemonic passwords, and some even with expansion (passphrase).

However, the randomness of such a mnemonic phrase will depend on the random number generator (RNG) used. In addition, when a seed phrase is automatically generated in the wallet, there is a risk of compromise, for example, if the device is infected with malware.

There are also online generators, but using this method is not recommended, because it is unknown who or how can store generated keys. This also applies to special software that can generate many seed phrases at once.

The most reliable method is the manual generation of a seed phrase using offline tools such as ELLIPAL Joy and dice. These methods are more complex, but are considered the safest and provide the best randomness.

Recommendations for secure creation and storage of a seed phrase

• It is safest to write the seed phrase on paper or on a special metal device (for example, Cryptosteel or CryptoTag) for storing mnemonic passwords, with the windows closed and in a room without cameras. To increase security, you can split the seed phrase into several parts, move the sequence of words according to a saved algorithm, or use the special SLIP39 format.
• It is not recommended to store the seed phrase in digital form (text or photo) or in cloud storage.
• It is better to store several copies of the seed phrase in case one is damaged or lost, but this increases the risk of compromise. It is recommended to store the seed phrase offline, but password managers such as Bitwarden are also suitable.
• An additional way to increase the security is to use a passphrase, which is better stored separately.
• You should not enter the seed phrase in online forms, especially if the user is under the impression of danger or if the request is allegedly from support — this is fraud. The seed phrase is needed only to restore a wallet directly in the software client or device.
• The safest are hardware wallets that "lock" the seed phrase inside the device and prevent it from being extracted.

Is it possible to brute force a seed phrase?

In theory, it is possible to brute force a seed phrase, but even for existing quantum computers, this is extremely unlikely. Even if all the most powerful supercomputers in the world are combined, brute forcing would take quintillions of years, which exceeds the age of the Universe.

The only option for calculating two identical phrases, according to experts, is an RNG error, in which the algorithm outputs non-random numbers. Therefore, when generating a seed phrase, you must ensure the reliability of the generator, made in accordance with certain specifications. This information can be checked on the wallet provider's website.

What is the probability that someone will create a duplicate seed phrase?

It may seem that 2048 words is a small number for generating unique private keys, but this is not the case. It provides about 5.44 × 10³⁹ combinations for 12 words and more than 10⁷⁷ for 24.

In other words, it is more likely to encounter the same atom in the Universe than to create two identical seed phrases.

Are there alternatives to seed phrases?

Until recently, a seed phrase was the only way to back up crypto wallets, but technology does not stand still. In addition, crypto enthusiasts fear that with the development of quantum technologies, the seed phrase generation algorithm can be quickly hacked.

Some crypto wallets already offer alternatives, such as:

• MPC (Multi-Party Computation) — a storage method in which the private key is divided into several parts stored in different places.
• Social Recovery — implementation of access to keys through trusted persons;
• New types of hardware wallets with built-in biometric Secure Enclave mechanisms for unlocking.