Cryptocurrency wallets are fundamental tools for anyone involved in digital asset holding and investment. These wallets store private keys, which are essential for accessing funds on the blockchain. Private keys function similarly to passwords, but losing them can result in permanent loss of access to your funds. Given that a private key is a lengthy string of characters, it can be challenging to store, input, or memorize. This is where seed phrases come into play.
What is a Seed Phrase?
A seed phrase, also known as a recovery phrase or mnemonic, is a sequence of words used to generate private keys. These strings of words are created using a specific algorithm that ensures their uniqueness and randomness. This process is standardized by the Bitcoin Improvement Proposal 39 (BIP-39). Typically, a seed phrase consists of 12, 18, or 24 words, and it’s crucial to keep it secure. The words in these phrases come from an official, open-source, and industry-standard word list containing 2048 words. This standard dictates that only the first 4 letters of each word in a seed phrase are necessary for identification.
It is worth noting that the order of seed phrase words is important and should not be changed by the user. It can result in irreversible loss of coins stored in a wallet.
A random seed phrase with 12 words might look like this:
cattle never buddy bulb survey promote pause junior ladder donate trend weasel
While you may recognize some of these words from various sources, it’s important to note that they are all part of the standardized BIP-39 wordlist.
The BIP-39 Wordlist Characteristics
The official BIP-39 protocol documentation outlines several key characteristics of the wordlist:
- a) Smart word selection: The wordlist is designed so that typing the first four letters is sufficient to unambiguously identify any word.
- b) Avoidance of similar words: Word pairs like “build” and “built” or “woman” and “women” are excluded to reduce confusion and errors.
- c) Sorted wordlist: This allows for more efficient word lookup and enables the use of data structures like tries for better compression.
How Seed Phrases Function
When creating a new wallet, you’re prompted to record your seed phrase. This phrase generates your private keys, which are then used to access your funds. In the event of private key loss, your seed phrase can be used to recover your wallet.
Seed phrases operate by using a specific algorithm that generates a unique set of private keys. This algorithm combines your seed phrase with a random number generator to create your private keys. Consequently, your seed phrase is the sole requirement for wallet recovery. This is why you need to store your seed phrase securely.
Wallet Recovery Using a Seed Phrase
If you lose your wallet you can recover your wallet using your seed phrase. This process involves entering your seed phrase into a wallet that supports seed phrase recovery. The wallet then uses the algorithm to regenerate your private keys and grant access to your funds.
The recovery process typically involves these steps:
- Locate your stored seed phrase.
- Reset your wallet to initiate recovery or use a new wallet.
- Input the words in the correct order. Most wallets will auto-fill or suggest words as you type.
- Upon completion, the wallet will either confirm the seed words and display your wallet or indicate an incorrect seed phrase.
Why do I only need the first 4 letters for each word in a seed phrase?
Each word in a seed phrase is unique, but interestingly, you only need to enter or store the first four letters of each word for recovery. This is because the first four letters of each word in the BIP-39 wordlist are sufficient to uniquely identify the entire word. This is a deliberate effect of smart selection of words set in BIP39 standard.
For example, if your seed phrase contains the word ” amazing,” entering “amaz” is enough for wallet recovery. This feature significantly simplifies and accelerates the seed phrase recovery process.
The BIP-39 protocol carefully selected commonly used words that are unique after the first four letters. For example:
- “amaz ” uniquely identifies “amazing”
- “leop” uniquely identifies “leopard “
Wallets can auto-fill or suggest the complete word based on these initial letters, as they are programmed with the standard wordlist.
This characteristic of seed phrases is useful when it comes to creating backups, as it requires to write down only first four letters of each word, instead of full words. All Coinplate backups are compatible with BIP39 and SLIP39 seed phrases.
SLIP39 standard is built similarly to BIP39 so it is also enough to use only the first four letters for each word of seed phrase. It’s worth noting that while the SLIP-39 protocol uses some words that overlap with the BIP-39 wordlist, BIP-39 contains 2048 words, while SLIP-39 has 1024 words.
Proper Backup and Security of Seed Phrases
Given the critical importance of seed phrases in accessing and recovering cryptocurrency wallets, proper backup and storage are paramount. While writing down your seed phrase on paper is common, it’s vulnerable to various risks such as fire, water damage, or accidental destruction. For enhanced security and longevity, consider using metal backup tools specifically designed for storing seed phrases.
One such solution is offered by Coinplate. These premium stainless steel devices, like the Coinplate Alpha, allow users to engrave their seed phrases at home, minimizing exposure to potential security risks. Made from 3/8″ (10mm) thick stainless steel, Coinplate wallets can withstand extreme conditions including fires, floods, and physical impacts, ensuring your seed phrase remains readable for decades.
Coinplate Alpha
Value Pack: Single set
Conclusion
Seed phrases are crucial tools for cryptocurrency holders, providing an additional layer of security and ensuring wallet recovery even in the event of wallet malfunction or loss. The importance of keeping your seed phrase safe and secure cannot be overstated. Understanding the mechanics of seed phrases, including the significance of the first four letters, can greatly enhance your ability to manage and protect your digital assets effectively.