What’s a Recovery Phrase?
— Your crypto wallet contains your private keys. So what if you lose your wallet – are your private keys lost?
— Your secret reecovery phrase is the back-up of all the private keys stored in your crypto wallet. It allows you to recover all your funds on any other wallet.
— Your recovery phrase is the most sensitive piece of data you will manage as a crypto owner.
— Securing your recovery phrase is non-negotiable. Here’s everything you need to know about it.
In the last article, we explained that the only truly safe way to manage your private key is by securing it in a hardware wallet. That’s because hardware wallets (or cold wallets) are resistant to the hacks deployed via internet connection.
But this brings another important question: if your keys are secured inside a wallet, does that mean you need that wallet to access your crypto?
The short answer is no. Nothing should stand between you and your blockchain assets, not even your wallet. In this article, we explain what a secret recovery phrase is, and how to use it.
What’s a secret recovery phrase?
When you set up a crypto wallet, you will receive a random set of 12, 18, or 24 words. No matter what kind of crypto wallet you choose to use, you will receive these words. This is known as your “Secret Recovery Phrase” or “Seed Phrase.” It is a mnemonic version of all of the private keys secured by your wallet. It’s like multiple private keys rolled up into 24 words.
You might be wondering why you need this phrase, since your private keys should never be visible at all. In short, it’s is about giving you control.
Linking you with your blockchain addresses
Imagine you’ve been using a crypto wallet to store multiple private keys (of your different crypto accounts). But one day, you lose access to the wallet – this could be because it’s lost, stolen or in the case of a software wallet, simply because the app crashes, blocking you out.
With no access to your wallet – is all your crypto gone? The simple answer is “no”, and that’s because your crypto is not in your wallet itself, but on the blockchain. The wallet simply protects the private keys connecting you to those blockchain addresses.
A spare key for your blockchain addresses
The purpose of your secret recovery phrase is to act as a back-up for all of your private keys. This phrase links you to all of your addresses on the blockchain, even when you don’t have your wallet.
Having this phrase means you can restore all of your existing private keys on another wallet, and retrieve your funds on the blockchain. This means you will never be dependent on any one wallet provider – you can access your crypto anywhere, as long as you have that phrase.
All crypto wallets recognize your recovery phrase
One of the special things about the recovery phrase is, that no matter which wallet you received it on in the beginning, it will be recognized by nearly every other crypto wallet.
Let’s say, you’ve been using a crypto wallet by X provider to secure your private keys, and now you need to recover them somewhere else. You can simply type the phrase into a new device by Y provider. All of your accounts are instantly recovered on this new device.
In a sense, the recovery phrase is like your personal blockchain fingerprint. It keeps track of all your addresses and allows you to access them from anywhere.
How to use a recovery phrase
Let’s say your hardware device got lost and you want to regain access to your crypto assets. Simply enter your recovery phrase or 24 words, which you would have taken note of when you first set up a crypto wallet, in another wallet. This will recover all the private keys to the new device.
But that brings us to another tricky issue – with the recovery phrase, can anyone access your funds?
Your recovery phrase is your biggest weakness
The short answer is: yes. Anyone who gets hold of your recovery phrase can instantly access all of the crypto keys it represents. In other words, you can consider that crypto gone.
The biggest threat to your crypto security is the way you store your recovery phrase. Once a person has access to it, they don’t need your ID, personal details, or your original crypto wallet. This is why storing it
How to protect your secret recovery phrase
- Write it down Correctly
It might sound obvious, but the very first thing you need to do is ensure you write your phrase down correctly. If you miss one word or confuse the order of the words, you’ll not be able to recover your crypto ever.
- Choose a Safe Storage Medium
As you know, your recovery phrase is the only backup for your entire wallet. So, it’s no use if it can be easily destroyed. Recording this phrase carefully is another important consideration.
If you’re writing your phrase down on paper, it could be vulnerable to fire or water damage. A better option is using accessories like the Cryptosteel Capsule Solo and the Billfodl . Both of these products allow you to record your recovery phrase on a steel backup, making it resistant to fire, water damage, and other physical threats to your crypto access.
- Store it securely, or seed the phrase into a secondary backup device
Never enter your phrase into a computer, smartphone, or any other internet-connected device. If your computer gets hacked, or even just seen by the wrong person, the attacker would be able to access your 24 words and take everything.
Make sure this phrase is stored securely in an offline place only known to you. Here, the top priorities for your choice of storage are security and secrecy . The optimal option is simply seeding this phrase into one or more extra hardware devices (each protected by a PIN, of course). These can then be used as backups if you lose or break your main wallet.
- Never give it to anyone
Never give your recovery phrase to anyone. There is no reason for anyone to ever know this information. In common phishing scams, scammers pose as a customer service agent and ask for this phrase as part of the assistance process. This is a clear trap. No customer service agent would need the recovery phrase for any kind of assistance.
Make sure you follow these simple rules to keep your crypto safe. We also recommend reading this article to be aware and understand common phishing attempts. It also elaborates the tips to protect your crypto assets against them.
The most important 24 words you’ll ever write
A recovery phrase is not just about backing up your security. It’s about ensuring that your access to the blockchain is not limited by any wallet or entity. And if you think back to our first article, that was the whole purpose of blockchain.
Now, you’re nearly set to start managing crypto for yourself. However, there are a couple more things you need to know before you go. In our next article, we’ll explain the key threats you face as a crypto owner, and how to secure yourself against them.