Do You Remember Your Seed Phrase? - Safeguarding Your Crypto

The phrase ‘MetaMask lost seed phrase‘ is consistently present in search engines throughout the year. Clearly, despite multiple disclaimers and warnings, the issue is faced by many.

So, before we begin, answer this question – do you remember where your seed phrase is?

What we know about seed phrases

Every new owner of a cryptocurrency wallet goes through the process of recording a combination of words – a seed phrase. This phrase serves as the key to restoring access to the wallet if you ever fail to log in.

A seed phrase is never a logical sentence or a quote – it’s a string of 12 to 24 random words. They are selected out of a 2,048-word dictionary, and each one corresponds to a number.

The seed phrase is used to generate public-private key pairs with BIP32 or BIP44 algorithms, and these pairs are stored in your device’s memory.

During registration, you always see a reminder that the seed phrase should be written down and kept somewhere safe.

If anything happens, this is the only way to restore your wallet and regain access to your funds.

I’m ready to keep it safe

The cautionary tale of Stefan Thomas only reminds us about the worst possible outcome.

The former CTO of Ripple made headlines when he was left with two remaining attempts to enter the correct password to his IronKey-encrypted flash drive.

According to different sources, the drive contained from $220 million to $240 million worth of Bitcoin (BTC).

If this story didn’t make you want to revisit your seed phrase, it’s hard to imagine something else would.

But forgetting your wallet password is only one common reason to look for your seed phrase.

The others include losing or misplacing the device that holds the wallet or having a malfunctioning one.

If you encounter one of these issues, you are guaranteed to have to look for the seed phrase, and let’s agree that knowing where and how to locate it is much safer than frantically searching high and low.

There are two ways to store a seed phrase – digital and physical. While neither one is perfect, we will tell you about the best practices.

Digital storage

• Low security – writing it in a document

Just writing down your seed phrase is dangerous. Not only will anyone in the vicinity of your computer would be able to access it – but it could be accessed by hackers or accidentally deleted.

• Medium security – writing it in a document and encrypting it

If you choose to store your seed phrase digitally, you need to think about encrypting it.

The easiest option is to write it down in a file and use encryption software. The file cannot be read by anyone else, but it can still be deleted by accident, especially if other people can access your computer.

There is a more advanced form of encoding that doesn’t require additional tools – saving excerpts that include a word from the seed phrase.

For instance, you can keep them in notes or saved messages. This allows you to be the only one who knows how to decode the phrase.

• Good security – uploading the encrypted file to Dropbox

A better solution is to upload the file to Dropbox or another cloud service so you always have a backup copy online. However, you should also be aware that cloud services can be hacked or unavailable sometimes.

It is wise to copy the file to multiple cloud services and also have a physical storage device, such as a flash drive. This way, you reduce the risk of losing your seed phrase.

But the more copies you have, the less secure they are. You may expose yourself to phishing attacks or theft of your seed phrase.

• High security – using an encrypted hidden container

If you want to add another layer of security, you could create a hidden container with double encryption and store it in the cloud.

This means that you need two passwords to access your data. One password will reveal one version of the data, and another password will reveal a different version.

Physical storage

• Low security – a paper wallet

A paper wallet is a piece of paper with the seed phrase written on it, stored in a secure place. This protects you from online hackers but not from losing or damaging the paper.

A more advanced method is to engrave the seed phrase on a metal plate. This makes it resistant to fire and water – but not to theft.

• Medium security – different hiding places

To prevent unauthorized access to the seed phrase, you can also divide it into several pieces and hide them in different locations.

While it’s a safety measure, it creates another challenge – the risk of losing some of the pieces.

• High security – smart wallet

Another option that helps you manage your seed phrase is a smart wallet.

It lets you split your seed phrase into several pages, and you only need some of them to recover the whole phrase.

For example, you can have three pages and need two of them or seven pages and need four of them. You can print the pages, which have clear instructions on how to restore the data.

The redundancy algorithm ensures that some pages are extra, but you can still restore the data if you lose them.

Some smart wallets use RAID5 disk-based storage, which is still widely used in data centers.

This is the most comprehensive solution for storing your seed phrase.

But remember that the pages should be kept apart – ideally, in different places where only people you trust can access them.

It would be safer to be the only one who knows where the pages are, but if you are away and need to restore your seed phrase, it is good to have someone who can help.

The most advanced practices

Well, now that you know almost all there is to know about the safekeeping of a seed phrase, let’s talk about preventing unauthorized access.

First and foremost, you should probably involve both digital and physical methods of storing the seed phrase. Additional security hasn’t hurt anyone so far.

Now, let’s come back to the core of a seed phrase. It’s a string of words, and there’s a finite number of them.

So, every once in a while, these words switch places and provide an entirely new seed phrase.

Let’s imagine we have two wallets with two seed phrases – wallet one – ABCDE – and wallet two – CDBAE.

Keep in mind that you’d have to search for these wallets for this

.

We store the wallet with one seed phrase with extra advanced security measures, so it seems like this wallet is the main one.

We put $100 on wallet one and $100,000 on wallet two – then we wait and watch.

If a hacker breaks through all the security measures in the first wallet, they take the $100 and either quit or continue on their quest.

Meanwhile, we become aware that there has been a breach and have enough time to move our $100,000 to a safer place.

It’s a complex security measure that requires a lot of effort – yet, for now, this is one of the better measures.

We have discussed two different ways to store your seed phrase for a crypto wallet. They both have different steps and security levels, and they both have pros and cons.

You have to pick the one that matches your needs and preferences.

Also published here.