October 18, 2023 · 8 min
Cryptocurrency wallets are an essential tool for anyone who wants to invest in digital assets. These wallets store your private keys, which are used to access your funds on the blockchain. See it like a password. However, losing your private keys can mean losing access to your funds forever. A private key is a long string of characters that is hard to store, insert, or memorize. This is where seed phrases come in.
A seed phrase, also known as a recovery phrase or mnemonic, is a string of words used to generate your private keys. These words are generated using a specific algorithm that ensures they are unique and random. This is all done using the Bitcoin Improvement Proposal 39 (BIP-39). The seed phrase usually consists of 12, 18, or 24 words, and it’s essential to keep it safe and secure.
The seed phrase should always be stored in the correct order. Do not mix up words or remove words for “safety purposes” - telling yourself that you will remember the word. History has shown memorizing and breaking up seed phrases are the biggest reasons for losing access to cryptocurrencies.
To showcase, a seed phrase can look like this. It might even contain some words that are also in your seed phrase. But do not worry, there are a gazillion different seed phrase possibilities.
hotel obvious agent lecture gadget evil jealous keen fragile before damp clarify
You might also have seen some of your seed words somewhere online. Of course, this was not your actual seed phrase, but the words in it come from an open-source and industry-standard wordlist. In the official BIP-39 wordlist, there are 2048 words. The wordlist can be found across the internet, in physical copies, and on numerous websites.
The official documentation of the BIP-39 protocol, where the seed phrases come from, states these things about the wordlist.
“An ideal wordlist has the following characteristics:
a) smart selection of words
- The wordlist is created in such a way that it's enough to type the first four letters to unambiguously identify the word
b) similar words avoided
- Word pairs like "build" and "built", "woman" and "women", or "quick" and "quickly" not only make remembering the sentence difficult but are also more error prone and more difficult to guess
c) sorted wordlist
- The wordlist is sorted which allows for more efficient lookup of the code words (i.e. implementations can use binary search instead of linear search).
- This also allows trie (a prefix tree) to be used, e.g. for better compression.
When you create a new wallet, you’ll be asked to write down your seed phrase. This phrase is used to generate your private keys, which are then used to access your funds. If you lose your private keys, you can use your seed phrase to recover your wallet.
Seed phrases work by using a specific algorithm that generates a unique set of private keys. The algorithm uses a combination of your seed phrase and a random number generator to create your private keys. This means that your seed phrase is the only thing you need to recover your wallet.
If you lose your private keys, you can use your seed phrase to recover your wallet. To do this, you’ll need to enter your seed phrase into a wallet that supports seed phrase recovery. The wallet will then use the algorithm to generate your private keys and give you access to your funds.
Seed phrases are made up of a list of words, and each word is unique. However, you don’t need to enter the entire word to recover your wallet. In fact, you only need to enter or store the first four letters of each word. The actual first four letters, not only the unique first four letters.
This is because the first four letters of each word are unique enough to identify the entire word. For example, if your seed phrase contains the word “elephant,” you only need to enter “elep” to recover your wallet. This makes seed phrase recovery much easier and faster.
The BIP-39 protocol and the seed words in the wordlist were carefully picked to be commonly used words and to be unique after the first four letters. Look at this example.
Since all words are unique after the 3rd letter, and your wallet knows the wordlist, it can auto-fill the words or suggest the word.
Keep in mind that the SLIP-39 protocol uses some of the same words that can also be found in the BIP-39 wordlist. The BIP-39 wordlist has 2048 words and the SLIP-39 wordlist has 1024 words.
In conclusion, seed phrases are an essential tool for anyone who wants to invest in cryptocurrencies. They provide an extra layer of security and ensure that you can always recover your wallet, even if you lose your private keys. Remember to keep your seed phrase safe and secure.
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