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The utmost responsibility of any crypto holder, investor, or trader is to keep their coins safe. Of course, cryptocurrency is decentralized, meaning nobody controls your money; thus, you’re solely responsible for the security of your digital assets. Mnemonic phrases and passphrases offer a superior means of securing Bitcoin and other cryptocurrencies. Thanks to the mnemonic passphrase, you don’t have to worry about keeping your cumbersome private keys to secure your coins.
Despite the importance of the mnemonic passphrase in securing cryptocurrencies, most crypto users lack awareness and self-education on the topic, therefore losing their entire crypto portfolio in case of misplacing their hardware wallets or losing/damaging their phones or computers. This guide takes a more in-depth look at the mnemonic passphrase, how to generate a passphrase, and ideas on storing your passphrase safely.
Mnemonic Phrase and Mnemonic Passphrase Explained
Contrary to the perceived speculation, there is a clear difference between the mnemonic phrase and the mnemonic passphrase. Nonetheless, they’re interrelated in some way.
A mnemonic phrase is also referred to as a mnemonic seed; a mnemonic phrase, seed key, or seed word, refers to a group of words generated when creating a new wallet to store cryptocurrencies. When creating a new crypto wallet, you’ll be required to write down a 12, 18, or 24-word mnemonic phrase or seed words on a piece of paper and keep it in a safe place.
Mnemonic phrase constitutes all the necessary information to recover your wallets and cryptocurrencies if your device is stolen or damaged. In such instances, you can recover your wallets and all your funds by keying in the mnemonic phrase words on the same wallet software in the same sequence they were generated.
An example of a 12-word seed phrase is: witch collapse practice feed shame open despair creek road again ice least. Mnemonic phrases offer several benefits: they’re easy to memorize, secure, store and readable to human eyes.
The primary security concern with mnemonic phrases is that anybody who stumbles upon the phrase can steal an individual’s entire cryptocurrency. While the seed key can be securely stored like cash or jewels, it’s not always secure and quite daring in securing an individual’s entire crypto portfolio. As such, most crypto wallets enhance users’ crypto security by enabling them to encrypt the mnemonic phrase with a password, i.e., the Mnemonic passphrase.
Mnemonic passphrase adds a second layer of security to the mnemonic phrase and consequently to an individual’s wallet by functioning like two-factor authentication or a second factor for a crypto wallet. A mnemonic passphrase is like a “something you have” or “something you know” password to the mnemonic phrase.
To recover a wallet in case of device damage or loss, a user must key in both the seed phrase and the passphrase. A mnemonic passphrase is also commonly referred to as the 13th/25th word, seed extension, or extension word. An example of a mnemonic password is a slim sugar lizard predicting state cute awkward asset informing blood civil sugar.
It’s vital to note that forgetting the Mnemonic passphrase would result in the total loss of an individual’s wallet. However, some crypto wallets that don’t use the BIP39 standard, such as Electrum Wallet, allow users to recover their wallets entirely from their seed keys. Users need to click on the “restore wallet” option in the wallet application startup page, select “I already have a seed,” and input the precise seed to recover their wallets. After the restoration, users can choose a new passphrase. Nonetheless, recovering the wallet is impossible when both the seed and passphrase are lost.
Note that not all crypto wallets support mnemonic passphrases. Some wallets that support passphrases include Ledger Nano S, Trezor Model T, Trezor, Coinomi, Electrum, Edge, Exodus, and Samourai Wallet.
Generating Mnemonic Phrases and Mnemonic Passphrase
Mnemonic phrases are generated automatically via the BIP-39 specification standard. BIP39 (Bitcoin Improvement Proposal) is a mnemonic word set that generates hierarchically deterministic keys. BIP39 is the conventional means of generating deterministic keys in the crypto space. Most wallets in the crypto space, including Keepkey, Ledger, Trezor, and other hierarchical deterministic (HD) wallets, leverage BIP39 to generate seed keys automatically.
Generating mnemonic phrases starts by creating initial entropy, i.e., random sets of bits (zeroes and ones) generated for use in cryptography. In creating a mnemonic phrase, the wallet needs a minimum of 128 bits of entropy and a maximum of 256 bits of entropy. Mnemonic phrases are usually 12 to 24 words depending on the length of the initial entropy. For example, a 12-word-long mnemonic phrase requires 128 bits of entropy.
After the generation of the initial entropy, the next step is to encode it in words. This is done by adding a checksum to the entropy to discover errors and make the final key more human-friendly. The checksum is generated by hashing the entropy via SHA256 to make the mnemonic sentence unique. 1 bit of the SHA256 hash is assigned to every 32 bits of entropy.
The final step in generating a mnemonic phrase is to convert the mnemonic sentence to the final seed phrase. This is done by passing the mnemonic sentence via the PBKDF2 hash function. The Password-Based Key Derivation Function 2(PBKDF2) hashes the mnemonic sentence multiple times to generate the final 64-byte seed. The final seed can create the master extended key (mnemonic passphrase) for a hierarchical deterministic wallet. Finally, the wallet’s private keys are also generated from a mnemonic phrase involving a couple of steps.
Ideas on Storing Seed Phrases and Mnemonic Passphrases for the Long Term
Mnemonic phrases and passphrases can be stored in many ways, including memorizing, engraving, or stamping on metal, chiseling into a stone tablet, and writing in book margins, among other creative ways. It’s crucial to note that improper storage or mistyping letters could lead to a total loss of your cryptocurrencies in storing seeds and passphrases. Here are some ideas for storing seeds and passphrases for the long term.
- Write the seed and passphrase on paper using a clear pencil and store the paper in the dark to avoid extreme physical conditions such as moisture and heat. You may want to use archival or acid-free paper for the best results.
- You can stamp or engrave seed phrases into metal or stone tablets, which are more durable than paper. This method is highly recommended if the threat involves water, fire, extreme temperature, and physical stress.
- Always store seeds and passphrases offline to avert the risk of information leakage or hacking.
- When writing down or engraving, ensure the seed phrase and passphrase are noted in the right order and spelled correctly.
- If you use a piece of paper, you may want to laminate it to make it resistant to physical elements, including water, dust, sunlight, and stress.
- You can make several copies of the seed and passphrase and store them in different safe places such that if you lose one paper, you still have other backups.
Things to Avoid When Storing Your Seed and Passphrase
- Never store your seed or passphrase online or as a file on your computer or smartphone.
- Splitting the mnemonic phrase into two and storing each in different locations is not good. This is because if one set of phrases is leaked, it is easier to brute-force the words’ rest.
- Never add random words to your mnemonic phrase to remove them later. You may easily forget the decoy words and lose your crypto assets. It’s also possible for an intruder to determine the decoy words since the passphrase words are obtained from a predetermined source.
- It’s not recommended to memorize seed phrases, as you can easily forget. Instead, put it down on paper or engrave it on a stone tablet or metal.
The importance of keeping your crypto assets safe cannot be overemphasized. Crypto coins are susceptible to hacking, and your sole responsibility is to protect them. A mnemonic phrase allows you to recover your crypto wallet if it gets lost, while mnemonic passphrase functions like two-factor authentication to the seed. In addition, a passphrase adds a security layer to your cryptos in that unauthorized persons cannot access your wallet even with the phrase.
Securing your mnemonic phrase and the mnemonic passphrase is paramount for the safety of your crypto coins. Therefore, it’s recommended that you store your seed and passphrase offline, on paper, metal, or stone tablets, and away from environmental influence. Remember, just like private keys, mnemonic phrases and passphrases are crucial in securing and recovering your digital assets; thus should be stored securely and properly.