What Is A Seed Phrase (DEEP DIVE)
If you have created a non-custodial wallet such as Metamask or Trust Wallet, you may have seen a message that warns you to keep your seed phrase secure.
What is a seed phrase, and how important is it in securing your assets in your wallet?
What is a seed phrase?
A seed phrase consists of a combination of 12 or 24 random words. The string of words serves as a ‘master password’ for you to access your non-custodial wallet.
When you create a non-custodial wallet, you are given full control and ownership of your funds. Each wallet comes with a seed phrase, which acts as the wallet’s password.
You may notice this familiar message whenever you create a non-custodial wallet.
If you are just using a centralised exchange like Binance or KuCoin, you may notice that you do not have a seed phrase.
This is because your assets are in the custody of the exchange, and you do not have full control over your funds!
How do I find my seed phrase?
The process is rather similar to most non-custodial wallets, and here’s how you can find your seed phrase on the Krystal wallet:
#1 Go to ‘Manage Wallets’ and select ‘Edit’
On the Krystal app (iOS | Android), you can go to ‘Settings’, and select ‘Manage Wallets’.
On the next page, you can swipe and tap on ‘Edit’.
#2 Select ‘Show Backup Phrase’
On the Edit page, you can select ‘Show Backup Phrase’.
#3 Select ‘Backup Mnemonic’
After entering the passcode, you will be given 3 options to backup:
- Keystore
- Private Key
- Mnemonic
The mnemonic phrase will be your 12-word seed phrase, which is the easiest way for you to write it down and store it securely.
If you selected the option to backup your private key, you will be given a string of letters and numbers. Moreover, you will only be able to gain access to this individual wallet.
What’s the difference between a seed phrase and a private key?
A private key is a string of letters and numbers that are specific to each wallet that you create. As such, if you export a private key, you will gain access to the funds in that specific wallet.
Some wallets allow you to create multiple deposit addresses (i.e. private keys) using the same seed phrase. If you export your seed phrase, you will gain access to all of the wallets (each with its own separate private key) that used the same seed phrase.
As such, keeping your seed phrase secure is of utmost importance.
Why is my seed phrase important?
Your seed phrase gives you full control over the funds in your wallet, just like how a password gives you full access to your account. If anyone gains access to your seed phrase, they will be able to take control of your funds.
Furthermore, since you are using a non-custodial wallet, you are taking full responsibility for the safety of your funds. In the event that you get hacked, it will be rather difficult for you to recover your funds!
This is in contrast to leaving your funds with a centralised exchange.
In the event that your account on the exchange gets hacked, you may be able to contact the exchange’s support and your funds may be recovered.
While decentralisation of your funds has its advantages, it also comes with its risk.
It is extremely important for you to keep this seed phrase secure, and never share it with anyone!
Be careful of scams!
If you have participated in any online crypto communities, there may be some users impersonating to be part of the support team to help you with your problem.
Most of these communities have a policy where they will not send you a direct message (DM) first. This means that whoever sends you a DM is very likely to be a scammer!
Furthermore, these support staff will never ask you for your seed phrase to help you to solve your problem. This will be a huge red flag if the ‘support staff’ asks you for your seed phrase.
Once you give the ‘support staff’ your seed phrase, they will have full control of your funds!
As such, do be extremely careful and never share your seed phrase with anyone!
Keep it secure!
Moreover, it is important that you keep this phrase in a safe and secure place.
In the event that your wallet gets deleted from your phone or computer, your seed phrase is the only way that you can recover your funds.
If you did not write down your seed phrase, your wallet will be lost!
How do I secure my seed phrase?
Here are 2 recommended ways that you can consider using to keep your seed phrase safe:
#1 Write on a piece of paper
The safest method would be to write your seed phrase down on a piece of paper, and then store it securely, such as in a safe or a deposit box.
You are recommended to make multiple copies of your seed phrase on paper. If you lose any of these pieces of paper, there will be no other way for you to recover your funds!
#2 Store it on a hardware wallet
If you have a hardware wallet, this will be another safe place to store your seed phrase.
When you import your wallet into a hardware wallet like Ledger or Trezor, you will have a physical 2-factor authenticator to confirm any transactions!
This will be more secure as a hacker needs control of both your seed phrase and your hardware wallet to steal your funds.
However, similar to a piece of paper, you will need to store your hardware wallet securely, and not lose it!
Should I store my seed phrase on my computer?
It is not recommended for you to store your seed phrase on your computer.
By storing your seed phrase on any device that is connected to the internet, there is a chance that your seed phrase can be compromised by a hacker. All they would need is to hack into your cloud storage or any of your devices, and they will gain access to your funds!
This was what happened to a Metamask user when his iCloud account was hacked, and you can check out our Newsflash article for more details.
A good practice for your seed phrase
Before you transfer any funds to your new wallet, it will be good to do these steps:
- Delete your current wallet
- Recover this wallet using the seed phrase
This will ensure that you have written down your seed phrase correctly, and you won’t have trouble recovering your funds in the future!
You can find out more details about recovering your wallet via your seed phrase here.
Conclusion
Seed phrases are extremely important if you are exploring the DeFi world. It is extremely important that you keep yours secure!
Navigate the DeFi Space now with Krystal!
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