What is a Recovery Seed & How to Use it in 2023

Much is made about the security of cryptocurrency and the fact that funds stored on a blockchain address are protected by military-grade encryption. This is accurate, so if you have crypto in a wallet, nobody can take it away from you unless they get their hands on your recovery seed.

However, the immutability and finality of blockchain transactions mean that keeping security tight is vital. Once funds are moved, they can’t be reversed. It isn’t like credit card theft, where you can simply phone your bank to report the theft and have all transactions canceled or reverted.

Keeping your crypto safe comes down to understanding how wallets and recovery seeds really work, so read on to find out!

What is a Recovery Seed?

Cryptocurrency wallets are key to taking custody of your own wealth, but they can often be difficult to get used to at first. One of the most intimidating things about a crypto wallet is that it can’t be recovered if you lose it, in the same way that almost any sort of application or account can.

As digital natives, we’re not used to being locked out of our devices or programs. Just like it’s easy to hide a key to your front door in a nearby flowerpot or under the mat, even the most sensitive apps can be easily restored if you forget or misplace your password. There’s always a handy little mechanism to recover and reset it, and the process takes mere seconds.

This is most definitely not the case regarding a crypto wallet. Given how easy it is to spoof a phone number or break into someone’s email, wallet recovery is a little more involved.

Instead, the wallet software generates a 12 or 24-word sequence during its creation process. This recovery word list is your key in a flowerpot, providing emergency access to your blockchain address if you forget your wallet’s password.

The distinction there is also key. A recovery seed points to your actual address on the blockchain rather than your wallet itself, which means that you can even use a different wallet to access that address using your seed phrase.

How to Safely Record & Store a Recovery Seed

Recording and storing your recovery seed is extremely important, even though it’s often overlooked since it’s just one step you must go through during wallet creation. If you lose it or have it stolen, the person who ends up with it has full access to all the funds stored at your blockchain address.

Many people employ different strategies when it comes to storing recovery seed words. At first, it’s only natural to grab a pen and paper during wallet creation and jot it down, but what comes next is important. It’s far too easy to push that slip of paper into a drawer or onto a pile and forget about it.

Keeping your recovery word list on paper is absolutely fine, but make sure to store it safely. Some people make a few copies and put them in different places. Having a copy at the home of someone you trust isn’t the worst idea, either.

If you’re a bit of a high roller, you could even follow in the footsteps of the Winklevii and store shards in different bank vaults. Of course, that would mean that you have to trust bankers with your assets rather than a friend or loved one.

Most crypto holders are quite happy to store their seed phrases themselves, and there are some great products on the market for more peace of mind. Recovery seed metal plates, for instance, can alleviate some of the risks of paper burning, getting waterlogged, or being destroyed by either termites or household pets. Homework’s fair game, but you really don’t want the dog eating your recovery seed!

Recovery seed best practices tend to include keeping seed phrases completely offline. It’s tempting to take a photo of your recovery seed word list or jot it down on a note-taking app, but these are awful ideas. Putting your seed phrase on any sort of device attached to the cloud or even just a wider network is opening yourself up for attack.

You could store your seed phrase on a device you keep completely offline. Just remember that many devices fail after a certain amount of time, and they can be misplaced too. You really don’t want to be this guy.

Recovery Seed vs. Private Key

Even though they’re sometimes mistaken for one another, there’s an important difference between seed phrases and private keys. Namely, the seed phrase allows you to access a certain blockchain address. Meanwhile, a private key is derived from your seed phrase and allows you to sign transactions from that address.

This means that the seed phrase is actually the most basic element when it comes to your blockchain address and your wallet. It’s also human-readable and in the case of Bitcoin, is pulled from a master list of thousands of words, making it almost impossible to duplicate.

Private keys, in contrast, aren’t human-readable. They’re made up of a string of arbitrary numbers and letters, and it’s often very, very difficult to remember them. Seed phrases can be memorized with greater ease using various mnemonic techniques, but it’s good practice to back them up safely, even if you’re an expert with memory palaces.

What to do if You Lose Your Seed Phrase

Losing access to your wallet is never good, and it can often be difficult or even impossible to recover your funds. However, just misplacing a PIN or a seed phrase doesn’t necessarily mean that all is lost.

Crypto wallets come in many forms. There are hardware wallets such as Trezor, browser extension wallets like Metamask, wallets for mobile devices, and classic programs like Bitcoin core. Most of these require a device to run on, which means that their interfaces also have a password, in the case of a desktop or browser wallet, or a PIN, in the case of a mobile wallet.

The best case scenario if you lose something here is that you lose either your seed phrase or your PIN/password but not both. As mentioned, a seed phrase gives you a blockchain address, so if you lose your password, you can simply create another wallet compatible with the same blockchain and use the “recover” option using your seed.

You could, for example, lose your phone, which had a Metamask wallet storing ETH, some ERC-20 tokens, and a bunch of NFTs on Ethereum. Don’t worry—simply get on another of your devices and download Metamask or another Ethereum wallet, such as the GameStop Wallet, and choose to “recover using seed phrase” rather than creating a new address. Now, use your seed phrase to recreate the wallet and regain access to your funds.

What if you lose your recovery seed, though? Again, not to worry. As long as you haven’t forgotten the password or PIN and can access the wallet, you can send funds out. That means you can create a new wallet with a new seed and send your funds to the new one.

Key Takeaways

In conclusion, recovery seeds are one of the most crucial things when taking charge and custody of your own crypto assets. The phrase “not your keys, not your crypto” is particularly apt since it underlines the importance of having that critical word list with not just the right words but the correct sequence as well.

As centralized custodial services continue to flounder and fail on the back of poor risk management, it’s up to you to do things right—and your seed phrase is both literally and figuratively the key to doing so.

Recovery Seed FAQ

• How do I find my recovery seed?

  During the wallet creation process, you’ll be prompted to write down your recovery seed and test it out. You can also view the recovery seed while logged into most wallet applications via an option in the app’s settings.

• What is a 12-word phrase to a private key?

  The 12 or 24-word phrase you get at wallet creation is called a recovery seed, and it’s what the wallet’s private key is derived from. You can create a new wallet and derive a new private key if you lose it using the recovery seed phrase.

• How many times can you use a recovery seed?

  You can use your recovery seed as many times as you need to. However, anyone who ends up in possession of a device of yours can also try and crack a wallet application’s password or PIN. For this reason, it may be wise to create a new wallet with a new seed and move your funds quickly if the device carrying your wallet gets stolen.

• What is a seed phrase?

  A “seed phrase” is a list of human-readable words that represents a blockchain address. As long as you have access to your seed phrase, you’re assured of being able to access the funds tied to that address.