Bitcoin Backup: How Recovery Seeds Work

The seed phrase, also known as the recovery phrase, is the golden key to digital wealth. Anyone who decides to keep Bitcoin and Co. themselves should think about the long-term security of the words.

But how does such a seed actually work?

The seed phrase consists of 12 or 24 words

In short, the seed is a well-defined but randomly generated list of words that contains all the information you need to recover your wallet in the event of a loss. And that is how it must be treated. Because anyone who gets their hands on the twelve or 24 words gains access to your BTC – and if in doubt can steal it.

Usually the seed phrase consists of 12 or 24 words. These in turn stand for a very specific number in the Bitcoin source code, which, in the unique combination in each case, forms the source for all key pairs of the respective wallet. So you can think of your Bitcoin wallet as a kind of password manager whose master password is the seed phrase.

Anyone who copies the private key lives dangerously

Of course, there are very practical reasons for using words and not numbers when programming the seed. You could also write down the public and private key and derive the wallet from them. However, the private key results from a hexadecimal sequence of numbers, the 64 digits of which offer many opportunities for an incorrect copy. If you write just one digit of the private key wrong, the coins are gone forever if you lose the wallet.

Recovery seeds for the long-term storage of your Bitcoin have prevailed in all well-known hardware wallets due to the advantages mentioned. In our review section you can find our extensive comparison of wallets like Ledger Nano, Bitbox and Trezor.

The seed should be kept safe

The location of the recovery seed(s) needs to be chosen carefully. After all, losing the seed with a simultaneous wallet compromise leads to the inevitable loss of the digital asset. Basically, never save your words digitally. Even printing it out harbors the risk of being compromised. Instead, write your recovery seed on a piece of paper, or better yet, stamp it in metal right away.

Storing your bitcoin is simple, but not easy. With the right hardware wallet you take a big step towards safe custody.