Bitcoin and cryptocurrencies can be challenging. New users deal with unknown jargon, complex technologies, and unfamiliar topics. Some of these terms can leave crypto holders scratching their heads, or, even worse, unwilling to proceed any further.

A term that you may regularly encounter is “seed phrase.” If you’ve found yourself wondering what a seed phrase is and how it impacts your crypto, we’re going to answer that question and more in the following post.

Before we get started, we do want to note that seed phrases and private keys are not the same things. However, both would give anyone who had them access to the crypto in your wallet.

What is a Seed Phrase?

Your seed phrase is a group of words randomly generated by a crypto wallet. Typically, you’ll receive these words during set up. Keep track of these words, because you’ll need them if you ever need to restore access to your wallet.

Even though they’re similar, don’t confuse your seed phrase or recovery phrase with your private keys. These are an alphanumeric passcode that lets you perform transactions to and from your wallet.

As we mentioned, you need to protect both to keep your funds safe and secure.

How Do Seed Phrases Work?

While you keep cash and credit cards in your physical wallet, Bitcoin and crypto wallets are totally different. The cash you keep in your wallet is also called fiat currency and is a physical representation of the currency’s value. That’s not how crypto wallets work.

The crypto you “own” doesn’t actually reside within the wallet. It sits on the blockchain as data. That means so long as you have the seed phrase and private keys to your wallet, even if service is interrupted, your funds stay safe and secure on the blockchain.

No matter what type of wallet you choose - software wallet, hardware wallet, or web wallet - the seed phrase is created when you make a new one. The phrase is made up of words selected from the BIP39 standard. By using these words, your wallet immediately touts 128-bit encryption. The vast majority of seed phrases are typically 12 or 24-words long and are always unique to the wallet being created.

When your seed phrase is created and confirmed during wallet creation, your private master key is generated. The private master key is used to generate your private keys, which allows for sending and receiving crypto. Remember to record your seed phrase exactly as it's listed, otherwise you may not be able to recover your crypto.

How to Keep Your Seed Phrase Secure

Now that you know what your seed phrase is, let’s discuss a few ways to keep it secure. The last thing you want to do is expose your seed phrase and put your funds at risk.

Keep Your seed phrase offline

You store your passwords in a password manager, so it only makes sense to keep your seed phrase in the same place, right? Not so fast.

The seed phrase you use is the master key to your Bitcoin wallet. If you want to prevent hackers and scammers from getting hold of your seed phrase, you’ll need to go the extra mile when it comes to protecting it. That means you want to take as many precautions as possible to secure your seed phrase.

One of the best ways to secure your seed phrase is to simply write it down on a piece of paper and store it in a safe place. However, remember that pen and paper are susceptible to liquid or fire and could deteriorate. Some users who prefer to write down their seed phrase may decide to have it laminated.

A more expensive approach to storing your seed phrase offline is through the use of a steel storage device. These devices are fireproof and water-resistant, which makes them a much better option than paper. If you’re not familiar with these types of recording devices, do a quick search for steel seed phrase recording - you’re likely to find something that catches your eye.

Use a secure safe

Another offline, albeit less portable option you might consider is to keep your seed phrase in a secure safe. Why use a safe? For starters, they’re typically water-tight and fireproof. If your home catches on fire or experiences a flood, your safe will protect your seed phrase.

Additionally, safes are thick and usually consist of a high-quality steel or dense material. Being thick makes it difficult to cut through, which adds an extra layer of security to your seed phrase. Plus, if you find a safe with a biometric locking mechanism, the only person who will be able to access your safe is you.

Store it in the cloud

A third way you can protect your seed phrase is by keeping it in a cloud-based vault. This is ideal if you’re the type of person who forgets where you put things. By storing it in a cloud-based vault, if something happens to you, your family will know how to access your funds. That may not be the case if you’re keeping your seed phrase in a desk drawer or in your safe. Who knows how long it would be before they found it?

Using a cloud-based vault gives you the best of all worlds. You get a hacker-proof storage that’s kept offline that protects your seed phrase. Plus, with a cloud-based vault, you can split up your seed phrase and keep it in multiple locations. Pretty nifty, right?

Lastly, most cloud-based vaults offer a mobile app, so you’ll have your seed phrase with you wherever you go. Don’t worry. These apps are secure, making use of two-factor authentication along with additional safety features that keep your seed phrase secure. They’ll also allow you to share the details of your seed phrase with a trusted individual, so if the worst should happen, they’ll know where your crypto is kept.

Protect Your Bitcoin

When you set up your Bitcoin Depot wallet (it’s built right into our app), you’ll have a seed phrase you need to keep safe. Anytime you get a new device or inadvertently lose your information, you’ll need that seed phrase to recover your wallet. That’s why it’s so important that you keep your seed phrase safe and secure. Use one of the methods listed above to ensure no one takes the Bitcoin you purchased from one of our thousands of Bitcoin Depot ATMs.