In traditional technology, creating an account with a company usually involves sharing personal information, which is then stored on the company’s server. But blockchain technology offers a new approach to securing user data, which is now possible without the need for personal information.
In a cryptocurrency wallet, three types of “secrets” are used to keep the wallet and associated accounts safe and private: the seed phrase, the password, and the private keys.
Understanding these three secrets is crucial for wallet security if you’re new to cryptocurrency. In this beginner-friendly guide, we’ll explain each of these three types of secrets in detail and how they work together to keep your cryptocurrency safe and secure.
The Seed Phrase
A seed phrase is a unique set of words your cryptocurrency wallet generates during setup. In a specific order, these words act as the key to accessing your wallet.
Some wallets may refer to this phrase by a different name, such as Secret Recovery Phrase (SRP) in the case of MetaMask, a popular wallet. Another seed phrase name is backup seed phrases or mnemonic phrases.
The seed phrase is generated cryptographically during setup, and only the user can access it, making it impossible for anyone, including the wallet company, to control the wallet.
A 12-word and a 24-word recovery phrase look something like this (under no circumstances should you use those seed phrases):
- 12-word recovery phrase: Avocado Bench Grail Pillow Purpose Pitch Beach Western Trade Again Level Sector
- 24-word recovery phrase: Onion Bench Grail Pillow Purpose Granted Nation Western Trade Again Level Sector Polar Cry Wolf Nephew Tourist Flush Board Citizenship Project Impulse Latin Strong
Wallets that allow users to access their seed phrase are known as non-custodial wallets, as the user has complete control over their funds.
Keeping your seed phrase safe is essential since whoever possesses it has full control of the wallet. Writing it down on a piece of paper and storing it somewhere secure is one way to do so.
Remember never to share your seed phrase with anyone, even in a customer service scenario, as this could lead to the theft of your funds.
These recommendations even come from wallet developers. MetaMask is just one example of a company that reminds its users not to share their SRP with anyone, even in a customer service scenario.
The Password
The password is an easy-to-understand security feature compared to the Seed Phrase. It is solely used to protect the cryptocurrency wallet application.
You’ll be prompted to enter your password to access the wallet through an in-browser extension or smartphone. This extra layer of security helps to safeguard your crypto assets.
It is vital to choose a strong and unique password that is difficult for others to guess. Avoid using common words, personal information, or easily guessable combinations like “1234” or “password.” Instead, use a combination of letters, numbers, and symbols to create a complex password.
It is also recommended to change your password regularly, especially if you suspect someone else might have gained access to it. This will help to prevent unauthorized access to your wallet and protect your cryptocurrency assets.
The Private Keys
Private keys are an essential part of securing your cryptocurrency. When you create a wallet, a private key is generated for each account you create within it. It is a long string of letters and numbers that is unique to each account and provides access to the cryptocurrency stored within it.
An example of a private key is (under no circumstances should you use this private key): E9873D79C6D87DC0FB6A57786331289F4453213123DA61F20BD67FC233AA13269
It is necessary to note that private keys should be kept safe and secure, just like the seed phrase. If someone gains access to your private key, they can take control of your account and steal your funds.
Some wallets allow you to import or export private keys. This can be useful if you want to transfer your account to a different wallet or if you need to recover a lost account. However, it is crucial to keep your private keys secure and never share them with anyone.
It’s crucial to understand that private keys and seed phrases are different things. While a seed phrase can restore an entire wallet along with all the associated accounts, a private key can only import one specific account. It’s also worth noting that some wallets may use different terminology, such as “secret keys” or “recovery keys,” but they all serve the same purpose.
How a Private Key Links to Your Crypto Address
The Seed Phrase vs. The Password vs. The Private Keys
| Criteria | Seed Phrase | Password | Private Keys |
| Definition | A group of randomly generated words that serve as the master key for accessing a cryptocurrency wallet | A secret word or phrase used for user authentication | A long string of characters used for authentication |
| Length | Typically 12 or 24 words | Varies based on platform or service | Varies based on platform or service |
| Generation | Generated by wallet during setup | Created by user or generated by platform | Generated by wallet during setup or created by user |
| Security | High | Low | High |
| User Control | User has full control and responsibility over seed phrase | User may forget or share password | User has full control and responsibility over private key |
| Recovery | Can recover wallet if lost or stolen with seed phrase | May require reset or customer support | Can recover wallet if lost or stolen with private key |
| Use | Required to access and manage wallet | Required for user authentication | Required for authentication and transactions |
| Sharing | Should never be shared with anyone | May be shared with trusted individuals | Should never be shared with anyone |
Key Takeaways
- Blockchain technology offers a new approach to securing user data without the need for personal information.
- Three types of “secrets” are used to keep a cryptocurrency wallet and associated accounts safe and private: the seed phrase, the password, and the private keys.
- A seed phrase is a unique set of words generated during setup that acts as the key to accessing a wallet. It should be kept safe and never shared with anyone.
- A password is used to protect the cryptocurrency wallet application and should be strong, unique, and changed regularly.
- Private keys are a long string of letters and numbers that provide access to the cryptocurrency stored within an account. They should be kept secure and never shared with anyone.
- Seed phrases can restore an entire wallet, while private keys can only import one specific account. Some wallets may use different terminology for these secrets, but they all serve the same purpose.
- The user has full control and responsibility over the seed phrase and private keys, while the password may be forgotten or shared with trusted individuals.
