What Are Seed Phrases and Why Are They Important in Crypto?

As more people become interested in investing in cryptocurrency, the importance of seed phrases becomes increasingly relevant. Seed phrases are crucial in securing your digital assets, as they serve as the master key to your cryptocurrency wallets.

In this beginner’s guide, we will explore what seed phrases are, how they work, and why they are so important in the world of crypto.

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What Are Seed Phrases, and Why Are They Important?

Seed phrases, also known as mnemonic phrases, are a series of words that serve as a backup to your private key.

Private keys are the unique codes that enable you to access your cryptocurrency wallets and execute transactions on the blockchain.

They are important because they allow you to regain access to your wallet if you lose your private key. They are also useful in cases where you need to transfer your cryptocurrency to a different wallet.

Most are typically composed of 12 or 24 words chosen from a list of 2048 words.

The order of the words is important, as it determines the keys that will be generated. The use of these codes is essential to ensuring that you can always gain access to your crypto, even if you lose access to your private key.

Understanding the BIP39 Standard for Seed Phrases

The BIP39 standard is a protocol used to generate seed phrases for cryptocurrency wallets.

BIP stands for Bitcoin Improvement Proposal, and BIP39 was proposed by a developer named Marek Palatinus in 2013. The BIP39 standard specifies the list of 2048 words that can be used in seed phrases as well as the rules for generating the phrases themselves.

The standard also includes a checksum feature, which ensures that the seed phrase is valid and has not been tampered with. This checksum is generated by taking the first four bits of the SHA256 hash of the seed phrase and adding them to the end of it. The resulting checksum is used to verify the seed phrase when it is entered into a wallet.

How Seed Phrases Work: Connecting Phrases and Private Keys

Seed phrases work by connecting phrases and private keys.

For example, when you create a new wallet, the wallet generates a private key. This private key is then used to generate a public key, which is your blockchain address. Then the code is used to generate a master key, which is then used to generate the private key.

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When you enter your code into a wallet, the wallet uses the BIP39 standard to generate the master key.

Next, the wallet uses this master key to generate the private key, which is used to access your wallet and execute transactions on the blockchain.

This code is important because it allows you to regenerate the master key if you lose your private key, ensuring that you always have access to your crypto.

Examples of Seed Phrases in Crypto

Here’s an example:

Examples of Seed Phrases in Crypto

This phrase consists of 12 words chosen from the BIP39 word list. It can be used to generate a master key, which can then be used to access a cryptocurrency wallet.

Some can also be longer, consisting of 24 words instead of 12.

Longer codes provide greater security, as they are less likely to be guessed or cracked by hackers. However, longer codes can be more difficult to remember, so it’s important to strike a balance between security and convenience.

Choosing Your Seed Phrase Length

When choosing your phrase length, it’s important to consider both security and convenience.

The 12-Word

12-word seed phrases are more convenient, as they are easier to remember and can be quickly entered into a wallet. However, they are also less secure, as they have fewer possible combinations and are therefore more susceptible to brute-force attacks.

24-Word Seed Phrase

24-word phrases are more secure, as they have a greater number of possible combinations. However, they are also more difficult to remember and can be more cumbersome to enter into a wallet.

Ultimately, the choice between a 12-word and 24-word seed phrase will depend on your individual needs and preferences.

How to Safely Store Your Phrase: Tips for Securing Your Crypto

What are Seed Phrases
Source: Coinbase

Since seed phrases are the master key to your digital assets, it’s essential to keep them safe and secure. Here are some tips for storing your seed phrase safely:

Use a hardware wallet.

Hardware wallets are physical devices that store your cryptocurrency offline, making them much less vulnerable to hacking and theft. Many hardware wallets, such as the Ledger Nano S and Trezor, come with seed phrase recovery features, allowing you to recover your crypto in case your device is lost or stolen.

Write down your code.

One of the simplest ways to store your code is to write it down on a piece of paper. Be sure to keep the paper in a safe place, such as a fireproof safe or safety deposit box. Avoid storing it in a digital format, as this can make it more vulnerable to hacking and theft.

Use password managers.

Password managers, such as LastPass and KeePass, can be used to securely store your information. These services encrypt your data and allow you to access it with a single master password. However, be sure to choose a password manager that has a strong track record of security and reliability.

Use seed recovery phrases.

Many cryptocurrency wallets, such as the Exodus wallet, offer seed recovery phrases as an additional layer of security. These are used to recover your seed phrase in case you lose access to your wallet. Be sure to store your seed recovery phrase in a safe place, such as a hardware wallet or safety deposit box.


Seed phrases are a vital element in securing your digital assets. They serve as the master key to your cryptocurrency wallets, allowing you to regain access to your crypto if you lose your private key.

By understanding how they work and taking steps to ensure their safe storage, you can protect your digital assets and gain peace of mind knowing that you always have access to them.