The crypto wallet seed phrase is a mnemonic phrase, or a group of easy to remember words, that is your only backup to your crypto wallet.
You are not supposed to write your seed down anywhere else than on paper, we all agree on that.
You also must not give it to anyone: Whoever has the seed has the private keys, and whoever has the private keys has the coin.
But what to do with the actual wallet seed?
When it comes to safely storing your crypto seed, the community is divided.
Did you know?
Most bitcoiners will tell you to put it on a piece of steel and forget about it.
But is it really the best idea, given that we now have four kinds of bitcoin seeds that are not mutually compatible?
That’s right, just having a seed phrase doesn’t guarantee you will be able to use it ten years from now.
Bitcoin wallet clients currently support one or more of the following seed phrase formats:
- First generation hardware wallets use BIP39 seeds
- Electrum wallets use their own seeds, but so far support BIP39 as well
- New Trezor models use brand new SLIP39 seeds since 2019
- Lightning wallets have their own seed algo because BIP39 was not secure enough
Keep up with the tech
Just knowing that seed phrases develop is knowing more than most hodlers do these days. (Alarming, isn’t it?)
If you trade actively or if you get paid at least partially in bitcoin, you have another advantage.
Chances are you move money around at least a few times a week, which is where your advantage lies.
The technology behind crypto wallets keeps developing. Simply using crypto wallets will force you to stay somewhat in the picture.
If nothing else: Ledger Live, Trezor interface or Electrum desktop app - all these popular wallets clients now feature a little box that will nag you whenever there is an important software update available.
Your 2021 tradeoff
If you regularly transact with crypto, you may be more vulnerable to getting hacked or phished - depends how safe you keep your online activities.
But your risk of losing access to your crypto in more distant future is far lower. These losses will happen due to lost seeds and incompatible software.
Keep the seed phrase at hand
It’s great to have your seed phrase on a steel plate that is fireproof and safely stored in your lawyer’s office, but it’s even better to have another place where your seed is quite safe but also available.
Whenever you update your hardware wallet, you might need your seed phrase to recover access. Everyone knows that.
It’s no good when the seed phrase is on another continent and you cannot move around due to covid restrictions.
Simply put: If you treat your wallet seed as something sacred and untouchable, you are putting yourself at risk.
For those of you willing to get their hands dirty, below is a way to safely and practically store your seed in any paper notebook that you use on a daily basis.
Paper Seed with PIN code
This could very well be a commercial service, but that’s for someone other than me to leverage.
The idea is to shift four positions in the seed phrase. These positions are your PIN code, which you have to remember.
- You need to remember your PIN code, but the PIN can be safely stored digitally. Make a secure note in LastPass. As long as you don’t store it at the same place as the seed, it’s safe.
- Do write the seed down into a table as explained below. It’s fairly easy to do the shifting as long as you see the positions laid out in front of you.
- Practice always helps to get the grip on it. Nobody gets born being natural at this.
Here is how to shuffle a BIP39 seed with a PIN step by step:
1. Generate a wallet seed
Duh. Let’s say you’re using BIP39 mnemonic seed phrase of 24 words.
Write it down on paper into four lines by six words.
(This is not a real bitcoin seed btw, wallets come with special lists of words to be used for seeds)
2. Choose a PIN code
Four numbers, just like a PIN code you use for your bank card. Each digit must be between 1 and 6.
You must remember your PIN code.
We’ll go with PIN code 1624.
Let’s now circle the first word in first line, sixth word in second line, second word in third line, fourth word in fourth line.
3. Turn anti-clockwise
Shift the position of the marked words to the left.
From the original seed ….
… becomes the shuffled seed:
4. In your notebook, write down the shuffled seed
Recovering real seed phrase from shuffled seed
1. Write down your shuffled seed on a piece of paper
2. Recall your PIN and circle the words that need to be shuffled
3. Turn clockwise
Shift the position of marked words to the right:
And that’s you done.