The safe custody of cryptocurrencies also involves the seed phrase, a fundamental element of any wallet

Store your cryptocurrencies

Those who hold cryptocurrencies know well that the seed phrase is the most important thing there is, to be protected and preserved with the utmost care. However, this often does not happen and capital is put at risk.

The aim of this article is to explain well what the seed phrase is and why it has all this relevance. Furthermore, we will also see some advice regarding conservation.

For maximum completeness, however, we will start from the basics, quickly touching on the crypto wallet and the public address. You will also find many links to specific insights.

At the end of reading you will know these concepts even if it is the first time you hear about them, I promise!

Wallet crypto

Let's start with the crypto wallet, the indispensable tool for storing your virtual currencies.

We have often made comparisons with the traditional wallet created to store coins, banknotes and credit cards. The wallet performs this task with cryptocurrencies, even if there are some significant differences with the "cousin" that we put in our pockets or purses.

First of all, cryptocurrencies only exist virtually thanks to different blockchains such as Bitcoin and Ethereum. Therefore, we will not have to hold any tangible assets.

After this obviousness, let's move on to the fundamental characteristic of the wallet, which is that it actually does not store any cryptocurrency. We may have millions of euros in coins and tokens, but not even a cent will be in the wallet. This tool acts as a gateway to funds which, in reality, are "deposited" on the blockchain. Let's explain better.

Let's imagine that our wallet has the name ABCDE and that there is 1 BTC on it. The bitcoin in question will be stored on the blockchain and not in the wallet. At the same time, the blockchain will have labeled this specific bitcoin as the property of the ABCDE wallet; consequently, only those who have access to the ABCDE wallet will be able to access bitcoin.

Regardless of the technical issue just described, the wallet is the indispensable tool for operating with the blockchain, receiving and sending coins and tokens, operating on DeFi, creating NFTs and much more. Safely storing access keys is essential: spreading them would be equivalent to handing over the ATM complete with PIN to anyone in the world; and someone, we are sure, will run to the first counter to withdraw everything that is available!

"Without a wallet you cannot interact with the blockchain"

Address crypto

Let's move on to the crypto address. Each crypto wallet has at least one unique address which, again using a traditional example, resembles the IBAN of the bank account.

When we want to receive money into the account, we must provide the sender with the address to which he must send it, i.e. the IBAN. On the contrary, if we were to send money, we would need to know the recipient's IBAN.

In the crypto world this happens with the address. If A has to send 1 ETH to B, he will necessarily have to know the latter's address. Or, if A were to receive money, she will have to provide the sender with hers.

The address is public, meaning that:

• We can, indeed, we must, provide it to receive money;
• It is displayed by the recipient upon receipt of a transaction;
• Anyone can use one of the many scanning services and essentially mind their own business.

On the last point, here lies one of both the positive and negative characteristics of crypto and blockchain: transparency. All transactions and balances can be viewed by anyone, which is not possible with a traditional bank account.

For this reason, there are alternatives that put privacy at the center (like Monero), but which also generate criticism.

At this point we can move on to the seed phrase, the real subject of the article.

"The address is public and can be consulted by everyone"

Seed phrase: what is it?

When we generate our address, a private key is also created which gives access and power over it. The seed phrase (also known as recovery phrase) is a list of words used to generate private keys.

Thanks to the seed phrase we can take control of the cryptocurrencies deposited by any device. To be clear, if we installed a wallet on our computer and it was lost, using the seed phrase we could recover the funds from another computer without any problem.

The seed phrase generally appears as a list of 12 or 24 words, which should be written down in the exact order in which it is provided. Each word is drawn from a set of 2048 words. This solution allows you to obtain a very high entropy, which makes it impossible to guess the seed phrase by chance. Even if we try, it could take millions of years, if not billions, even using special computers.

We understood that the seed phrase gives access to the funds present on a specific address. Consequently, we will have to keep it secret and keep it safe: let's see how!

How to store the seed phrase

Let's see what not to do to avoid the dangers as much as possible:

• Avoid just memorizing it;
• Do not save the seed phrase to the cloud or computer devices, even if the file is protected;
• Don't spread it;
• Avoid saving it on perishable media (such as paper);
• Never write it down if asked; the only exception is the recovery of our funds, but otherwise don't do it: it would certainly be a scam aimed at stealing the cryptocurrencies of the unfortunate people;
• Never carry it with you.

And now here are the practices to follow:

• Always transcribe the seed phrase on a physical medium, such as the appropriate metal plates, so as not to run any risk even in the event of floods or fires;
• Keep it in a secret and safe place; for large amounts, a safe deposit box at a bank may be ideal;
• If we really wanted to save it on paper, transcribe it into two copies to place in different places;
• If we have to take it with us, don't leave it in objects that can be lost or stolen (such as a wallet or backpack) and opt for a pocket with a zip or button.

In any case, we repeat, NEVER SPREAD IT.

To increase security, there are solutions to encrypt the seed phrase, which however increase operational complexity.