The security of your crypto wallet is crucial. That means rigorous security procedures and attention to detail regarding passwords, antivirus software, seed phrases, and more. Simplistic passwords and outdated software can lead to disasters like hacks or other major breaches. Worse: lost or forgotten seed phrases mean lost account access – and loss of your funds. Forever.
The first step in owning crypto is understanding account security. Let’s start with the fundamentals:
Wallet security measures
There are two primary types of crypto wallet security measures: seed phrases and private keys.
A seed phrase is a randomly generated combination of words, usually 12 to 24, used to secures a blockchain wallet. It’s a master key and must be entered in exact sequence to access a wallet. If the phrase is lost, forgotten, or entered incorrectly, the corresponding wallet cannot be accessed.
Private keys are cryptographically secure 256-bit numbers that provide wallet access. They consist of random numbers, encoded e.g. as a hex or as a base58 encoded string. Either way, it makes them complex and difficult to hack.
Seed Phrases – what are they?
A Seed Phrase (or recovery phrase), is a randomized combination of words that secure your blockchain wallet. It stores the data required to access or recover cryptocurrency or crypto wallets. Should your hardware break or your phone is lost or stolen, you can use the Seed Phrase to recover your account.
Whenever a new wallet is created using a Seed Phrase, the phrase is generated from a list of 2,048 English words specified in the BIP39 Standard. When accessing your account, remember to always use the Seed Phrase in the exact sequence.
Again, your Seed Phrase is the ONLY way to access your account. Losing or forgetting it means losing access to your wallet – and your funds. Make sure to store it safely.
Five ways to store Seed Phrases
1. Write it down on paper
One of the most crucial steps in securing your seed phrase is to write it down on a piece of paper which you store in a secure environment. Writing it down offline excludes the risk that your notebook gets compromised or keystrokes recorded.
2. Seed splitting method
This method involves dividing the Seed Phrase into two or more portions and storing them separately, digitally or physically. Because Seed Phrases only work in the exact sequence, cutting them up into pieces makes it difficult for hackers to access your wallet.
3. Store in a physical safe
A physical locker is a good way to keep your funds from cyberhacking. However, be sure to use the above-mentioned seed splitting method to ensure full safety. You can also hide the split seed phrases in multiple spots – the more obscure location, the better.
4. Password-protected flash drive
Affordable and easy to use, flash drives are good for offline storage. However, security can be compromised if criminals get access to it. Therefore, it’s safer to split the seed phrases between two or more flash drives and store them separately in multiple secure locations.
Seed Phrases are designed to be readable compared to randomized numerals. Even though it’s challenging to memorize a 12 – 24-word phrase, it’s not impossible. However, while through a combination of practices, it’s possible to memorize your Seed Phrase, we recommend using phrases. Also securely store it in a physical location, like a steel safe, as described above
So, what’s the best method?
While all the above are options, in terms of security the best way is to keep everything offline: split up, and stored in separate locations. Also, be careful when using password managers because a compromised device can lead to compromised Seed Phrases and keys.
Additionally, avoid taking a picture or screenshot of your Seed Phrase and storing it in your phone or the Cloud. Phones can be lost or stolen and Clouds can be breached by hackers.