Over the years, the awareness of cryptocurrency is increasing globally. Hence, it is important as a trader, an investor, or an investment enthusiast to understand some vocabulary and terms related to cryptocurrency. One of which is the seed phrase that is used to recover blockchain wallets.
In this article, we will be explaining what a seed phrase is, and how it works. Therefore, I urge you to read on.
Definition of seed phrases
A seed phrase is defined as a chain of twelve to twenty-four words called seeds that are used to generate private keys for crypto-wallets. Only those who have created a cryptocurrency account get a seed phrase, and this is usually gotten immediately. The main purpose of the seed phrase is to recover blockchain accounts. These seed phrases contain all your cryptocurrency wallet information, hence its importance. Therefore, you are expected to keep it in a secured place.
It operates just like a fiat currency account with bank verification numbers and pins, but in the case of cryptocurrencies, the seed phrase is like the bank verification number while the private key is like the pin. With an investor or trader’s seed phrase, you can gain access to all the information or accounts linked to the wallet, even if the wallet was previously misplaced or mistakenly deleted. It is the only way to recover blockchain wallets, therefore it is very important that it is secured.
How do seed phrases work?
It is created as you create a crypto wallet, irrespective of the platform used to create the wallet. It is made up of a chain of different numbers represented by a list of words obtained from the dictionary. It is represented as words to make it easy for people to remember because people can easily remember words which they use daily much more than numbers.
This seed phrase is made up of about 2,050 basic and easy-to-learn words that are used to create each seed phrase. These words are similar to encryption because they have been assigned to specific numbers in the blockchain. Therefore, whatever the words are, they can easily be translated to numbers because that is what they represent.
Also, each user has its own specific seed phrase, and it cannot be the same as another user’s own. The generated private key is like a password that you use to access your cryptocurrency at any time, from any place and platform. It is used to recover blockchain accounts.
In case you misplaced your phone changed it, or mistakenly deleted your cryptocurrency wallet, you can recover your blockchain wallet with your seed phrase.
It is not only used to recover blockchain wallets, but it can also be used to interoperate large wallets, i.e., if you don’t want to open 2 or more of your multiple wallets at a time, you just have to input your seed phrase in the current wallet, and your other cryptocurrencies will appear there.
Seed phrases are very easy to use because, in situations where a mistake is made when inputting the seed phrase or when you are writing it down, it can be corrected. This is why they are made up of relatable and regular language vocabulary. Even if the handwriting used in writing down the seed phrase is unclear, it can still be constructed, even if one or two of the letters are missing or unreadable.
It is very important that your seed phrase is secured and well protected against thefts, phishing assaults, and loss. This is because it can be used anywhere to acquire complete access to your crypto assets. When you make a copy of your seed, the seed phrase is automatically stored and not the private key. To make a spare copy of your seed, you must use an offline seed phrase.
How many types of seed phrases exist?
There are 2 types of seed phrases:
- The cold and
- The hot seed phrases.
What are the differences between the cold and hot seed phrases?
| Cold seed phrase | Hot seed phrase |
| Cold seed phrases are more like hard copies and are saved on offline media such as books or journals, as well as USB drives and mobile device memory cards. | Hot seed phrases are similar to softcopies and are saved on laptops, desktops, mobile devices, tablets, and gear like routers. |
| The cold seed phrase is safer than the hot seed phrase because you don’t need to be connected to the internet to access your private keys. | With hot seed phrases you need to be connected to the internet to access your keys, and you can also save the seed in plain text.
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