A single starting point when deriving keys for a deterministic wallet.
The seed phrase (also known as seed recovery phrase, backup seed phrase or
mnemonic phrase) refers to a generated list of 12 to 24 words, in a specific order, used by crypto wallet users to regain access and control of their funds on-chain. This also means that any third party who knows your recovery seed can potentially move your funds to another wallet address.
The seed phrase is a randomly-generated string of words cryptographically derived from the wallet’s
private key and paired with 12,18 or 24 words (as per the user’s discretion) from a list of 2,048 English words called the
BIP39 Wordlist. This sequence can also be converted to a corresponding series of mapped numbers that provide the user access to his wallet and its public-private key pair.
A crypto
wallet’s software is designed to generate these phrases, which users are then tasked to keep. This ensures that even if the hardware malfunctions or gets lost or stolen, they can always download the wallet software again and use the seed phrases to restore access to their assets back.
Keeping a copy of the seed phrase offline is advisable because it makes it invulnerable to hacking. Seed phrases stored on devices connected to the internet are considered unsafe and are not recommended.
The recommended method of keeping a copy of a seed phrase is to write it down and store it somewhere secure like a vault or a safe box. Do not leave a copy of your seed phrase in any format, not even a print file or photo.
Hardware (cold) wallets can securely store private keys without the security risks that come with online wallets. However, the security of your wallet is only as strong as the method that you use to hide your recovery seed.