Understanding Bitcoin Seeds: What They Are and How They Work

If you’ve been following our content, you’ll know that we often emphasize the importance of having control over your Bitcoin balances. The only way to achieve this is by owning your private keys or seeds.

But what does this really mean? It may sound complex, right? Don’t fret; in this article, we’ll break down this crucial technical aspect so you can confidently self-custody your Bitcoin.

What is a Seed?

At its core, a seed is essentially a master key. It refers to a set of words generated by your Bitcoin wallet (hot wallet or cold wallet) software that can be employed to regain and restore access to all your Bitcoin addresses and their associated balances.

Typically, seeds are produced as a sequence of 12 to 24 words— a random order that’s unique for each wallet.

Seeds can also go by:

• Recovery phrase
• Backup phrase
• Mnemonic

How Does a Seed Phrase Work?

The journey begins when you set up a Bitcoin wallet for the first time. The software creates a seed, which will underpin all your future addresses and private keys. It’s vital to write down this seed and store it in a safe place.

In case you ever lose access to your wallet— whether your device is stolen or damaged—you can use this seed to restore access to your funds in a new wallet.

This sequence of words results from an algorithmic process that converts a large set of random numbers (referred to as entropy) into a set of words that are easier to handle. These words are selected from a predefined list of 2048 words known as the BIP39 list, which is a standard introduced to enhance compatibility between wallets and reduce errors when restoring them.

You can find all the possible seed words, representing specific number sequences, on GitHub.

What is BIP 39?

Most modern wallets lean on this 12 or 24-word representation. This standard, established by Bitcoin’s BIP 39, is designed to prevent backup errors. Computers are proficient at handling complex codes and mixed sequences of letters and numbers, but we humans find whole words easier to understand.

To ensure the security of your seed, this standard employs 256-bit encryption with 256-bit numbers, similar to various mechanisms within the Bitcoin network. These 256-bit numbers are incredibly large, with up to 80 digits.

Fun fact: The number of potential seeds surpasses the quantity of sand grains on Earth. There are more possible combinations for a 24-word seed phrase than there are atoms in the known universe! It’s a mind-boggling concept for us to comprehend.

As a result, pinpointing someone else’s keys is virtually impossible, even with all the supercomputers in the world. It would take decades to search through even a tiny fraction of all possible combinations, making such an endeavor both time-consuming and cost-prohibitive. This holds true for private keys as well, as they also utilize 256-bit encryption, rendering them as resistant to hacking as seed phrases.

Interestingly, even if you have multiple different coins in your wallet app, a single seed can recover the balance for all of them.

Why Are Seeds Important?

Seeds are pivotal because they act as a primary defense against losing access to your Bitcoin. If, for any reason, you can no longer access your original wallet (due to reasons like a lost or damaged device), the seed allows you to restore that wallet and reclaim all your Bitcoin addresses and balances.

Related topic: How many Bitcoins are lost forever?

The significance of these words cannot be emphasized enough. It is imperative to meticulously document them on paper in the exact sequence they appear and store them securely. In the unfortunate event of your device being lost or damaged, these words become your lifeline for regaining access to your wallet and all associated balances.

Furthermore, even if you lose the device where your wallet was installed, these words (your seed) can back up your account on another device, ensuring the recovery of all your addresses and balances.

Now, do you grasp the seed’s significance?

Anyone in possession of your seed can gain access to and potentially steal your balances without requiring your physical device. Losing your seed means losing the opportunity to back up your wallet. Therefore, record your seed diligently and protect those words.

From seed inception, the wallet spawns private keys. From the private key, the wallet produces a public key. From the public key, the wallet generates an address. It’s a cascading process that kicks off with the seed.

This is precisely why safeguarding your seed is of utmost importance. With the seed, you have the power to reveal all your private keys and wallet addresses. The seed provides complete access to move any coin within a wallet. On the flip side, owning only a wallet’s address does not reveal its private key. This is why sharing your address for transactions does not pose a risk of unauthorized balance transfers; moving funds from an address requires the private keys.

Therefore, the seed stands as the single most critical element to guard. Losing it means there is no possibility of recovery; if someone else gains access to it, they could potentially take your entire stash.

Safety Recommendations

So, be extra cautious about where and how you record your seed. Never digitally store the seed, snap photos of it on your phone, or email it—these pose massive risks.

Ideally, note your seeds (seed phrases) on paper, stowing them somewhere ultra-safe and out of others’ reach.

Always remember your coin security ties directly to your seed’s safety. If you aim to masterfully self-custody your Bitcoin, we at Bitcoin Starter teach about wallets, their functions, their types, and how to securely stash your seed.