Why Is a Bitcoin Wallet Seed Phrase So Important?

Matt Gibson| Feb 27, 2018

How To

When you set up a Bitcoin wallet you are told to write down either 12 or 24 words (depending on the wallet) and to keep them safe somewhere and never put them online.


Sometimes it’s not clear why you have to do this, or what these words are even for.


This blog will hopefully make that clear for you.


A seed phrase is a list of words that is generated from your private key, the way to think of it, is that it is your private key in a more accessible format. So anytime I mention ‘seed phrase’ or ‘private key’ in this blog I am actually talking about the same thing.


Here is what a private key looks like in its original form before it is turned into a seed phrase:





So what is a private key?


A private key gives you access to your Bitcoin on the Blockchain. Each Bitcoin wallet has its own private key. If I send some Bitcoin to you, they aren’t sent into your wallet, they are sent to your wallet address on the Blockchain and your wallet simply gives you access to that Bitcoin via your private key.


If this is a bit confusing, just think of your private key as a ‘house key’ which unlocks your front door and in the same analogy the address of that house would be your public wallet address.


What this means is that if someone gets access to your key, more specifically if someone finds your seed phrase of 12 words, they can claim access to your Bitcoin and can steal it from you in seconds. This is why when you write down your seed phrase you must store it safely somewhere and ideally offline. If you put it online, there is a chance someone could hack your device and get access to it.


If you lose your phone with your wallet on it, your seed phrase is the only way you can be sure that you still have access to your Bitcoin. You simply just need to ‘re-import’ your Bitcoin wallet via your seed-phrase through the same or a different wallet provider.


Why turn a private key into a seed phrase?


By turning that long line of numbers and letters into 12 random words, it is easier to display and write down without making mistakes. You may ask yourself if 12 random words is less secure then a string of numbers and letters?


Well, the BIP39 protocol used to turn the private key string into a seed phrase has a wordlist of 2048 words of choose from. So if the phrase contains only 12 random words, the number of possible combinations would be 2048¹² or the number 5 plus 39 zeros after it. That basically means it is virtually impossible to hack.


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