So you popped your crypto cherries. Bought some Bitcoin, kept them in your own super secret wallet that no one else knows about. You bookmark your watchlist, your portfolio app slowly follows your stash as it grows in value.
Well and good for years. Until your phone/computer/hardware wallet is gone.
No problem. You have backed up your recovery phrase, just like you were taught when you first learned about crypto security.
But then it doesn’t work. You enter the sentence and repeat it, word for word, three times checking the spelling and order. But the “next” button on your new wallet will remain greyed out.
If this has ever happened to you, you are not alone. A cursory search on the popular Bitcoin forum Bitcointalk and on Bitcoin subReddits turns up more than a handful of people with the same problem.
- “Recovery Phrase Doesn’t Work, $200 Reward.” (Bitcointalk)
- “Invalid recovery phrase” (Rto process)
Like you, they just discovered the awful truth about backing up Bitcoin wallets – simply relying on your recovery phrase is nowhere near enough.
If you’re not new to Learn Crypto, then you’re probably wondering why this article suddenly claims that storing a secret recovery phrase isn’t nearly enough to back up a crypto wallet.
In reality, the recovery phrase is all you need as a backup (and we recommend keeping them in separate secure locations, maybe even a vault). For most people and in most cases, they should be able to restore access with just the phrase.
However, there are some cases where other information is also important to ensure a smooth recovery process – as evidenced by the cases mentioned earlier in the article, where people have found that they can lose access to their crypto wallets by diligently checking their to use. saved secret recovery phrase.
Today, a secret recovery phrase can be 12, 15, 18, 21, or 24 words. Of these, 12 and 24 are the most common – so count the individual words and make sure they add up.
Order is important, so make sure you’ve written the secret recovery phrase in the correct order. If you mix them up for extra security, make sure you know how to derive the correct order.
Spelling counts too, and some words can look alike if not carefully noted. In one of the examples we shared above, the user’s problem was finally there dissolved when it was discovered that their secret recovery phrase was spelled incorrectly. The confusion? The word “annual” with “animal”.
When creating a wallet, you are usually prompted to re-enter the recovery phrase. Do this manually by typing each word from your written backup instead of copying and pasting from a digital copy. This ensures that you have written them down correctly.
You may even want to try a restore before using your new crypto wallet – by restoring it on a new device to see if the phrase works.
A big problem with crypto wallets is that there are so many of them.
The good news is that most wallet software developers have tried to adhere to common standards. This means that most wallets understand how to properly use a seed phrase.
A wallet’s ability to do this is outlined in a type of documentation called “Bitcoin Improvement Proposals” or BIP.
BIPs describe how everything works in Bitcoin.
A version of how a seed sentence works is described in the documentation referred to as BIP39. This is also currently the most common way to derive a seed sentence. Wallets using this version would use a BIP39 decoy path.
Under the hood, a BIP39 wallet can translate your 12 to 24 word seed phrase into the actual seed it understands.
The bad news is that not all wallets use BIP39. Other competitive standards include BIP44, BIP49And BIP84. Some don’t even use a standard and others don’t implement the same standard in the same way.
So it is very important that you record the diversion path for your wallet when recording your seed phrase. That way you can use a wallet that understands your seed phrase when you recover it.
This is all related to the above, but it is also important to note the name of your wallet, along with the version you are using and the type of crypto you are using.
This is because some crypto wallets no longer work with older versions, or do not support the same coins on a different version.
So if you’re using Electrum, for example, you might want to include not only your seed phrase, but also:
- The version number (currently 4.4.3 as of May 2023)
- The device you are installing on (Android, Windows or Mac?)
- The crypto you use (Bitcoin)
Ouch, we know. We have had to use so many technical terms in this article because the documentation in crypto wallets will refer to them that way, and that is how you will find them, if they are available.
Now that you know this, it’s worth noting that not all crypto wallets make this information readily available, if at all. It’s best to avoid wallets that don’t even publish this information in case they stop developing and your new device doesn’t support the wallet in the future.
Fortunately, there is a handy website called WalletRecovery that publishes an up-to-date list of major crypto wallets along with this information: https://walletsrecovery.org/.
It’s a good place to turn if you ever find yourself locked out of all your money because your seed phrase didn’t work.
To get this out of the way, you may come across different terms depending on the wallet, which actually refer to the same thing.
We use the term secret recovery phrase here to refer to the fact that it is a phrase that you will use to recover a wallet.
They are also called seed phrases because the phrase acts as a seed for your wallet, from which the other components are derived – the private keys and the public keys.
Some wallets call these secret phrases because… they’re supposed to be a phrase known only to the owner.
Finally, you may also come across the term mnemonic expression. Mnemonic means “easy to remember. The phrase is so named because of the shape of the modern seed: a series of readable words that are easier to remember than a long string of random characters…that is, if you understand the language!
They all refer to the same thing.
Another point of confusion with crypto wallets is the relationship between private keys and seed phrases. Therefore, we conclude this article with a brief examination of these two components of a crypto wallet, how they are related and how they work together.
You know that popular mantra about “Not your keys, not your crypto”? It is often suggested that you only need your private key to manage your crypto. And that’s not untrue – your private key gives you access to the cryptocurrency on the blockchain.
The private key is and has always been the central element of crypto. Whenever you create a blockchain address, you generate both a private key and a corresponding public key.
The public key is the visible crypto address you can share, it’s how people can send you crypto. With the private key, you can unlock that address, access what’s in it, and send crypto out of it.
Now this private key itself poses a bit of a user problem because it’s a really long string of random alphabets and numbers. Technically, the private key is a 256-bit number, which is usually represented as a 64-character line.
Now imagine having to enter a 64 character password every time you use crypto! Easy to make mistakes and completely impractical to use, right?
In the very early days of crypto, wallets actually generated a set of private keys and public keys. Every time you needed new addresses, the wallet would have to generate a new set of keys. You should back up the different wallet files for all these different sets.
Later on, wallets implemented a “master seed” system that created a single seed for each wallet. This seed would suffice as a backup, as all future keys generated from that wallet can be determined from that same seed.
Hence the term “deterministic wallets”, wallets that first used a single seed as a backup.
The most advanced form of deterministic wallets arranges everything in a tree-like structure, starting from the seed. The seed can produce the parent keys, the parent keys can produce the child keys, and so on… in a hierarchy.
This is where the term hierarchical deterministic (HD) wallets comes from – you might see this used to describe many popular wallets today, including Electrum, Trezor, Ledger, and MetaMask.
However, seed sentences still consisted of quite a long string of characters, so the next generation of wallets improved on the seed technique, making it a readable way for humans to use a number of words
Thus was born the term “mnemonic” or “secret recovery phrase” that we use today.
So the recovery phrase is what you could say the other side of the whole coin is. In other words, the secret recovery phrase is basically all of your private keys – just in a different format that’s easier for you to understand.
So there you have it. A complete guide on how to properly backup your crypto wallet by saving the secret recovery phrase as well as all identifiable information from your wallet.
That way you’ll be extra confident and better equipped to not lose access to all your money just because you didn’t save your seed phrase correctly.
