Bitcoin is a purely digital currency which means it only exists as information; the digital entries that represent your Bitcoin on chain and in your wallet use cryptography to secure its transactions and prove that you are the only one who has permission to move that value. One of the most important cryptographic concepts in Bitcoin is the private key or seed phrase. A private key is a 256-bit number that is used to sign transactions and prove ownership of Bitcoin.
Without a private key, you cannot send Bitcoin or access the wallet that holds those funds. While the funds still exist on-chain and can be seen by any node or block explorer, the secret key to access them are your responsibility.
If someone were to gain access to your private key, they could steal your Bitcoin and if you lose your private key and have no copies or recovery method, then that Bitcoin is lost forever. Therefore, protecting your private key and storing it safely is essential.
There are several ways to store your private key. You can store it on a hardware wallet, a software wallet, or even on a piece of paper; another popular storage method is to etch it into a metal plate.
Your private key is your private property.
Your private key is the most important piece of information in your Bitcoin wallet. It is used to sign transactions and prove ownership of your Bitcoin. In Bitcoin, there are no custodians to help you pause accounts, recover funds or issue clawback transactions. There is no way to prove you own Bitcoin with an ID or a document; your private key is the only method of proof recognised by the network.
He who owns the private key owns the Bitcoin.
If someone were to gain access to your private key, they could steal your Bitcoin. There are many ways that your private key could be compromised. You could fall victim to a phishing scam, your computer could be infected with malware, or you could simply lose your private key. If your private key is compromised, you will lose access to your Bitcoin.
There is no way to recover your Bitcoin without your private key. That is why it is so important to protect your private key. You should never share your private key with anyone, and you should store it in a safe place.
Why You Need to Protect Your Private Key
You can create as many private keys as you like; there is no limit, and you can use them however you like, but if you’re going to use a set of private keys for long-term storage, you might want to take care not to expose them in any way.
Here are some tips for protecting your private key:
- Never share your private key with anyone. Not even your spouse, your children, or your best friend.
- Store your private key in a safe place. This could be a hardware wallet, a software wallet, or even a piece of paper.
- Back up your private key. This way, if you lose your original copy, you will still be able to access your Bitcoin.
- Don’t store your private key on an internet-connected device: You have no control over all the software and connections on your laptop or smartphone; if there is a breach on it, your keys could be exposed.
- Split up your phrase: Don’t leave it all in one place; if someone can find your entire set of keys, they can easily restore your wallet and access your Bitcoin.
What is BIP39?
In the early days of Bitcoin, losing your private key or having an incorrect copy was a pain many would have to go through before new methods of private key creation came around that were more user-friendly. Your master private key was a long string of text containing letters and numbers and wasn’t exactly easy to read, and remember was very easy to miss a letter or number, and poof goes your Bitcoin.
Something had to be done to improve wallet creation and recovery, and Bitcoin wallets have come a long way in the last decade. If you’re using a modern wallet, it’s likely already implementing BIP39, which turns your private key into a 12, 18 or 24-word mnemonic sentence.
Since these words are human-readable and they are based on a simple set of words, they are easier to store, remember and even if you make a mistake in spelling 1 or 2, possibly guessing them could lead you to recovery.
If you decide to migrate your keys to a different wallet, you can re-create your crypto holdings in your new wallet by feeding it your original BIP39 mnemonic sentence. This works because so many wallet manufacturers support BIP39.
As a result, not only does BIP39 simplify wallet and key management, but it also opens the door to much simpler wallet migration. Although it is a “Bitcoin Improvement Proposal,” in practice, BIP39 is a de facto standard that has greatly evolved the cryptocurrency industry.
What is BIP39Colours?
Launched by user EnteroPositivo, BIP39Colors offers a BIP39-compatible secure approach to storing Bitcoin seeds. Allows you to convert a 12/24 mnemonic of words or word position from a BIP39 word list into a colour pallet and vice versa.
As mentioned earlier, your private key is all you have to prove your Bitcoin ownership, so finding new and interesting ways of protecting it is a must. While BIP39Colours might seem like a novelty to some, it could be used to encode one of your multi-sig keys in a different format to give yourself another layer of security should your keys be compromised or stolen.
A practice that has a clear application for making your Bitcoin harder to recover for someone who doesn’t know your unique recovery process.
Why colour code your seed phrase?
As seed phrases become more popular in the cultural zeitgeist, they will become a target for cybercriminals and your old phased home invaders. As these criminals research Bitcoin holders and how they store their wealth, items like hardware wallets and seed plates become easy to spot, while paper seed phrases won’t be overlooked as meaningless words any longer.
If you live in a country where home invasions are a regular occurrence and you do keep your seed in your home, BIP39colours could be an added layer of protection.
By representing the mnemonic as colours, BIP39 Colors adds an extra layer of obfuscation. Colours can be found in various sources such as website source code, colour palettes used by artists, images, etc., making it less obvious to hackers or thieves.
Alternative recovery method
If you feel like you need another recovery method outside of remembering your 12-24 words or want a copy different from your current paper or steel wallet, a colour wallet could be an option.
Order Doesn’t Matter
The app allows for random storage of seed components, eliminating the need for the correct positioning. So you can shuffle and store the colours in any order and recover the original BIP39 mnemonic. If you store each colour in different parts, no one will know that those colours correspond to parts of a mnemonic phrase!
Warning before you dive in.
BIP39 project is open source; you can get the source code from GitHub and play around with an online version, but please do not submit active private keys to an online version as you can expose your keys.
If you’re serious about using BIP39 colours, running the software on your local and using it offline would be best.
Do your own research.
If you want to learn more about BIP39Colours on Bitcoin, use this article as a jumping-off point and don’t trust what we say as the final say. Take the time to research, check out their official resources below or review other articles and videos tackling the topic.
Do you take self-custody of your stack?
If you’re new to Bitcoin and have not ventured down the self-custody rabbit hole, what is stopping you? If you’re already self-sovereign, how has the experience been since you took hold of your funds? Let us know in the comments down below. We’re always keen to hear from bitcoiners from around the world.