To take complete control of your bitcoin and enjoy the benefits of the network as it was intended, you need to take full custody of your funds. This means that you own the bitcoin with no third party obligations or risk and can secure your bitcoin in a way where only you can gain access to the funds. The biggest security aspect of your bitcoin is linked to your wallet management. If you’re using an exchange wallet, you take risks from the service provider and their security practices.
When you use a hot wallet, you take on the threat that the device you created the keys on may not be secure, and someone could access those keys.
Bitcoin is revolutionary, I get it, and it takes some time to get used to, especially When you store your coins in a non-custodial wallet like a hardware wallet. It’s a strange feeling knowing you are the only one in charge of your money. Unlike banks, fintech apps and exchanges, you can manage and transact your funds as per your will. This journey of being able to control money without an intermediary is empowering.
Having control over your money is a superpower in today’s age and like any superhero, as the saying goes, “with great power comes great responsibility”. In this article, I will play the role of the Uncle Ben of Bitcoin, and we will dive into the concept of seed phrases and how you can ensure their maximum security.
What is a seed phrase?
A seed phrase, private key or recovery phrase is a generated list of 12, 18, or 24-words that follow a sequential order. The words are unique in order and can only unlock your wallet. This means that whoever has access to a seed phrase owns and controls whatever bitcoin is on the wallet linked to it.
A seed phrase is not a simple password.
A seed phrase is a password that gives you access to a specific wallet on the bitcoin blockchain and the funds housed in that wallet. Unlike a regular password to your computer or digital account, a seed phrase cannot be changed once created. That permanency of a seed phrase means it must always be kept secure and accessible to you at all times. What’s more, is that if it is compromised, you will need to create a new seed phrase and move your funds yourself; there is no one to manage your wallets for you; only you can do that.
If you have a considerable amount of funds in your bitcoin wallet, losing your seed phrase, or having it stolen, could result in the loss of significant amounts of money. So, make sure you consider the best fund management option for you. This could be slitting funds into different wallets with separate seed phrases and having separate security implementations for each seed phrase.Â
How should I store my seed phrase?
You can generate and store your seed phrase online or offline. You should, however, choose carefully as the level of security varies for both; online methods are generally known for lower security. While trying to keep your seed phrase as far away from an internet-connected device is always the more secure option.
If you’re intent on taking your security seriously, your first step would be to acquire a hardware wallet that allows you to generate a set of private keys offline. Once you have your seed phrase, it’s time to secure it with the method you prefer.
Write your seed phrase on a piece of paper
Writing your seed phrase on a piece of paper is the most straightforward approach when converting your digital seed phrase to physical. This is because it is not an online method of storage, simply writing all of your seed phrases on a piece of paper might give you all the safety you need.
Remember to write it out in a way that is legible so you can always understand what words were used and in what sequence they need to be used to restore your wallet.
Once written down, be cautious to protect or laminate your paper. Both paper and ink are easy to destroy. Paper can get destroyed if there is a flood or a fire, which means your seed phrase will be destroyed as well.
Encryption before storing digitally
I would recommend against this method and if you do please consider using a device you never connect to the internet. I understand that some people would like to save their complete or partial seed phrase digitally. If you are going to be storing your seed phrase on a computer, please take extra care to store it safely. It would help if you encrypted it before storing it where you want to keep it permanently.
Don’t save your seed phrase in a simple text or word document on your device or use notes on your mobile device but rather create an encrypted file instead. Also, DO NOT print a physical copy of your seed phrase. Printing your seed phrase can expose your seed data to another device and a device where wireless connections like the internet and BlueTooth connections are not secure.
It’s best to store your keys on a device is if you’re tech-savvy and can create an encryption algorithm yourself (RSA encryption is a good one). Encrypting your seed phrase makes it useless to whoever might discover it since they would be unable to read the meaning. If you would, however, do this, ensure you encrypt with your PC disconnected from the internet and store your private key securely. Please do not use a third-party encryption service; they can access your bitcoin. This method is very technical, and security varies depending on how carefully you store your private key.
A physical storage solution
Once you have a physical copy of your private keys, you need to think of where you will keep them; you can’t dump it in your desk draw and call it a day. The entire point of a seed phrase is to ensure only you have access to it, and you should make it hard for anyone else to gain access. So, again, I highly recommend seed splitting and multiple secure hiding places if you want to store your seed phrase in this way.
Your hiding spot all depends on you and your home; you could use everyday objects like a book or bookshelf, a safe, under a floorboard, within the zip of your office chair, or even behind the label on a jar—the more obscure, the better.
You may want only to store partial copies in different places, so if one of your hiding spots are compromised, the funds will remain safe unless two or more hiding places are found.
Offline seed generation
As a bitcoin holder, you must realise that holding your wealth in a digital medium comes with particular security trade-offs. When you dematerialise wealth from the physical, you have to ensure that your security is on point because the slightest breach can leave you vulnerable to a world of threats.
All digital devices, be it desktops, tablets or mobile devices, can have vulnerabilities. The more apps, software and connection points on a device, the more exploit options you add to the device. That is why you should always consider generating and storing your seed phrase on an internet-connected device. Using offline methods reduces all the chance of your keys getting exposed and therefore keeping your transactions safer as well as the funds you hold.
While paper and offline documents on flash drives serve the purpose to keep your seed phrase secure, they are not full proof and are liable to physical damage and erosion. Steel seed phrases are a great way to take your seed phrase’s security to the next level.
Once etched into a steel storage solution, your seed phrase is now secure; it can be locked with a key to keep it from prying eyes. It can also protect your seed phrase from damage like floods, fire or your puppy eating your bitcoin.
Now that you realise the options available to secure your seed phrase, the choice is yours — steel-grade security or paper-grade security, single storage or split storage? Take your pick, and choose the security method that works best for you.
Keep your seed safe
Your seed phrase is as essential as your bitcoin, so you must ensure it doesn’t fall into the wrong hands. You don’t want to give up your hard-earned money to someone else or lose it yourself. If you choose to store your wealth in bitcoin, you should consider backing up the seed phrases. Having a failsafe means that if one method is destroyed, you can always fall back to another.
