Keys, seed phrase and address

People worry about dropping their hardware wallet in water. Yet the device is replaceable – you buy a new one and restore it. Only one piece of paper is irreplaceable: the seed phrase. To see why, let us look at what is actually in it.

Key and address#

• A so-called private key is a huge secret number. Whoever knows it can sign a transaction, i.e. send coins.
• From the private key a public key is calculated mathematically, and from that an address – what you give people so they can send you money.
• The path goes one way only. A private key cannot be calculated from an address, so feel free to show your address to anyone.

The seed phrase: one key to every door#

If you had to back up every private key separately, you would go mad. That is why wallets use a seed phrase: 12 or 24 words from a list of 2,048 words under the BIP39 standard. All your keys are calculated from it – for Bitcoin, Ethereum, Solana and other networks, and for any number of accounts.

What follows from that:

• Whoever has the seed phrase has everything. They do not need your device, password or PIN.
• A lost device does not matter, a lost phrase does. With a backup of the phrase you restore everything on a new device.
• The phrase works in other wallets too. If the manufacturer goes bust, you restore it elsewhere. Some wallets, though, calculate keys by a slightly different path – if you do not see your balance after restoring, nothing may be lost.

Why nobody can guess it#

Twelve words out of 2,048 give so many combinations that all the computers in the world could not try them all in billions of years. The weak spot is not the mathematics but the person: a photo on a phone, a file in the cloud, paper in a drawer, a "technician" who asks for the phrase.

What matters#

• Word order. The same words in a different order are a completely different wallet.
• Spelling. The words come from a list, and each can be identified from its first four letters alone – which is why metal plates often have only those stamped.
• The last word contains a checksum. So do not invent your own phrase – let the device generate it.

Common myths#

• "The coins are in the device." They are on the blockchain. The device only holds keys – and those can be restored from the phrase.
• "I must keep my address secret." An address is public. You must keep the seed phrase and private keys secret.
• "A seed phrase is for one cryptocurrency only." One phrase usually opens accounts on many networks.