Business,Operations,Guide,Module 2.2
Module 2.3
Private Keys and Seed Phrases
When you use a non-custodial wallet, you will encounter the term private key and often a seed phrase (or secret recovery phrase). These are the cornerstone of self-custody.
A private key is a long alphanumeric string that permits you to access and spend the funds at a specific blockchain address. Think of the private key as the password or digital key to your crypto funds. Every blockchain address (also known as a public key or just “address”) has a corresponding private key that controls it. If someone obtains your private key, they can control the funds at that address – analogous to knowing the combination to a lock or the key to a safe deposit box.
A seed phrase (or mnemonic phrase) is a human-friendly representation of a master key. It’s typically a sequence of 12 or 24 simple English words (e.g., “flower correct horse battery staple… ” etc.). Modern wallets generate a seed phrase upon setup because it’s easier for a person to securely record a set of words than a long hex string. The seed phrase can deterministically generate your private key(s). In fact, one seed phrase can generate many private keys (and thus many addresses) – this is a feature of HD (Hierarchical Deterministic) wallets.
To understand this, imagine a highly secure vault that contains many safe deposit boxes inside. Each safe deposit box might have its own key (analogous to individual private keys for addresses). The seed phrase is like the master key to the entire vault – with it, you can recreate all those individual keys (access to all boxes) . If you lose a device or wallet file, you can input your seed phrase into a new wallet app and regain access to all your addresses and funds. However – and this is crucial – anyone else who obtains that seed phrase can do the same. The seed phrase must be guarded with the same care you would guard a physical vault key or the PIN to your bank card (but even more so, because there is no bank to call for a reset).
Best practices for seed phrases and keys:
When you create a wallet, it will display your seed phrase. You must write it down (typically 12 or 24 words) by hand on paper or otherwise record it in a safe, offline manner. Do not take a screenshot or save it in a file on your computer or cloud storage, as those can be hacked or leaked. Treat it like a confidential document.
Store the written record of the seed phrase in a secure location. Preferably, make two copies on paper or another durable medium (some people engrave them in metal for fireproofing) and store them in separate secure places (for example, one in a personal safe at home and one in a safety deposit box at a bank). This guards against loss by fire or other accidents.
*Never share your seed phrase or private keys with anyone. No legitimate authority or IT support will ever ask for your seed phrase. If you need to input it (for recovery), ensure you are doing so in a trusted wallet application in a safe environment.
If someone obtains your seed phrase, assume your funds are stolen – you’d need to move any assets to a new wallet immediately. There is no undo or recovery if an attacker uses your keys.
Analogy: The seed phrase is the one key that can open all locks in your digital safe deposit vault. Just as you wouldn’t give someone the master key to all your bank’s vaults, you must not give out your seed words.
In summary, write down your 12- or 24-word secret seed phrase and store it in a safe place as if it were a bundle of cash or the deed to your house. It is the ultimate backup to your wallet . Losing it means losing access to your assets; exposing it means someone else can gain access.