Blockchain terminology is confusing at first. To make matters worse, everything sounds alien once you dive into crypto territory. Blockchain network, wallet address, seed phrase, private key, public key – there’s no way for a beginner to understand one concept without knowing how it connects to another concept.
Creating a crypto wallet is the first important step you take when investing. And because storing your assets safely stands above all, it’s important to understand the differences between some words: like private keys and recovery phrases!
Today’s article walks you through the differences between a private key and a recovery phrase. I’ll explain the differences between them and teach you how the private key is used in comparison to a recovery phrase and vice-versa.
What Is a Private Key?
Imagine creating an account on a random website. The website asks you for an email and a password. The email might end up being a public piece of information on your profile. But your password? It’s obviously a crucial piece of information only known to yourself. You don’t want other people to have easy access to your account.
A similar dynamic exists when it comes to blockchain wallets. You create a wallet and generate two keys: a public key and a private key. The public key is an address that you share to others when you want to receive funds. It’s basically a deposit address where exchanges and other users send money to you.
On the other hand, there is the private key. The private key is what you use to log into your account and gain access. It’s like a password in the previous context. But there’s a crucial difference between private keys and passwords. Yes, a private key confirms your ownership over the wallet. But the user never directly interacts with the private key.
The private key represents a crucial part to unlocking your wallet and confirming your ownership over it. Without the private key, you can’t sign transactions or send funds to others or your alternative accounts. Here is an example of a Bitcoin private key:
Private keys come in the format of a 256-bit number, making them incredibly difficult to write down or remember. Using the private key every time you want to log into your wallet is therefore completely impractical. That’s why users use private keys to log into their wallet. Instead, they use the recovery phrase (seed phrase); an alternative way for proving your credentials.
What Is a Recovery Phrase?
A recovery phrase, alternatively known as seed phrases, is a string of 12, 18, or 24 randomly generated words. The recovery phrase allows you to obtain access to your wallet account in the case that you uninstalled your wallet or wish to log into your wallet from a new device.
The seed phrase is also what you use to prove ownership for your blockchain wallet. Writing up to 24 words only once is easier than writing a 256-character private key every time you wish to sign a transaction. In fact, the wallet automatically uses the private key when you access your wallet by writing down your seed phrases.
From this, you can conclude that seed phrases represent an alternative representation of your private keys. Both are used for proving that you are the real owner of your wallet, not only when you log into your wallet, but every time you sign a transaction. However, the user only stores the seed phrase when wanting to preserve their blockchain wallet.
Seed phrases are generated each time a new blockchain wallet is created. The seed phrase is directly tied to your wallet and all the private keys contained within it. Every time you create a new blockchain wallet you’re told to write your keys – often in a non-digital format – in order to keep your wallet safe and sound.
What Is the Difference Between a Private Key and a Recovery Phrase?
A Bitcoin private key is a random string of words containing 256 characters. A wallet can contain one or multiple private keys, and stores them in the wallet file on your local device. You can find an example of a private key in the “What Is a Private Key” section.
The seed phrase encodes the data contained inside the private key. Accessing the private keys directly translates to being able to use funds stored at the relevant wallet. That means that someone with access to your computer/smartphone can execute transactions by grabbing the file that stores your private keys.
A seed phrase also contains access to all your funds. There are multiple private keys and each one corresponds to a currency found on your wallet. For example, you’ll have special keys for Bitcoin, Ethereum, and other tokens. The seed phrase, on the other hand, unlocks all your currencies, making it easy for someone to drain your account.
The obvious difference between a private key and a recovery phrase is their format. The private key is a 256-bit randomly generated phrase. Seed phrases contain 12, 18, or 24 randomly generated phrases from the English dictionary. A seed phrase is easier to memorize compared to a private key.
How to Safely Store Your Seed Phrases
You don’t have to do much to protect your private keys – apart from not putting yourself at risk from computer malware. But it’s a whole different story for seed phrases. You need to safely store your seed phrases in order to keep your blockchain wallet secure.
You need a seed phrase each time you want to log into your wallet from a new device. It’s why they’re also called recovery keys – because you need to recover your wallet!
If I generate my wallet on a computer and want to access my funds from a mobile phone, I’ll have to download the same wallet and enter my seed phrases. This allows me to send my cryptocurrency to other addresses from my phone.
But once you get back to your computer you might have to enter your seed phrases again – depending on which wallet you’re using – as you may be logged out. Some wallets also don’t synchronize well when using a single wallet on multiple devices. So don’t be scared if your funds are missing or not properly shown!
Now how do you safely store your seed phrases? The moment you install a wallet, the software will show you a combination of 12, 18 or 24 words. These words are ordered in a certain way and numbered. The wallet will tell you to store these phrases, but how should you go on about that?
I recommend not storing your seed phrases in any digital format. This includes:
- Writing down the words in a notepad on your computer
- Taking a picture of your seed phrases with a phone
- Taking a screenshot of the seed phrases
- Storing the seed phrases on any digital device in any digital format
What you instead want to do is grab a notebook and write down the seed phrases. This way, no one will be able to find your keys without having the notebook in their hands. You’re literally eliminating any possibility of an online attack vector by refraining from digitally storing your seed phrases.
But this isn’t enough. You should write your seed phrases inside multiple notebooks and store them in different locations. Because what if you lose the original notebook? You’ll lose access to your wallet forever. Leave a copy at home, one in your parent’s house, one at your cottage in the woods – do whatever you think is necessary, nothing is overkill.
Conclusion
Private keys and seed phrases are two digital formats of storing credentials to your personal blockchain wallet. Private keys are stored in your wallet’s .dat file and they help the software understand that you’re proving your ownership over your wallet. Private keys are used whenever you want to sign a transaction and transfer your funds somewhere else.
The practical portion of your wallet credentials comes in the form of seed phrases. Seed phrases, also known as recovery keys, are used to prove ownership over your entire wallet. Think of seed phrases as the master key, while the private keys can unlock only specific doors.
For best results, you should store your seed phrases physically. You’ll need them every time you want to recover access to your wallet. This can take place when you want to log into your wallet from a different device, or if your existing device has experienced a hardware or software problem that prevents you from accessing the wallet.
Never show your seed phrases to anyone. If you interact with a crypto platform and their representative asks you for your seed phrases, you’re highly likely interacting with a scammer trying to steal your assets. No one will ever ask for your seed phrases, so keep them to yourself!
If you want to learn more about blockchain wallets and how to safely store your cryptocurrencies, I recommend reading the following articles:
- What Is a Crypto Wallet?
- What Is a Mutisig Wallet?
- Crypto Cold Storage: How to Safely Store and Move Assets
I am an expert in blockchain technology and cryptocurrency, with a deep understanding of the concepts discussed in the provided article. My knowledge is grounded in practical experience and a thorough grasp of the intricacies of blockchain terminology. Let's delve into the key concepts covered in the article.
Private Key: A private key is a randomly generated 256-bit string that serves as a crucial component of blockchain security. It is analogous to a password and is used to unlock and access your cryptocurrency wallet. Unlike passwords, users don't directly interact with private keys, but they are essential for signing transactions and confirming ownership of the wallet. Losing access to the private key means being unable to perform transactions or access funds.
Public Key: While not explicitly mentioned in the article, it's worth noting that the public key is derived from the private key. It acts as an address where others can send funds to your wallet. The public key is shared when you want to receive cryptocurrency.
Recovery Phrase (Seed Phrase): A recovery phrase, also known as a seed phrase, is a series of 12, 18, or 24 randomly generated words. It serves as an alternative method to access your wallet, especially in scenarios like switching devices or reinstalling the wallet application. Importantly, the recovery phrase is easier to remember than a private key and is used to prove ownership of the wallet.
Relationship Between Private Key and Recovery Phrase: The private key is the primary credential for accessing and managing your wallet, while the recovery phrase is an alternative representation of those credentials. The recovery phrase simplifies the process of proving ownership and is more user-friendly than dealing with the complex private key every time a transaction needs to be signed.
Differences Between Private Key and Recovery Phrase:
- Format: Private keys are 256-bit randomly generated phrases, whereas recovery phrases consist of 12, 18, or 24 randomly generated words.
- Memorability: Recovery phrases are easier to memorize compared to private keys.
- Functionality: Private keys are used for specific currencies in the wallet, while a single recovery phrase unlocks access to all currencies stored in the wallet.
Safe Storage of Seed Phrases: The article emphasizes the critical importance of securely storing seed phrases to maintain the integrity of your blockchain wallet. It recommends physical, non-digital methods such as writing down the phrases in a notebook and storing copies in different locations. This precautionary measure guards against the risk of losing access to the wallet due to unforeseen circ*mstances.
Conclusion: Private keys and seed phrases are fundamental components of blockchain wallet security, each serving a distinct purpose. Private keys are like specific keys that open individual doors (currencies), while the recovery phrase acts as the master key, providing access to the entire wallet. Proper understanding and secure storage of these credentials are essential for safeguarding cryptocurrency assets.
