The Importance of Securing Your Seed Phrase
Your seed phrase is one of the most important things you need to secure as a Bitcoin user. Learn more about your best options.
Why Do You Need Seed Phrases?
Bitcoin is the first technology that gives anyone access to a decentralized form of money and the option of self-custody without any bank or intermediary. Vital to the Bitcoin ethos is bulletproof security, the guarantee that each transaction gets sent safely and securely across the internet. While the protocol guarantees secure transfer, that guarantee doesn't extend to the safety of your coins.
It's the tradeoff for total financial freedom. If you don't want anyone—not even the most well-funded government or corporation—to control your money, you'll need to take security into your own hands. That means keeping your seed phrase secure.
While everyone has the capacity for self-custody, it's important to note that you are responsible for your own coins with no recourse for lost keys or accidental destruction. If you're not careful, there's a very real possibility you could lose access to your coins forever.
A 2020 Chainanalysis study suggets that around 20% of all bitcoin have not moved in 5 years or more and are considered lost bitcoin.
Different Ways to Secure Your Seed Phrases
Hide it in a Physical Location
One of the simplest ways to secure your seed phrase is to hide it in a physical location. This could be a safe, a lockbox, or even a secret compartment in your home. The important thing is that the location is known only to you and is secure from outside threats. A considerably safe option is to store your seed phrase in a safety deposit box at a specialized institution for counterparty risk, ensuring an extra layer of security.
Some people go so far as to bury their seed phrase in a physical location, like their backyard. This offers an extra layer of security, as it would be very difficult for someone to find your seed phrase if they don't know where to look. However, this can be risky, as your seed phrase may be exposed to inclement weather or other environmental threats.
Encrypt it With a Password
Another option for securing your seed phrase is to encrypt it with a password. This means that even if someone were to find your seed phrase, they would not be able to access your funds without also knowing the password. This method isn't generally recognized as safe, as passwords can be guessed or brute-forced. However, if you have a strong password and take care to protect it, this method could work for you.
Splitting It Up and Hiding It In Multiple Locations
You could also split your seed phrase into multiple parts and hide each part in a different location. For example, you could split your seed phrase in two, store one at your home, and another in a safety deposit box. Finding one seed half wouldn't be enough, as it would be necessary to have both pieces to regain access to your funds.
Splitting up your seed phrase balances simplicity and security best out of these options, as it's easy to split a phrase in half and store it in two known and secure locations. It's easy enough to find your two seed halves and put them together and secure enough to make it an appealing option.
Consider the use of metal wallets to protect against fire and tamper-proof bags to protect against water damage, compromised hardware, and other physical threats.
Using a Brain Wallet
Known colloquially as a "brain wallet," committing your seed phrase to memory is one of the most secure ways to store it. After all, if you don't write your seed phrase down in the physical world, there's no way anyone can steal it. However, this method is also the most difficult to execute properly.
This method is not recommended for beginners, as it requires a lot of practice and focus to commit a seed phrase to memory. In addition, if you forget your seed phrase or lose focus while trying to remember it, you could lose access to your Bitcoin forever.
Other Things to Keep In Mind
Don't make storing your seed phrase unnecessarily complicated. Remember, there's such a thing as security through obscurity, which is when you try to make something more secure by making it harder to find. This doesn't make it more secure and can often backfire, as it makes it more difficult for you to remember where you stored your seed phrase.
Methods aside, the most important way to protect your seed phrase is by never telling anyone you have it. The only people who should know about your seed phrase are you and anyone you plan to leave your Bitcoin to. This can be done through a lawyer or by creating a will.