As a crypto user, a private key is what stands between you and your cryptocurrencies. It is the PIN that gives you access to your bank account. It allows access to your cryptocurrencies, enabling you to send and receive crypto coins to anyone across the globe.
Over the years, many people have either lost or misplaced their private keys resulting in costly losses with no recourse. For example, James Howells lost his Bitcoin private keys, and it cost him 7,500 Bitcoins (now worth millions of dollars). This is the kind of nightmare that haunts many crypto investors.
However, there is a solution. Using seed-phrase security enables you to recover your funds in case you lose your private key. In this post, we define private keys, seed phrase-security, and the best ways to secure sensitive information.
What is a private key?
A private key is a series of alphanumeric characters that give you access and total control over your cryptocurrencies. A private key is used to sign transactions to allow you to spend and send your crypto coins to anyone in the world. The security make-up of the private key helps to secure your digital coins from unauthorized access and theft.
It is important that you keep your private key safe. If you lose your private key or it falls into the wrong hands it is the end of your funds. Without your private key, there is no way of accessing your digital coins. You can’t spend, withdraw, or transfer your cryptocurrencies
There are a number of ways you can securely store your private keys. You can store your private keys on paper wallets or a hardware wallet. You can also store your private keys on mobile wallets, desktop wallets, or web-based wallets.
What is a seed phrase?
The seed phrase is a list of random words (12 or 18 or 24 in number) used to recover your funds in case you lose your wallet’s password or the device where your wallet is installed. It also comes in handy when your wallet is not functional.
The seed phrase is also called recovery key, seed key, and recovery seed.
A seed phrase is usually generated when setting up your crypto wallet. Therefore, it is important you don’t skip this step. Backup systems always come in handy when looking to salvage a dire situation.
Once you have access to your seed phrase, taking a pen and a paper and physically writing it down is the next best step. Memorizing the phrase is not a viable option. Also, never store your seed phrase on platforms that can easily be hacked like Evernote or iOS Notes.
Just like your private key, your seed phrase can give anyone who has it access and control over your funds. That said, your seed-phrase security is as important as private key security. So, how do you keep them safe?
How to secure a seed phrase and private key
There are several ways you can store your seed phrase and private key. You can:
Use a paper wallet
While paper is relatively destructible, it is arguably one of the best ways to store your seed phrase and private key. Physically write down your seed phrase and private key on a piece of paper and store it in a safe and secure location where no one but you has access. You can even laminate the piece of paper to resist water damage and possible tear and wear.
Besides paper, you can have your seed phrase and private key engraved on steel plates or other durable metals for enhanced safety. Metals come with more durability when compared to paper wallets.
For example, Cryptosteel is a device that allows you to back up your private key and seed phrase in a fireproof, shockproof, and waterproof manner.
Use a hardware wallet
Hardware wallets like Trezor, Ledger, and Keepkey are in existence to help you securely store your seed phrase and private key. The hardware wallets provide a safer option to store your sensitive data offline. Hackers have no way of accessing your data.
Create extra copies
You can write more than one copy of your seed phrase and private key and store them in different places. In case anything happens like say one copy gets destroyed due to natural disasters, you still have a way of accessing your funds. All is not lost.
Divide your seed phrase into 2-3 parts
You can write the first 4 words on a piece of paper and another 4 words on another piece of paper and keep going till you complete the whole phrase. Each paper can be stored separately such that access to the whole phrase is hard for anyone but you. Remember to number the pieces of paper to avoid altering the sequence.
Avoid storing a digital copy of your seed phrase or private key
Anything stored online can easily be accessed. The online world is not as safe as many people think. Don’t take a picture, print, or save your seed phrase or private key on a digital platform. A hacker can easily hack your system and access sensitive information.
By now, it is clear that your private key plays an important role when it comes to the safety of your digital coins. Therefore, the information must always be safe and away from everyone else but you. You already have some ideas of how you can safely store your private keys.
In case you do lose the private key (and mistakes do happen) thanks to seed phrase security, you have an option for easy recovery of your funds. Just remember not to skip the option of requesting for a seed phrase when creating your digital wallet.