10 PLACES TO STORE YOUR CRYPTO SEED WORDS

What is BITCOIN and BITCOIN WALLET?

Bitcoin is a decentralized digital currency which you can buy, sell and exchange directly without an administrator like Central Bank. Created in the year 2009 by an unknown person using the alias Satoshi Nakamoto.

Bitcoin wallet is a type of wallet used to send and receive Bitcoins. Each Bitcoin wallet contains a set of secret numbers, or private keys, corresponding to the user’s blockchain address book. 

How does a BITCOIN WALLET work?

Once you’ve installed a Bitcoin wallet on your computer or mobile phone, it will generate your first Bitcoin address and you can create more whenever you need one. You can disclose your public addresses to your friends so that they can pay you or vice versa.
The blockchain is a shared public ledger on which the entire Bitcoin network relies. The integrity and the chronological order of the blockchain are enforced with cryptography.

Bitcoin wallets keep a secret piece of data called a private key which is used to sign transactions, providing a mathematical proof that they have come from the owner of the wallet.

What are SEED WORDS?

A seed phrase/ recovery phrase/ backup phrase is a list of words generated by your cryptocurrency wallet which stores all the information needed to recover Bitcoin funds. This string of 12 to 24 words is literally the key to your crypto. As long as you have your seed phrase, you’ll have access to all of the Crypto associated with the wallet that generated the phrase even though you lose the wallet.

Usually, the wallet software will generate a seed phrase and instruct the user to note it down. The user can either write it on a paper or use metal devices to store it. The paper or metal device acts as a backup for your seed words and the user can download the same wallet software again to get their bitcoins back.

Things to be kept in mind while storing your recovery seed:

• You must protect your seed words from unauthorized access by securing it in an safe place.
• You must ensure its physical security i.e. You have to protect it from damages like fire, water, corrosion etc.
• You must remember the hiding spot

Where to store?

One of the biggest issues faced by the crypto market is the care, custody and control of currencies. Here comes the importance of using backup storage devices and we can make use of two types of storage:

• Primary storage

• Secondary storage

What is Primary Storage?

In primary storage, hot storage or cold storage devices are used to store crypto seed words. In hot storage, seed words are stored online and in cold storage they are stored offline. You can use mobile wallets, exchange wallets and desktop wallets as your online storage devices. Your recovery phrases can be stored offline by using paper, metal, flash drive etc. As a part of security, it is always recommended to store the recovery seed offline especially through metal back up option.

What is Online / Hot Storage?

Online Mode (Hot Storage) – Storing seed words online has its own advantages – they are easily accessible from anywhere in the world and you don’t have to worry about any sort of loss and physical damage. But the truth is that besides you, everyone else in the whole world has the opportunity to gain access to your online storage.
You can store your digital currency in a hot wallet if you use crypto for everyday purchase or regularly trade crypto on an exchange. When you create an account on an exchange, download a mobile wallet or download a desktop wallet on your laptop, you are creating a hot wallet.

What are the different types of Online/ Hot storage devices?

1. Mobile Wallets: A mobile wallet is a virtual wallet which the stores payment card information on a mobile device. It helps to make in-store payments and can be used at merchants listed with the mobile wallet service provider.

2. Exchange Wallets: These wallets are web-based wallets. For using this, first you have to create an account on the exchange. After that you can sign in and access your wallet. All your account information can be easily accessed and you can quickly make transactions.

3. Desktop Wallets: These wallets are installed on a desktop or laptop computer and provide the user with complete control over the wallet.

What is Offline / Cold Storage?

Cold Storage

Offline wallets are crypto wallets that are not connected to the internet and hence safe from hack attempts. So as a part of security, it is recommended to store the recovery seed offline.

Then there arises a question which is the most suitable storage tool? You can store the recovery phrases offline by using paper, metal, flash drive etc.

What are the different types of Online/ Hot storage devices?

Paper wallet is a printed piece of paper that contains keys and QR codes that are used to facilitate cryptocurrency transactions. It is considered as secure way to keep bitcoins safe from cyber-attacks, malware, etc.

While paper wallets offer security advantages, they also come with risks someone can steal your bitcoins just taking a photo of the paper. It is easy to destroy it with flood or fire. Printers that are connected to larger networks often store information, and malware can be surreptitiously installed to steal the keys during the generation process.

Hardware wallet is a type of cryptocurrency wallet in which you can store your private keys in a secure physical device. The cryptocurrency details stored in the wallet are kept offline, meaning that they can’t be hacked. However, when needed, the coins stored are readily available, and it’s easy to hide. example : Ledge Nano S

Metal Wallet is an indestructible private key cold storage backup tool for crypto wallets, passwords and confidential information without any third party’s tools or services, better seed storage alternative than paper wallets. It is fireproof, corrosion-resistant, acid-resistant and virtually uncrushable.

Different kinds of metal seed plates are – Cypher Safe, Quadrat Register, Steel Capsule, Crypto keys, Stainless Steel  Tags, Crypto Steel Cassette, Crypto Key Stack, Coldbit Steel etc.

What is Secondary Storage?

Another method for storing Crypto seeds is  called decentralized method or secondary Storage. Decentralization refers to the transfer of control and decision-making from a centralized entity (individual, organization, or group thereof) to a distributed network. It can be well explained with an example.

Suppose, you have a 24-word seed phrase and you want to make it secure by sharing it with your trusted family members or friends. Here, you can split your 24 words into 2 equal parts i.e., 12 words with you and 12 words with your friend/ family member.

The reason for splitting the seed word is security aspect. Nobody can hack the seed words as they are kept by 2 different persons. This method is like having 2 keys to your wallet but your wallet will only open if all the keys come together.

Now you have got a better understanding of how the recovery seed works and how to secure it. Once you have a wallet, make sure your recovery seed is backed up properly remember” Not your keys, not your coins”

The first step to start using the recovery seed is to setup your Metal wallet. If you do not already own a Metal wallet, you can purchase one from our shop