Crypto Seed Phrase Playbook. Let's begin đď¸ââď¸
Learn how to safely store your precious 24 words. Learn to be paranoid about the right thing. Learn good practices and how to create good habits. Learn who hackers like to target.
This article series aims to help you dramatically increase your safety and mentally healthy. Good crypto seed phrase storage is where it all starts. Poor opsec has led many people to lose their life savings and many companies to shut down. Be smarter: read these articles and start implementing good habits right now.
Articles of the series:
Crypto Seed Phrase Playbook. Let's begin đď¸ââď¸ YOU ARE HERE đ
Brute Forcing, 12 vs 24 Words, Seed Phrase Splitting đśď¸
Got my Seed Backup Kit? Guide For Seed Backup Kit đ
More to follow in the coming weeks âĄď¸
Financial wealth happens in two steps, firstly by building up that wealth and secondly by protecting that wealth. Read it however you want, in the crypto space that second part is very real: it's extremely common for people to lose their funds overnight by using custodial solutions such as centralized exchanges, but this financial disaster is also common for those using non-custodial solutions. All non-custodial solutions imply âstoring a seed phrase somewhere safeâ, thatâs where most people fail and thatâs what I address in this article.
Vocab Tip
âCustodialâ means using a trusted party such as a trading platform hold your funds whereas âNon-Custodialâ (aka âSelf-Custodialâ) means you are the one and only one âin full controlâ of the funds â typically you do that by using a hardware wallet.
âBeing your own bankâ carries a heavy amount of responsibility, as the saying goes âWith great power comes great responsibilityâ, sometime a seed phrase can hold someoneâs lifetime worth of savings. 24 words that can destroy someoneâs financial life if discovered by someone else, could it get more radical?
Vocab Tip
This âseed phraseâ is also known as â24 wordsâ, âseed backupâ, âbackup phraseâ, âseed phrase backupâ, ârecovery phraseâ, âmnemonicâ, âmnemonic codeâ.
These terms are used interchangeably which can be confusing at first.Vocab Tip
"Seed" vs "Seed Backup".
A seed backup is a human-readable representation of a seed. A seed is a long string of random digits. As a typical wallet user youâll never see this string of digits, though â you will see the version that is far easier to write down.
In this article I use the term âSeed Phraseâ to mean âSeed Backupâ because itâs the term I heard the most.
You May Wonder âWhoâs The Author Anyway?â
As of writing, I wear one hat: Founder of Web3 Family, a Barcelona based grassroots web3 community. I worked for many crypto firms since 2018, ran countless community events and gave away 60+ hardware wallets to friends and community members â starting with 30+ Ledger wallets by mid 2022.
Gifting so many devices ended up being reality check: only approx 3% of people who own crypto also own a hardware wallet. Why? Because 1/ the device is complex to use and 2/ safely storing a seed phrase is difficult.
âWhy get a hardware wallet if one cannot store the seed phrase properly?â
I did a lot of research, stubbornly asked hard questions to experts and found very valuable answers.
Regardless what self-custodial solution you choose, whether you use a singlesig or a multisig, you will have to keep that seed phrase safe.
Vocab Tip
Single Sig: stands for âsingle signatureâ, meaning you use a single wallet - whether hardware or software wallet - to confirm/sign transactions.
Multi Sig: stands for âmultiple signaturesâ, meaning you use several wallets - can be a combination of hardware or software wallets - to confirm/sign transactions.
My Goals For You đŻ
First Goal: De-Risk Your Seed Phrase Storage Strategy
Risks you are exposed to include: loss, theft, destruction, hardware failure, accidental reset, armed robbery, fire, water, flood, natural disaster, confiscation and âcomplexâ self-made storage schemes.
That ideally means using sound solutions that have been battle tested and endorsed by thought leaders of the industry.
Second Goal: Understand The Trade-Offs You Make
There is no single-bullet solution to protecting your seed, but only trade-offs that make you less likely to lose your funds.
The risk-reward ratio in the context of âconvenience vs securityâ is what will make you confident that the strategy you choose is the best for your usage.
Live In Paranoia vs Worry About The Right Thing
The âtrust yourselfâ mantra also kind of implies âtrust no-oneâ. Living in paranoia about everything and everyone around me is definitely not a lifestyle I want though â âwhat's the point of entering a new financial paradigm if you cannot sleep at night?â, âis it really worth it?â crypto skeptics often ask.
The only way to find peace of mind regarding self-custody is by educating oneself, find quality answers to hard questions and learn what you should really worry about.
âThere is nothing wrong about being paranoid. Itâs about educating paranoia and knowing what to be afraid of. If youâre afraid of everything, youâre overwhelmed. If you educate yourself on what to prioritize regarding what to worry about [then youâre ok]â â El Calderon at Lex Fridman Podcast (at 1h26m), prev. counter narcotic & organized crime investigator in Mexico
The Bicycle Thief Analogy
Think of it this way: if your bicycle is parked next to another 100 bicycles, a thief will chose the one thatâs the easiest to steal, the one thatâs with the weakest lock and/or poorly locked. There are exceptions of course, for instance if a bicycle value is 10x more than any of the others next to it then the thief might focus on that one.
If you use best practices when locking up your bicycle then you are much more likely to keep it safe for a long time.
The same goes for storing your seed phrase: do it properly and you will most likely be in the top 1% who do it well, hence much more likely to keep your funds safe for a long time.
Donât Roll Your Own Crypto
TL;DR: âuse established good practicesâ.
âDon't Roll Your Own Cryptoâ is a saying you hear often in the blockchain industry, more than a saying, this is a golden rule for cryptographers.
What it means
Do not try to re-invent the wheel, follow established good practices otherwise the chances you will fail in your attempt will be great and come with a heavy cost.
In scientific and engineering contexts it means âdo not roll your own cryptographic designâ, use battle tested encryption mechanisms instead of creating new ones.
In the context of self-custody, it means âuse battle tested seed phrase storage strategiesâ.
NOT in The Scope Of The Article Series
Keeping the scope of the article series as narrow as possible. I am NOT covering:
Multi-sig â we only cover single-sig, the simplest setup.
Passphrase (no âSeedPhrase+Passphraseâ) â passphrase is an advanced feature, here we cover a âseed phrase onlyâ setup, the simplest setup. Reminder: passphrase is not the same thing as seed phrase.
3rd party recovery setup â whether social recovery or else, we do not cover this topic.
However, everything you will learn in this article series is extremely valuable in each of the use cases mentioned above.
Articles of the series:
Crypto Seed Phrase Playbook. Let's begin đď¸ââď¸ YOU ARE HERE đ
Brute Forcing, 12 vs 24 Words, Seed Phrase Splitting đśď¸
Got my Seed Backup Kit? Guide For Seed Backup Kit đ
More articles to follow in the coming weeks âĄď¸
Coming soonâŚ
OpSec habits and rituals
Possible optimizations
I may address more points, this is just a preview. We will dive into these topics in following posts so keep an eye on this very blog!
Follow me twitter.com/AdrienBe_
All My Articles đ
Well said and great analogies! More people should see this.