Crypto Seed Phrase Playbook. Let's begin 🏌️♂️
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 🏌️♂️ YOU ARE HERE 📍
Got my Seed Backup Kit? Guide For Seed Backup Kit 📙
More to follow in the coming weeks ⚡️
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 “storing a seed phrase somewhere safe”, that’s where most people fail and that’s what I address in this article.
Vocab Tip
”Custodial” means using a trusted party such as a trading platform hold your funds whereas “Non-Custodial” (aka “Self-Custodial”) means you are the one and only one “in full control” of the funds — typically you do that by using a hardware wallet.
“Being your own bank” carries a heavy amount of responsibility, as the saying goes “With great power comes great responsibility”, sometime a seed phrase can hold someone’s lifetime worth of savings. 24 words that can destroy someone’s financial life if discovered by someone else, could it get more radical?
Vocab Tip
This ‘seed phrase’ is also known as ’24 words’, ‘seed backup’, ‘backup phrase’, ‘seed phrase backup’, ‘recovery phrase’, ‘mnemonic’, ‘mnemonic code’.
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 you’ll never see this string of digits, though — you will see the version that is far easier to write down.
In this article I use the term “Seed Phrase” to mean “Seed Backup” because it’s the term I heard the most.
You May Wonder “Who’s The Author Anyway?”
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 — 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.
“Why get a hardware wallet if one cannot store the seed phrase properly?”
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 “single signature”, meaning you use a single wallet - whether hardware or software wallet - to confirm/sign transactions.
Multi Sig: stands for “multiple signatures”, meaning you use several wallets - can be a combination of hardware or software wallets - to confirm/sign transactions.
My Goals For You 🎯
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 “complex” 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 “convenience vs security” 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 “trust yourself” mantra also kind of implies “trust no-one”. Living in paranoia about everything and everyone around me is definitely not a lifestyle I want though — “what's the point of entering a new financial paradigm if you cannot sleep at night?”, “is it really worth it?” 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.
“There is nothing wrong about being paranoid. It’s about educating paranoia and knowing what to be afraid of. If you’re afraid of everything, you’re overwhelmed. If you educate yourself on what to prioritize regarding what to worry about [then you’re ok]” — 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 that’s the easiest to steal, the one that’s 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.
Don’t Roll Your Own Crypto
TL;DR: “use established good practices”.
“Don't Roll Your Own Crypto” 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 “do not roll your own cryptographic design”, use battle tested encryption mechanisms instead of creating new ones.
In the context of self-custody, it means “use battle tested seed phrase storage strategies”.
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 — we only cover single-sig, the simplest setup.
Passphrase (no “SeedPhrase+Passphrase”) — passphrase is an advanced feature, here we cover a “seed phrase only” setup, the simplest setup. Reminder: passphrase is not the same thing as seed phrase.
3rd party recovery setup — 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 🏌️♂️ YOU ARE HERE 📍
Got my Seed Backup Kit? Guide For Seed Backup Kit 📙
More articles to follow in the coming weeks ⚡️
Coming soon…
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_
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Well said and great analogies! More people should see this.