Safeguarding Private Keys and Seed Phrases

Securing private keys and seed phrases is very important to make a shield around the cryptocurrencies. A private key is the secret cryptographic key which is used to control and manage the access to the cryptocurrency. It should be kept secure in order to prevent any case of theft or unauthorized access to the digital assets. Whereas, a seed phrase is a recovery phrase used as a backup mechanism which allows us to recover access to the crypto wallet in case of emergencies and crucial times. Both of these elements are a critical part of the wallet security and shall be stored carefully in order to play safe in the crypto world.

1. What are private keys?

Private keys are the secret passwords which allow us to control and access the digital money stored in the virtual wallet. Just like an ATM pin is kept safe from any leakage, the private key shall also be a secret. If someone else gets to know of the private key, he could have complete access to the account and use the digital money stored in it. It is advised to follow proper safety measures to keep the private keys out of anyone’s reach.

• In cryptography, a key pair has two keys, private and public. They are linked together but serve different purposes.
• Private key is kept confidential. It is like a secret password used to access the digital wallet. Only the owner shall know the private key.
• Public key is derived from the private key. It is the public identifier which others use to send money to your account. It is safe to share public keys with others.
• An address is generated from the public key which can be shared with others when you wish to receive crypto from others. They are shorter and more user-friendly than the public keys.
• The private key is owned by the owner of the wallet. It is required whenever one has to make any transaction.
• Protecting the private key is very essential. Anyone can have access to the wallet by the help of a private key.
• It is a common practice to create a backup of the private key (seed  phrase) and store it in a safe place.

2. Seed Phrases: An Overview

Seed phrase is like a secret recipe to the digital currency wallet. Imagine having a special recipe book with a list of 12, 18 or 24 secret ingredients. These ingredients coincide with simple words and when used together in the right manner, they can magically recreate the wallet and the money in it.

Just in case, if something happens to the wallet, we forget the password or lose the device, this secret recipe can be used to cook up a brand new wallet which is exactly like the old one! It is like having a backup plan for the digital cash. Therefore, it is super important to keep the phrase safe and hidden.

• A seed phrase contains 12,18 or 24 words which serves as a recovery backup mechanism for the crypto wallet. 
• When a new wallet is created, one is usually prompted to write down and store the seed phrase. 
• These phrases are human friendly and easy to write and remember.
• Many wallets use deterministic wallet structure, which means the private keys and public addresses are generated from the seed phrase in predictable and repeatable manner. 
• Since it is the ultimate key to the wallet, it must be kept extremely cautiously. 
• To recover a wallet using a seed phrase, it shall be entered in the correct order to have the access to the funds.
• The word order is very crucial in a seed phrase. 

3. Importance of security

• The private key and seed phrase are the keys to the digital funds. If they fall in wrong hands, the currency can be stolen and there is usually no way to have it back. Securing both the keys is like locking your bank vault.
• The keys give you full access to the crypto wallet. One can easily send, receive and manage the funds by the help of these keys. Losing them means losing the funds.
• If a wallet password is forgotten or a device is stolen or lost, the seed phrase is the lifeboat. It is the only element which can prevent you from losing access to your funds permanently.
• Since crypto operates on decentralized platforms, there is no central authority to help in recovering the keys.
• Crypto transactions are irreversible! Protecting both the keys is the main action of defence against malicious transactions.
• At the end, it gives peace to the mind to know that the funds are safely protected by well-shielded keys!

4. Step-by-step generation and storage of seed phrases

• Start by selecting a trusted wallet! Hardware wallets like Ledger or software wallets like Electrum are very popular.
• Set up the wallet by choosing a strong, unique password.
• During the setup, the wallet prompts to create a seed phrase. This is usually a list of 12, 18, or 24 words. Write them down exactly as they are and store it in a safe, offline space.
• The words shall be written in the correct order. Use a pen and a paper, and avoid storing it on a computer or any device connected to the internet.
• Verify the seed phrase by entering specific words from it. 
• Storing the seed phrase correctly is very crucial. Always create multiple copies of it. 
• Store these copies in physically safe places like fireproof safe, or a bank safety deposit box.
• Never store them digitally, in an email, cloud storage , or notes app. 
• To add an extra security layer, share parts of the phrase with trusted individuals. This is called the “shamir secret sharing” approach.
• Some choose metal engravings to protect the phrase from physical damage like water or fire.
• Keep a regular check on the seed phrase to ensure its safety.

5. How to protect your private key?

• It is always advised to use a hardware wallet like ledger or Trezor to store the private key offline.
• Choose a strong password which is a mixture of upper and lower case letters, numbers and symbols.
• If a software wallet is being used, make sure that the device is safe. Use a strong PIN for the device too.
• Look out for phishing scams and do not enter the private key on fake websites or URLs.
• Always enable the two-factor authentication (2FA) to add an extra shield of security.
• Keep the wallet software updated with the latest security upgrades.
• Avoid using public Wi-Fi to access the wallet.
• Practise cold storage techniques to stay safe from online scams. Keep only a part of the amount in hot storage for daily usage. 

6. Beware of these scams!

• Phishing scams like Pay Zero and get it all! It is a scam where the attackers pay zero to the victim for their assets and trick them to allow the transfer of token ownership.
• Crypto giveaway scams lure victims with gifts from exchanges. Clicking on such links could make the person lose access to all the funds in the wallet. Here is an example of a phishing trap:

7. Final thoughts

Private keys and seed phrases are like oxygen to the whole crypto life of any investor. If you wish to keep breathing, these two elements need to be kept very safely. Crypto space has been targeted by many scammers, therefore, being cautious and alert is the key to be protected.

8. FAQs