Wallet Security: Three Types of ‘Secret’

Most companies in the traditional technology world require users to create an account before they can use a service. The sign-up process typically involves entering your personal details online or on a smartphone app. This data is then usually stored on a server that belongs to the company.

However, through the advent of blockchain technology, there is now a new way to secure user data.

A typical cryptocurrency wallet does not require any user information. Instead, it simply relies on three types of “secret” to keep the wallet and the associated accounts private, safe and secure.

These include: the seed phrase, the password, and the private keys.

Keep reading to find out more.

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The Seed Phrase

When researching the world of cryptocurrency, you are bound to come across a term known as the seed phrase. 

A seed phrase is a random group of words that is generated by a crypto wallet during the initial setup. These words and the specific order in which they appear represent the code needed to access a wallet.

Occasionally, the seed phrase will be referred to by a different name but will serve the same exact function.

For example, MetaMask, which is one of the most popular wallets in the world, refers to this as the Secret Recovery Phrase (SRP).

The seed phrase is cryptographically generated when the wallet is set up and no one but the user has access to this code. This means that not even the company is able to control the wallet.

Wallets that give users access to the seed phrase are known as non-custodial wallets since only the user has access to this code.

Whoever has the seed phrase has full control of the wallet to which it belongs. For that reason, it should be kept very safe.

You can write down your seed phrase on a piece of paper and store it somewhere secure, away from unwanted eyes.

NOTE: Do not reveal your Secret Recovery Phrase to anyone under any circumstance. If someone asks for it, they are likely trying to steal your funds.

Here is MetaMask reminding their users not to share their SRP with anyone, even in a customer service scenario. 

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The Password

The password is a lot less technical than the seed phrase. That’s because it is simply used to secure the wallet application itself.

You will be prompted to enter your password when you open the app on your in-browser extension or smartphone.

It adds an extra layer of security to your crypto assets.

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The Private Keys

A private key is a string of letters and numbers that provides access to crypto assets stored within a wallet.

Some wallets, such as MetaMask, enable users to create multiple different accounts within the same wallet. Notably, each account contains its own private key. 

While the seed phrase is used to restore an entire wallet along with all the associated accounts, a private key can be used to import one specific account.

The private keys should be kept safe in the same way as the seed phrase.

When browsing the internet, you will likely come across scammers who will attempt to steal your private keys from you.

REMEMBER: Never share your private keys with anyone.

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