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In order to understand private keys and seed phrases, it is important to know what is meant by a blockchain wallet. A blockchain wallet is a digital wallet that allows users to manage their cryptocurrencies such as Bitcoin, Ether, etc. The real purpose of a blockchain wallet is not to store your crypto, but rather to secure your private keys. You generate a private key along with a corresponding public key each time you create a blockchain account.
Each blockchain has a specific blockchain account that is created by users. For example, a Bitcoin account will be created to manage BTC, so will ETH and so on. Blockchain addresses have private and public key pairs, and can be well understood as a public key like a bank’s A/C and a private key to serve as a bank’s A/C password. For a specific blockchain address, the private key gives you unlimited control over the asset. If your private key is exposed to other entities, they can transfer your funds without your permission or knowledge. Therefore, it is very important to manage your private keys responsibly and ensure that no one else can access them.
Blockchain wallet, secures multiple blockchain addresses with the same private and public key architecture. As mentioned before, keeping private keys secure is of the utmost importance, but securing private keys in their natural form can be challenging, as they are not easily readable by humans. Here is an example of a private key:
E9873D79C6D87DC0FB6A5778633389F4453213303DA61F20BD67FC233AA33262
For maximum security, the best method for securing the private key is to write it down somewhere offline. However, there may be errors in recording the private key, especially if someone chooses to remember the private key. Therefore, to simplify private key management, seed phrases were introduced.
The initial phrase is a random set of 12, 18, or 24 words that is generated each time a new wallet is created. It is intended to be a representative of the private key of a blockchain wallet, and is used as a standard across wallets for managing funds secured by blockchain wallets. Here is an example of a 12 word seed phrase:
“skate plate tray pizza gate has black link team that reflects freedom”
The Private Key serves two important functions in relation to blockchain accounts: The Private Key proves ownership of the blockchain account and also serves as a verification stamp when a transaction occurs from the blockchain account.
The private key serves as login access for individual blockchain accounts. So, for each individual blockchain account, there will be one corresponding private key. If someone wants to access their blockchain account, they can import account content by adding the private key to each of the interfaces they use.
Additionally, blockchain accounts facilitate transactions, and private keys play an important role in digitally signing transactions. For a transaction to complete on the blockchain, it is encrypted using a public key, which can only be decrypted with a private key. Then, the transaction is signed using the private key to prove that there were no modifications to the transaction. Once broadcast across the blockchain network, the transaction can be authenticated using the public key. Hence, the key pair helps to prove the authenticity as well as the ownership of the wallet.
A seed phrase is a random group of words generated by a blockchain wallet during initialization of the wallet. A blockchain wallet is designed to store multiple blockchain accounts, and the seed phrase is a way to recover all associated balances from the blockchain account associated with the wallet. Therefore, seed phrases are considered as a backup in case you need to restore access to your funds for a particular blockchain wallet.
Seed phrases are usually 12, 18, or 24 words long and follow a standard called BIP39. The BIP39 standard was developed to ensure that seed phrases created from one particular wallet will work with other wallets. For example, you created a wallet on Metamask with a seed phrase and you want to use the same wallet on another interface. By importing the seed phrases in the Cypherock X1 wallet, you will be able to see the exact matched balance, and change the interface.
When the wallet is initialized, a seed phrase is generated. The initial phrase is generated from a list of 2,048 words outlined by the BIP39 standard. The words that make up the seed phrase correspond to a series of random numbers called the seed. The seed is a representative of the wallet’s master private key, and in turn is used to generate multiple private keys for various blockchain accounts. So when the initial phrase is added to the wallet, the wallet generates all blockchain accounts for each cryptocurrency associated with the initial phrase.
Private keys and seed phrases are important components in a blockchain wallet. Private keys provide access to individual blockchain accounts, while seed phrases provide access to entire blockchain wallets that secure multiple blockchain accounts. Given that private keys and seed phrases are critical in granting access to accounts and wallets, keeping them secure is of the utmost importance.
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