What is a Recovery Phrase?
|— Your recovery phrase is the only backup to all crypto assets managed through your Ledger device and can be used to restore access to them.|
— Your 24-word phrase must be kept secure- it’s vital to never enter it into a computer or smartphone and to never share it with anyone.
— It’s essential that you’ve written it down correctly, which you can double check with the Ledger Recovery Check app.
— Even if Ledger no longer exists, you can use your 24 words with a different, compatible wallet to access your cryptocurrencies.
When starting to use your Ledger hardware wallet, you will receive a random set of 24 words. This is also known as your Recovery Phrase. It’s a key element in using a hardware wallet and it must be kept secure and offline at all times. In this article, we’re going to take a closer look at how best to manage this key information.
Purpose of a Recovery Phrase
Recovery phrases, also known as Seed Phrases, are absolutely vital in using a hardware wallet. If for any reason your Ledger Nano X or Ledger Nano S becomes unusable (theft or destruction), you haven’t lost your precious cryptocurrencies. Your 24 words serve as a backup to all the crypto assets managed through your device.
Let’s say your Ledger device got lost and you want to regain access to your crypto assets. You’ve already ordered a new Ledger Nano X and are ready to start using it. When starting your new device, you will have the option of selecting “Restore from recovery phrase”. After having correctly entered all of your 24 words, your device will give you access to exactly the same addresses as before!
How does a Recovery Phrase work?
Your recovery phrase can be seen as a master key which every application on your Ledger device uses to calculate their private keys from. This means that so long as your recovery phrase is the same, the calculation of the private keys will always have the same result. You can read more about how applications calculate the private keys for each cryptocurrency here.
As you might have guessed, there is a specific list of words that can be part of your recovery phrase. A total of 2048 words exist in this list, which is also referred to as the BIP-39 Word List. You can find the full list of possible words here.
If you’re afraid that someone might guess your specific set of 24 words, not to worry. There is a massive total of 115.792.089.237.316.195.423.570.985.008.687.907.853.269.984.665.640.564.039.457.584.007.913.129.639.936 possible combinations. You’re more likely to win the lottery a couple of times in a row.
While your recovery phrase might be presented to you as a set of words, they actually translate into a long string of data that looks somewhat similar to a cryptocurrency address. For your convenience, these are shown as humanly readable words.
Keep it Secret, Keep it Safe
As mentioned in the beginning, your 24-word recovery phrase is a backup to all of your crypto assets. This also means that if anyone else can get their hands on your set of 24 words, they can access your cryptocurrencies. As such, it’s extremely important to keep your recovery phrase secure. The following steps can help you with this:
– Never share your 24-word recovery phrase with anyone – not even with Ledger. We will also never ask for it.
– Never enter your phrase into a computer, smartphone or any other internet-connected device. If your computer would get hacked, the attacker would be able to access your 24 words.
– Only keep your recovery phrase on a piece of paper or metal backup.
Making sure to follow these simple rules will help keep your crypto safe. We also recommend reading this article to make you aware and understand common phishing attempts – it also provides useful tips to protect your crypto assets against them.
An Honorary Mention: Never Input your Recovery Phrase on a Hot Wallet
There is one more very important commandment that every hardware wallet owner needs to bear in mind – and it deserves its very own section.
The entire point of a hardware wallet like a Ledger is that it keeps everything – from your private keys to your recovery phrase as it is generated – completely offline. Instead of being shown on your computer screen, the recovery phrase for your Ledger is displayed on the device’s Trusted Screen. This means you can be certain that nobody – not even the most sophisticated digital spyware – can see those words.
However, the moment you enter that recovery phrase into a hot wallet (ie, a connected device) that certainty disappears. The problem with our connected world is that you can never be completely sure that nobody is spying on you; the only way to remain secure is to keep all valuable data offline, always.
Short story? If you need to recover your hardware wallet – make sure you only ever do this on another hardware wallet. This will enable you to access all your original crypto accounts, without this incredibly sensitive piece of data being exposed online, and rendering your device useless.
Always double check
Aside from keeping your recovery phrase secure, it’s equally important that you’ve written down your 24 words correctly. Any error in spelling or word order would cause a different set of addresses to be generated – and not the ones you put your cryptocurrencies on.
To lend a hand with this, Ledger has developed a dedicated application to check if the recovery phrase you wrote down matches the one your device is currently set up with: the Recovery Check app. We also have you enter the correct 24 words during your device initialization phase, to make sure it’s written down well.
Larger than Ledger
Finally, it is worth noting that your recovery phrase would be usable to regain access to your cryptocurrencies if Ledger would ever cease to exist.
Ledger is not the only wallet provider to make use of a recovery phrase. These are part of a standard referred to as BIP-32. This means that if Ledger’s no longer around, you can always enter your 24 words into another compatible wallet to have access to your cryptocurrencies. You can also enter the recovery phrase of another wallet into your Ledger device. For optimal security, we only recommend doing this for other hardware wallet providers.
Note: Ledger hardware wallets only generate 24-word recovery phrases. You can also enter a 12, 18 or 24 word recovery phrase you received from a different wallet provider.
When a user first receives their Ledger wallet, it must always be initialised by following this process:
- Powering on the device
- Generating a pin code
- Generating 24 words
If a user were to receive a device containing a pre-completed recovery phrase or a pin code, the user should not use the device, as it means that the device may have already been used by somebody else. Ledger will never provide a pin code or recovery phrase with the product, nor ever ask for them. Under these circumstances, the user must contact Ledger customer support.
Knowledge is power.
Trust yourself and keep learning! If you enjoy getting to grips with crypto and blockchain, check out our School of Block video.