Private Keys Vs Seed Phrase: What’s the difference?
|— A private key and a seed phrase: two closely related concepts that are central to crypto security.
— Private keys in raw form are 256 digits long, making them impractical for storing, securing, and transacting with.
— Your seed phrase acts like a master key for all the accounts protected by the same wallet.
— Seed phrases are much easier to record and store than a list of private keys which makes restoring access to your wallet easy.
If you feel like you’re not sure which one’s which, then this is the article for you. Here, we get into the nitty-gritty of private keys and seed phrases and the differences between them.
If you have a crypto wallet, you’ve likely run into the terms private key, seed phrase, wallet and blockchain address. You might even know that you need to keep both your private keys and seed phrase safe, but do you know the difference between them?
Your private key and seed phrase are all part of a crypto wallet’s security features. And understanding the difference between them is imperative to keeping them safe.
Let’s explore why.
What is a Private key?
Private keys are the central element of crypto ownership. Blockchain is a digital storage network, and having the private key for a given blockchain address means that you control everything at that address. Your crypto wallet generates a private key (along with a corresponding public key) any time you create a blockchain address.
The best way to think about key pairs is by imagining your public key as a PO box: it allows others to find you, and send you things. In contrast, the private key lets you access what’s inside and send assets, much like having the key to the mailbox. In essence, your private key is what gives control over a specific account and all of the assets it contains. This is why it is so important to manage your private key responsibly.
The problem with Private Keys
Private keys might well be at the center of your crypto control, but they come with a key difficulty: they are long and complicated. To explain, in raw form, a private key is a string of 256 alphanumeric characters. A string of characters this complex isn’t a practical format for humans to record. Remember – a mistake on the blockchain cannot be undone, so the sheer length of private keys makes them risky. It’s all too easy to record a private key incorrectly, and if you do you lose access to your crypto.
This issue is amplified when aiming to manage multiple accounts. Recording multiple private keys accurately and storing that record offline is not as easy as it seems. Anyone managing multiple acccounts needs a wallet capable of storing multiple strings of characters without mistakes.
The Solution: a simple-to-read mnemonic, your seed phrase
Your seed phrase, also called a secret recovery phrase or mnemonic phrase is a series of 12, 18, or 24 words used for backing up a crypto wallet. Essentially it acts as the master key for all of your private keys. These words, when entered into another crypto wallet (in the correct order) will recover all of the private keys you were storing in your original crypto wallet. Having this phrase means that even if you lose access to your crypto wallet, you can restore your accounts with ease. It also means you don’t need to record each private key separately. HD wallets use the same derivation path which means that with the same seed phrase, you can always recover the same set of private keys, and thus unlock the same accounts.
How does my seed phrase work?
Your seed phrase may seem like a string of random words, and in a way, it must be. To clarify, your seed phrase is a derivation of a long random number called the entropy. This number must be very random, as otherwise, an attacker may be able to access your assets by guessing your seed phrase. Although the basis of the number is random, your seed phrase always contains words from a list of 2048 possible English words. This is referred to as the BIP-39 standard Word List, and most hierarchical deterministic crypto wallets use this standard today. As such, you can restore your crypto wallet using any wallet provider that supports this standardization.
Private Keys Vs Seed Phrase: The Similarities
Keep them both offline
Unfortunately, your web2 device, be it a phone or computer, is just about the most unsafe place you can keep your private key or seed phrase. Anything connected to the internet can be targeted via remote hacks and malware, allowing bad actors to view data stored on your computer, possibly even extracting your private keys or seed phrase. This is why computer storage simply is not a secure solution.
Software wallets (also known as hot wallets) store private keys and seed phrases directly on their host device. This is simple fact creates a huge security vulnerability. As such, software wallets are less suitable for protecting assets long-term. A much better solution is storing those private keys offline in a paper or hardware wallet. For example, Ledger devices store your private keys offline and allow you to sign transactions in an environment isolated from your web2 device such as a smartphone or laptop. Offline storage is the only safe solution for storing these keys as it keeps you safe from hackers.
For the same reasons, you should never upload a text or image copy of any crypto wallet seed phrase to any online storage services. Uploading your seed phrase to the cloud may be all a hacker needs to gain access to your accounts.
Private Keys Vs Seed Phrase: What’s the Difference
Your seed phrase controls many accounts whereas each private key controls just one
Each crypto account in your wallet is controlled by a separate private key. This private key is what allows you to sign transactions, verifying that you agree to the terms of each proposal. Each transaction you sign is executed one specific account, which is signed with the corresponding private key. That means that if you approve any smart contracts, they will only be able to access your assets in that account. By extension, that also means that if a bad actor gains access to that private key, they will only be able to move assets in that specific account.
Unlike your private keys, it’s not possible to sign any transactions directly with a seed phrase. However, anyone with your seed phrase has instant access to every private key (and therefore every single account) in your crypto wallet. If it falls into the wrong hands, the potential risk to your crypto is far greater than just exposing a single private key. As such, learning how to store your seed phrase safely is imperative.
Manage Your Crypto With Confidence
Blockchain, a vast public network of digital storage, revolutionized our monetary system, and many other things too, by enabling users to own digital assets independently of a bank or third party. Your private key is what links you uniquely to your blockchain address, while your seed phrase is a fingerprint of all your blockchain assets that you can use as a back-up if you lose your crypto wallet.
Blockchain can be a tricky space to master, with new terms to understand and new risks to be aware of. But by continually educating yourself on best practices and the tools available to you, you’ll leave yourself free to enjoy the spoils of being your own bank, without the stress.