Private keys and recovery phrases

Keys and addresses

A private keyPrivate keyA secret number that proves you own the crypto in your wallet. Whoever holds the private key controls the crypto. is basically a huge random number. In Bitcoin and Ethereum it is 256 bits long, and the number of possible keys is a 78-digit number. That is why guessing someone else's key is, in practice, impossible.

A public keyPublic keyA key calculated from your private key that others use to verify your signatures, and that is safe to share. is calculated from the private key, and the wallet addressWallet addressA string of letters and numbers you give out to receive crypto, much like a bank account number. from the public key. The calculation only works in one direction. Anyone can see your wallet address, but nobody can work out the private key from it. This is made possible by CryptographyCryptographyMathematical methods that protect information and prove who sent it, forming the basis of security in crypto..

Think of a safe deposit box. The wallet address is like the box number, and the private key is the key to it. The difference is that there is no bank clerk who can open the box if the key is lost.

When you send crypto, your walletCrypto walletAn app or device that holds the keys to your crypto and lets you receive, store and send it. signs the TransactionTransactionA record of crypto moving from one wallet address to another, signed with the sender's private key and stored permanently on the blockchain. with the private key. The network checks the signature without seeing the key itself.

What is a recovery phrase?

Few people want to write down a 64-character string of numbers and letters. So most wallets show you a recovery phraseSeed phraseA list of 12 or 24 words that backs up every key in your wallet, so whoever has the words can restore the wallet and take the crypto. instead, also called a seed phrase. It is a list of ordinary English words, such as "ocean", "ladder" and "velvet", from which all the wallet's keys are derived.

Most wallets follow the BIP39 standard, introduced in 2013:

• The words are chosen from a list of 2,048 English words.
• 12 or 24 words are the most common, but the standard also allows 15, 18 and 21.
• The last word contains a checksum, so the wallet will usually notice if a word is misspelled.
• The first four letters are enough to tell each word apart from every other word on the list.
• The order matters. The same words in the wrong order won't open your wallet.

From the words, the wallet derives all its keys and addresses, both the ones that exist now and any created later. One backup of the words therefore covers the whole wallet. If your phone breaks, you install a wallet app on a new phone, type in the words, and everything is back.

Some wallets also offer an optional passphrase on top of the words. It adds security, but if you forget the passphrase you can't get into the wallet, even with the right words.

How to store your recovery phrase

Your recovery phrase is worth as much as the crypto itself. Treat it like cash in an envelope: whoever finds it can take everything.

Do this:

• Write the words down straight away when the wallet is created, in the right order and with a number next to each word. Check the spelling against the screen.
• Keep them offline, on paper or on a metal plate, which survives fire and water better than paper.
• Choose a safe place, such as a safe at home or a safe deposit box.
• Consider two copies in two different places, so a fire or flood in one place doesn't mean losing everything.
• Think about your family. If nobody knows the words exist, or where they are, the crypto may be lost if something happens to you. See Crypto and inheritance.

Don't do this:

• Take a photo or screenshot of the words. Photos are often backed up to the cloud automatically.
• Keep the words in email, a notes app, messages or cloud storage.
• Type the words into any website or app, except when restoring your wallet in the wallet app itself.
• Show the words to anyone or read them out, whether by phone, online or in person.

A hardware walletHardware walletA small device that keeps private keys offline and signs transactions inside the device, so the keys never reach your computer or phone. keeps your private keys offline, but its recovery phrase still needs to be stored the same way. If the device is lost, the words are the only way back.

If the words are lost or someone gets hold of them

If the words are lost but the wallet still works, for example if the paper was destroyed, create a new wallet with new words straight away, write them down and move your crypto across. You then have a valid backup again.

If both the words and the device are lost, the crypto is gone for good. No developer, miner, wallet maker or crypto exchange can retrieve it for you. The European supervisory authorities point out that losing private keys means a permanent loss that can't be undone.

If someone else has seen the words, treat the wallet as wide open. Create a new wallet with new words immediately and move your crypto across before the thief does. Blockchain transactions can't be reversed, so whatever is taken won't come back.

No legitimate service asks for your recovery phrase

This is the most important rule: never give anyone your recovery phrase or private key. No crypto exchange, wallet maker, support team or bank needs them. As Ethereum.org puts it, nobody needs access to your private keys.

Scammers still try to get them by various tricks. Common examples:

• Fake support. You ask for help on social media, and a "support agent" contacts you first and asks for your words to "fix" your wallet.
• Fake apps and websites. A copy of a well-known wallet, or a site that asks you to "validate" or "sync" your wallet using your words.
• Scare tactics. Messages saying your wallet is at risk and you must act immediately.

These tricks are known as PhishingPhishingA scam where criminals pretend to be a trusted company or authority to get you to hand over passwords, card details or your seed phrase. and social engineeringSocial engineeringWhen scammers manipulate people, rather than hacking computer systems, to get them to reveal information or send money.. If someone asks for your words, it is a scam, however convincing they seem. Read more about common crypto scams.

What if your crypto is with a custodian?

If your crypto is held by a CustodianCustodianA company that holds crypto and the keys to it on behalf of customers, such as a licensed crypto exchange., such as a crypto exchange, you don't get a recovery phrase for it. The custodian manages the keys, and you log in to your account. If you lose access to your account, the custodian can help you get back in after verifying who you are.

The difference between losing a login and losing a wallet key is explained in Lost access: your login or your wallet key?

Closing thoughts

The private key gives control over your crypto, and the recovery phrase is the backup of every key in your wallet. Whoever has the words controls the crypto.

Write the words down, keep them somewhere safe and offline, and tell no one. No legitimate service will ever ask for them.