How to safely store seed phrases
We’ve all heard of the saying “not your keys, not your Bitcoins”. For newcomers, keys in that phrase represent the private keys to a coin that prove ownership. Keeping assets on exchanges is not always the best ideas as exchange hacks occur, there are no guarantees and there is even a rumour spreading that some exchanges are practising fractional reserves which could lead to catastrophic results especially during sharp downturns.
Cold Storage
The safest way to keep one’s crypto-assets is in cold storage away from the internet, hackers and all other possible threats. There are multiple cold storage options out there, each with pros and cons and the most popular being the Ledger Nano X, which is mobile compatible (by Bluetooth) and is able to store more than a hundred apps and more than 1000 cryptocurrencies. The second most popular on the market is manufactured by Trezor. Trezor One was one of the pioneers inside the markets and keeps maintaining its status. The wallet supports more than 40 cryptocurrencies and ERC-20 tokens. It also includes FIDO U2F support and an easy-to-use interface.
The one thing in common with all cold storage hardware is an emergency recovery seed phrase that is 12-24 words long, which acts like a secondary emergency key. This MUST be stored safely in case one’s device is stolen, broken, water-damaged or turned dysfunctional for any other reason. The seed phrase will become the only key left to unlock one’s assets before they get lost forever joining the millions of Bitcoins already lost.
The question becomes, we have a safe way to store our crypto-assets but how can we safely keep our seed-phrase away from intruders, thieves and natural disasters?
This journal covers this topic in particular and gives out several options available for one to safely store these valuable words which are divided into two categories: physical and digital.
Physical Storage
All hardware wallets come along with a piece of paper to be used for jotting down the words and storing the paper in a safe place, but what if it’s damaged or stolen? The easiest workaround would be to store several copies in several safe places. The second precaution one can take is to use steel plates to avoid damage, one option available out there is this modular steel cassette.
The main con that comes along with storing copies in different places is that your system becomes as strong as your weakest link. If one of these is found and stolen, the thief will have unrestricted access to your crypto-assets.
Digital Storage
This alternative to physical storage makes it much harder for theft if done properly, which certainly does not include screenshots or keeping the seed phrase in your notes app. The potential options are as follows:
- Password protected external storage
- Encrypted file uploaded to a cloud service (one or several)
- Encrypted file uploaded to external storage (one or several)
What may seem uncalled for right now can lead to a lot of regret down the road if an exchange hack occurs or one loses the seed phrase kept in the night table drawer. Taking the extra steps for precaution has never hurt anyone, the options stated in this journal could also be used in conjunction with each other or one on its own.
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