Explainer · Crypto Safety
Seed phrases and private keys: the basics that protect you
Two secrets decide who controls a self-custody crypto wallet. A private key signs transfers, and a seed phrase can rebuild the keys. Lose them and the crypto is gone; reveal them and someone else can take it.
Quick answer
A private key is a secret code that authorises transactions from your wallet. A seed phrase is a list of words, 12 to 24 under the BIP-39 standard, that can restore the wallet and its keys [4]. Anyone holding either can move your crypto, so never share them [1].
Key points
- A private key authorises transactions; a public key only lets others verify transactions and send you crypto [1].
- A seed phrase can restore your wallet if you lose the device or the private key [1].
- Under BIP-39, a phrase has 12, 15, 18, 21 or 24 words taken from a list of 2,048 [4].
- Lose both the key and the phrase and access is gone for good [1]; reveal either and someone else can move the crypto.
- Never type your seed phrase into a site reached from a message you did not start; the FBI has seen fake reward sites ask for it [3].
On this page
What is a private key?#
The SEC describes a private key as a randomly generated alphanumeric passcode that allows you to authorise transactions for a crypto asset [1]. In plain terms, it is the secret that lets you sign a transfer.
The Bitcoin whitepaper shows why that signature matters. Each owner transfers a coin by digitally signing a hash of the previous transaction and the next owner's public key, and anyone can check the signatures to verify the chain of ownership [2]. The network does not know your name. It only knows whether a valid signature was made with the right key.
Every private key has a matching public key. The SEC explains that the public key is used to verify transactions and receive crypto, does not give access to the private key and cannot authorise transactions [1]. You can share the public side so people can pay you. You never share the private side.
What is a seed phrase?#
A seed phrase is that backup. The SEC defines it as a random sequence of words that lets you restore your crypto wallet if you lose it or your private key [1]. The FBI puts it more bluntly: a string of 12 to 24 words that serve as "the key to a user's crypto" [3].
One standard for seed phrases, BIP-39, was first assigned in 2013 and is marked as deployed [4]. Its authors chose words because a sentence is easier for people to handle than raw binary or hexadecimal numbers [4]. Words are easier to write down, read back and check. They are just as easy for a thief to copy.
The figures on this page come from BIP-39. The standard does not claim every wallet uses it, so check your own wallet's documentation for how its backup works.
Seed phrase vs private key: what is the difference?#
The short version: a private key unlocks what it controls, and a seed phrase can recreate the keys. The comparison below sets out what each does, what it covers and what losing or leaking it means.
| Question | Private key | Seed phrase |
|---|---|---|
| What is it? | A random secret code | A list of words that encodes random data |
| What does it do? | Authorises (signs) transactions | Restores the wallet and regenerates its keys |
| What does it cover? | The crypto that key controls | Every key the wallet generates from it |
| If you lose it | Access lost unless the seed phrase can restore it | No way to restore the wallet if the device or key is also lost |
| If someone else gets it | They can sign transfers of that crypto | They can rebuild the wallet and move what is in it |
Sources: SEC custody bulletin [1] and the BIP-39 standard [4].
How do a few words turn into your keys?#
BIP-39 starts with a random number between 128 and 256 bits long [4]. That number, plus a short checksum, is cut into 11-bit groups, and each group is used as an index into a fixed list of 2,048 words [4]. The words you write down are simply that number spelled out.
To turn the words into keys, the wallet runs them through a function called PBKDF2, with 2,048 rounds of HMAC-SHA512, and gets a 512-bit seed [4]. An optional passphrase can be added at this step: it is joined to the word "mnemonic" and used as the salt [4]. The wallet then generates its keys from that seed, which is why the same words always rebuild the same wallet.
The length of the phrase depends on how much randomness the wallet started with. BIP-39 allows five sizes, listed in the next table with the checksum and the total each word count carries.
| Phrase length | Random bits | Checksum bits | Total bits |
|---|---|---|---|
| 12 words | 128 | 4 | 132 |
| 15 words | 160 | 5 | 165 |
| 18 words | 192 | 6 | 198 |
| 21 words | 224 | 7 | 231 |
| 24 words | 256 | 8 | 264 |
Word counts and bit sizes from the BIP-39 table [4]. Totals checked in code as words × 11 bits (calculated).
What happens if you lose or share them?#
If you lose the device and the private key but still have the seed phrase, you can restore the wallet [1]. If you lose all of them, the SEC is clear that access can be lost permanently [1].
Sharing is worse, because it is fast and silent. Anyone holding the words, and the passphrase if you set one, can regenerate the same wallet [4] and sign transfers from it. Bitcoin was designed so that transactions are computationally impractical to reverse [2], so a theft cannot be undone by asking. The FBI describes exactly this: a fake site asks for the seed phrase "to complete the connection", and the information entered lets the criminal steal the crypto from the wallet [3]. More patterns like this are on our page about crypto scams.
How do you protect a seed phrase?#
- Write it down when the wallet shows it
The phrase is the backup that restores the wallet if the device or key is lost [1]. Check every word and its order against the screen.
- Store it in a secure place
The SEC's advice is to store your seed phrase in a secure place and not share it with anyone [1]. Our sources do not rank physical storage methods, so think about fire, water, theft and who else can reach it.
- Never enter it because a message asked you to
The FBI says not to respond to requests for passwords, seed phrases or one-time passwords if you did not start the contact [3].
- Check offers with the provider itself
If a "free token" or reward appears out of nowhere, the FBI advises verifying it with the crypto provider before accepting it or giving any information [3].
- Keep your holdings private
The SEC advises not sharing the amount or types of crypto you hold with anyone [1]. A known balance invites targeted attempts.
If holding your own keys feels like too much responsibility, that is a real consideration, not a failure. Our guide to custodial vs non custodial wallet set-ups compares the risks of letting a company hold them instead.
Mistakes beginners make with seed phrases and private keys#
- Keeping the only copy on a connected device
The SEC notes that being connected to the internet exposes crypto to cyberthreats [1]. We apply the same logic to a photo, note or cloud file of your words.
- Having no backup at all
A lost, stolen or damaged wallet with no backup can mean permanent loss [1].
- Mixing up the public and private key
The public key is for receiving and verifying; it cannot authorise transactions [1]. The private key is the one that must stay secret.
- Forgetting that a passphrase was set
With BIP-39, the passphrase is part of how the seed is made [4]. The words alone will not rebuild the wallet you used.
Frequently asked questions#
Is a seed phrase the same as a private key?
Can someone guess my seed phrase?
A 12-word BIP-39 phrase has 2 to the power 128 possible combinations, a 39-digit number (calculated). Our sources do not estimate how long guessing would take. The realistic danger is being tricked into revealing it, which the FBI has documented [3].
Do I have a seed phrase if my crypto is on an exchange?
Usually not one you hold. With third-party custody, the provider holds the assets and manages the keys [1], and you sign in with the account login instead.
The bottom line#
A private key signs, a seed phrase rebuilds, and either one in the wrong hands is enough to empty a wallet. Write the phrase down once, keep it somewhere secure and offline, and treat every request for it as a scam until proven otherwise. If that responsibility does not suit you, compare the alternatives before you buy, and read the risk disclosure first.
Sources
- Crypto Asset Custody Basics for Retail Investors - Investor Bulletin.
- Bitcoin: A Peer-to-Peer Electronic Cash System.
- Cybercriminals Defraud Hedera Hashgraph Network Non-Custodial Wallet Users Through Nonfungible Token Airdrops Disguised as Free Rewards.
- BIP 39 - Mnemonic code for generating deterministic keys (bip-0039.mediawiki, bitcoin/bips repository).
- What To Know About Cryptocurrency and Scams.
Education only. This page is not investment, tax or legal advice. Trading and crypto can lose you money. See our risk disclosure.
