When you create a cryptocurrency wallet, you receive a list of 12 words that can unlock your wallet. This list of words is called a seed phrase, backup phrase, recovery phrase or passphrase. It is somewhat annoying that the same thing carries so many names, but that’s what often happens in decentralised communities like blockchain. In Blockbasis we decided to call the phrase that unlocks your account the passphrase, so that is what we will call it for the rest of this article.
If you have been in cryptocurrency for some time, you might remember how it used to be when you had to unlock your Bitcoin by entering the passphrase into the Electron Cash application:
It is essential that this phrase is kept in a safe and secret location. Whoever has access to this passphrase has access to your wallet, and ultimately, your cryptocurrency funds. The phrase is autogenerated when creating the wallet, and cannot be changed, hence this phrase should not be shared with anyone.
To keep the phrase safe and in secrecy, a good idea is to write it down on paper. Never stored on any digital device, which is prone to cyberattacks and hacks. Many find it convenient to split the phrase into multiple pieces and save them in different locations, for added security. You may also want to consider keeping all your information on an encrypted hard drive. If you do that, make sure to use a two-factor authentication login and disable automatic login.
When do you need a passphrase?
The usage of your passphrase depends on where you have created your wallet. In general a passphrase is used when
- You forget your private key
- Your device that you normally access your wallet is lost or stolen
- Your hardware becomes corrupted or compromised and has to be reconfigured
On Blockbasis, we have taken all the security measures we can to protect our users. Users can login using Google login or email/password like most other non-decentralised cryptocurrency platforms, but when it comes to making a transaction – like a transfer or a trade – then a user is asked every time for the passphrase to unlock their wallet. In that sense, a passphrase acts as a two-factor authentication for every Blockbasis user, which ultimately prevents any wide-scale attacks to affect our users.