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What Is a Recovery Phrase, Backup Phrase, Recovery Seed, etc? – [Crypto Safety 101]

What is a recovery phrase

If you have been in the cryptocurrency space for any amount of time you probably have heard of a recovery phrase, backup phrase, recovery seed, etc. They all are different terms but mean the same thing. For the purpose of keeping my sanity I’ll be referring to the term “recovery phrase” alone throughout most of this review but just know that when I say this I’m referring to all these terms.

Anyhow… what is a recovery phrase? From the sounds of it this seems to be some sort of phrase that has to do with recovering something. If this is what you are thinking then you are correct. That is the basic concept behind it but in this review I’ll be going over all you need to know about these things…. what they are for, how they work, using a recovery phrase, safety and more.


What Is a Recovery Phrase Exactly?

In the world of cryptocurrency, a recovery phrase is mnemonic phrase that you can use to recover a wallet of some sort, whether it be a bitcoin wallet, an Ethereum wallet, etc. Basically its a list of random words, usually 12 -24 words long, that you can remember to completely restore your wallet in case of a disaster.

So say your house burns down (lets hope not) and you have a hardware wallet that gets burnt to dust, or some kind of crypto wallet downloaded on your computer that becomes incinerated in the blaze. You are out of luck when it comes to actually getting the physical hardware wallet back or the computer back, but all you need is that recovery phrase to get your wallet back. So what you could do is re-download the wallet on another computer, or re-buy the hardware wallet and recover your account completely.

You will notice that with all the wallets out there they always tell you to write down your phrase, seed, whatever, right when you create your wallet or activate it for the first time. This is because it is an extremely important step that you do NOT want to skip. Make sure no one else sees this phrase and don’t store it on a computer. I would suggest writing it down on paper and storing it (preferably multiple copies) in a separate space.


How Can a Phrase Recover Your Account/Wallet?

It may sound like quite a strange and unimaginable concept that a bunch of words can recover your cryptocurrency wallets so I’ll do my best to break it down for you.

As you may or may not know… wallets don’t actually store your cryptocurrency… they just give you access to your account on the blockchain. In reality your cryptocurrency resides on the blockchain and even if you lose your wallet and recovery phrase the cryptocurrency still exists, you will just lose access to it.

With every wallet, Bitcoin wallet, Ethereum wallet, Litecoin wallet, Cardano wallet, etc there is a public address, which is the address you send your crypto to in order to deposit it into your wallet, and then there is the private key that is the key to opening your wallet up.

Your private keys are everything in crypto. They grant full access to your funds. In a nutshell a recovery phrase is a bunch of words that stands for your private key, which is really a bunch of numbers. So each of the words in your phrase stands for a number or numbers. The reason that they make recovery keys instead of just having people remember their private keys is because they are easier to memorize… or at least that’s how I understand it.

So just to reiterate, your recovery phrase is a phrase of words that stand for your private key that grants access to your account and all the funds within.


Recovering One Wallet With a Different Wallet

One thing that many people are unaware of is that with many of the wallets out there you can actually recover your accounts on a totally different wallet. For example if you lose your TREZOR hardware wallet and don’t have the money to buy a new one, you can download a software wallet like Electrum for free and use your recovery phrase to restore your account on it. And this is just one of many examples.

The Jaxx wallet has a 12 word “backup phrase”, TREZOR has a 24 word “recovery seed”,  the Electrum 12 word “seed phrase”, KeepKey’s 12 word “recovery sentence”, etc are all interchangeable. You can recover any of these wallets on another of the wallets because of the cryptography that they use.

Many of the wallets out there use BIP39 and BIP44 for encryption and because many of them use this they all are able to recognize the phrases and give access to the corresponding private key for your account.


Recovering Multiple Wallets from One Wallet (Confusing I Know)

Many of the different wallets out there store multiple cryptocurrencies. Just as an example, KeepKey can store Bitcoin, Litecoin, DogeCoin, Testnet, Ethereum, and Dash. So you may be wondering how one single recovery phrase can recover multiple crypto wallets that are all inside a KeepKey wallet like this or any other wallet with multiple crypto’s.

The way it works is like this: When you set up your wallet you write down your recovery phrase. This phrase is randomly generated and then all of the different wallets that you create within this one main wallet have private keys that are based on that phrase. So one phrase can be the key to multiple wallets basically.


On Problem To Be Aware Of

One thing you have to consider is what cryptocurrencies you have in your wallet.

What you have to be careful with is making sure that the new wallet you are restoring the old wallet on is compatible with all the different cryptocurrencies that were in your old wallet. If you have all the available cryptocurrencies I mentioned above on a KeepKey and you try to restore them to a wallet that only offers some of them then you won’t recover every account/wallet that was encrypted in that recovery phrase.

If you do run into this problem its nothing to be scared about. You just have to find a wallet that does offer all the crypto’s you had in the original.


The Process of Recovering a Wallet

The process of recovering a wallet with a recovery phrase is pretty simple and straightforward. It will differ slightly depending on what wallet you are using but the basics of it are that you will click somewhere within the wallet recover a wallet and you will be prompted to enter the recovery phrase.

With hardware wallets you will be instructed on what to do on the hardware wallet itself or you may have to type in the words based on what is displayed on the hardware wallet.KeepKey Recovery

But anyway you do it the process is pretty simple.


A Word of Caution

Beware of fraudulent wallets being sold or given away for free. If your wallet comes with a pre-determined keyword phrase then avoid it. Keyword phrases are created randomly by the wallet when you initially set it up.

If you buy hardware wallet or download a software wallet and it already has a recovery phrase set up then what is going on here is the scammer behind it has already set it up. And now they are waiting for you to deposit cryptocurrency into it so they can use the recovery phrase to get access and steal everything.

Just be aware of this because it does happen and its very unfortunate.

As always, leave any comments or questions below and I’ll get back to you soon 🙂

About the author

Mr Hodl

Hi, My name is Kyle but as the creator of this site I go by "Mr Hodl". After my first encounter with Bitcoin back in 2015 and becoming increasingly intrigued with the new emerging world of cryptocurrency, I thought it would be a good idea to create this site to provide guidance to others who are involved or looking to get into it. I hope you find my site helpful and thank you for stopping by!

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