The worst places to keep your crypto wallet seed phrase – Vijay Gir
November 14, 2024
Analysis

The worst places to keep your crypto wallet seed phrase

Crypto Live India

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Under the mattress, in the seams of a piece of luggage or even rolled into a cigar, what are the worst and best ways for keeping a seed phrase safe? The key to unlocking and recovering cryptocurrency, a seed phrase, should be secured and safe. 

Especially now that prices are low and the crypto tourists have checked out, it might be time for a crypto security spring clean. Security starts with a seed phrase, sometimes called a recovery phrase.

There’s no denying it: Bitcoin and the crypto space writ large are in the clutches of a bear market. Since Do Kwon’s Terra experiment went up in smoke, a crypto contagion has choked the most reputable of exchanges, causing many self-sovereignty advocates to chant, “not your keys, not your coins.”

Indeed, hardly a day goes by that another “trusted” crypto lender freezes customer withdrawals. From Singapore’s crypto lender Vauld to Thailand’s crypto exchange with 200,000 customers, Zipmex, to the world-renowned Celsius exchange, many centralized lending platforms have suffered similar fates, ensuring heartbreaking consequences for customers in 2022.

These circumstances are timely reminders to look after one’s own keys and to ensure they are in a safe place. So, while prices are low and trust in centralized exchanges (places that claim to look after crypto), also hits rock bottom, there is no better time to up the security of one’s crypto assets.

Seed phrases save lives

A seed phrase, sometimes called a private key, is a list of 12 or 24 words forming a mnemonic phrase. Metaphorically speaking, a hardware wallet, or cold wallet, contains these keys providing a convenient way of sending, or “signing” funds. 

If looked after properly, a seed phrase can save lives, as Alex Gladstein, a human rights activist and chief strategy officer at the Human Rights Foundation, often states. For example, if a burglar steals a hardware wallet but not the seed phrase, it’s no critical issue — the seed phrase can be used with a new wallet. If a government or bad actor forces you to flee, the 12 or 24 words can be used anywhere in the world to access Bitcoin (BTC) or crypto funds.

Goldbug and Bitcoin skeptic Peter Schiff once bungled his seed phrase, confusing it for his pin code. That’s the first mistake to avoid. Now, here are some other examples of where not to store a seed phrase.

Open secrets

The couple in possession of the Bitfinex billions in Bitcoin, who stored their seed phrase on their cloud storage account, take the first prize. As Cointelegraph reported, cybercriminals Heather Morgan and her cybersecurity specialist husband, Ilya Lichtenstein, stored their seed phrase on a cloud storage account. As such, the FBI only had to crack their iCloud password to gain access to over $4 billion in BTC at the time of reporting. The lesson here is to not store let your seed phrase on the internet. That means your Evernote notes, in a draft email or even in a low engagement tweet:

Similarly, as Cointelegraph reported, one must never type a seed phrase into a phone. Why? Because, as one Redditor realized, smartphone text prediction could actually guess a seed phrase. Text prediction, while at times useful for tricky spelling or emojis, is counterproductive when it comes to protecting personal wealth.

Although it sounds fitting, a fridge is also not the ideal place for the “cold” storage of cryptocurrencies. A Bitcoin enthusiast replied, “Fridge,” to the question “where is the weirdest place to store a seed phrase?” without explaining whether the seed phrase should be stored inside or on top of the fridge. As it turns out, a nonfungible token (NFT) fan had already stored a seed phrase on the fridge:

Cointelegraph’s editor-in-chief, Kristina Lucrezia Cornèr, suggests that the worst place for a seed phrase to be stored is in bad memory. Indeed, unlike dates of historic battles, car keys or the names of acquaintances from passages of life, a seed phrase should be wholeheartedly committed to memory. 

Among the more creative yet memory-exhaustive methods are memorizing “pages, lines and words from favorite books,” which for one Bitcoiner means storing the seed phrase on pages 100 to 112 of a Harry Potter text. Which one of the eight or more books Harry Potter books is anyone’s guess. Fortunately, there are now nifty ways to memorize a seed phrase. MTC, a Bitcoin educator who thought up the Sats Leger savings device, concocted a way to memorize a seed phrase in just 10 seconds through patterns.

Playing it safe

But, what do the experts have to say about seed phrases? Chris Brooks, founder of cryptocurrency recovery business Crypto Asset Recovery, told Cointelegraph that in his experience, human error can eradicate wealth. People should be more worried about leaving their seed phrase or private keys in paper wallets that can be mistakenly thrown out rather than hackers or scammers. Brooks explained:

“You have a far greater chance of moving to a new apartment and losing your crypto password in the process than you do of getting hacked.”

The Brooks family behind Crypto Asset Recovery operated a “seasonal business,” as in every bull market, such as in 2017 and 2021, the crypto crackers are called upon by crypto enthusiasts who have forgotten their passwords or lost their seed phrases. At one point in 2021, they told Cointelegraph they had up to 150 customer calls in a day. Their one big piece of advice for managing seed phrases is to keep it simple:

“So generally speaking, our security tips are pretty basic. Get a $30 safe off Amazon or, you know, build a little wooden box that’s easily identifiable as a place for secure documents and just store your seed phrases there.”

They suggest putting anything important into that box. That way, whenever “you’re doing spring cleaning or when you’re moving houses, you’re not going to throw it out. You’re not going to shred the paper or something like that.”

Related: NFT, DeFi and crypto hacks abound — Here’s how to double up on wallet security

However, because it’s crypto, those of a physical persuasion may be more inspired to store their seed phrases in some even more creative storage “boxes.” Bitcoin advocate, onthebrinkie 3D printed an adult toy suitable for an OpenDime (like a USB key for Bitcoin) or a seed phrase to be hidden away. The inspiring idea is that if an intruder breaks in, they might steal the wooden box full of important documents, but no one in their right mind would steal a sex toy.