When venturing into the world of cryptocurrencies, one of the most important things to consider is the security of your assets, which boils down to private keys and seed phrases. They play an important role in controlling your wallet and getting a backup of your accounts. In this article, we’ll talk about how they work and their differences.
What is a Private Key?
A private key is generated when a wallet is created. It consists of a unique string of characters and numbers of length 256 bits and only by employing the correct private key can a trader access and control their wallet. A public key will be generated based on the private key and can be used to facilitate transactions. Furthermore, a public address(shortened form of public key) will also be generated, which a trader can share to receive funds from others to their wallet. Basically, a public address represents a destination for blockchain transactions. Unlike a public address, which can be shared with anyone, private keys need to be kept confidential.
Example of a private key:
AdjfhREc3847384dewFE534E……d4w3SS434s490
When a trader wants to transfer or send cryptocurrencies, private keys are necessary to sign transactions and verify ownership before they can proceed. The main problem with private keys is that they are long and difficult to remember. If a trader uses the wrong private key or forgets their key, they won’t be able to access their account (address). To solve this issue, they need to use a seed phrase.
What is a Seed Phrase?
Seed phrase is also called the recovery phase or secret phrase. They are a group of random words clubbed together in the form of 12,18 or 24 words and are created when the wallet is initialized. Seed phrases follow a standard called BIP39, which was specifically developed to create a reliable and easy-to-remember method for traders to back up and recover their crypto wallets. When traders forget or lose their private key, they can use seed phrases to recover their private keys for all their accounts in a wallet.
Example of a seed phrase: Apple, Bright, Drift, Ecology, Cat, Flower, Chair, Melt, Rescue, Image, Three, Water
Each of these words is randomly chosen for a list of 2048 standardized words, according to the BIP39 protocol. Furthermore, when using them to recover your wallet, the order of the words is crucial because if there is a mixup in the order of the words, your wallet cannot be restored.
How Does Private Key Work in Crypto?
A private key is a string of numbers and characters that are used to secure and control the assets within your wallet. They are generated in the format of 64-character hexadecimal strings and are randomized to maintain safety and security. Although public keys are generated based on private keys, it is impossible to figure out private keys using them because they employ one-way communication, from private to public. Furthermore, all the funds sent to you will be sent to your public address and can be accessed through the wallet.
When sending funds from your wallet, under normal circumstances, the private key will digitally sign them to verify the ownership of the funds and authorize the transfer from your wallet to another account. Additionally, a unique signature will also be created along with the public address, which allows the network to verify the transaction without leaking your private key.
How Does Seed Phrase Work in Crypto?
Seed phrase is specifically designed to act as a backup for accessing your wallet when the private key is lost, or your wallet is damaged. The seed phrases, which are about 12 to 24 words, are chosen from 2048 words that are standardized by the BIP39 format. Entropy (random data) is run through a hashing function called SHA256 to generate a checksum, which is then added to random data to get the final output. The resulting output is split based on 11-bit chunks, which are then mapped to a word in the 2048-word list generated by BIP39.
Difference between Private Key and Seed Phrase
| Feature | Private Keys | Seed Phrases |
| Format | 256-bit format | 12-24 word phrase |
| Purpose | Gain access to the account, sign and verify transactions | Wallet recovery |
| Risks | Easy to forget or lose, and if this happens, access to funds is gone. | If a word phrase is exposed, anyone can access and control the wallet. |
| Complexity | Difficult to remember | Easier to remember |
| Control | Direct control over transactions | Indirect control |
Private Key vs. Seed Phrase: Which is More Secure?
When it comes to wallet recovery, seed phrases are more secure because they allow traders to recover access to their wallets. If your seed phrase is compromised, you might end up losing control over your wallet with no way to gain back control. In contrast, a private key is more secure because it is the only way to gain access to the account. However, it is extremely difficult to manage because of its complexity and length.
Conclusion
In the world of cryptocurrency, both private keys and seed phrases are crucial for securing access to your wallet and assets. While private keys offer direct control over transactions and wallet access, they are complex and difficult to manage, especially given their length. Seed phrases, on the other hand, are a more user-friendly backup solution, allowing wallet recovery if the private key is lost. However, they also pose risks if exposed, anyone can access your wallet. Ultimately, the security of your wallet depends on how well both are managed and stored. Using a combination of offline storage and strong encryption can significantly enhance the safety of your crypto assets.
