Seeds and mnemonic codes

Non-deterministic wallets are not very accessible and uncomfortable for users because they must back up each private key independently. Deterministic wallets arrived later and solve the problem of portability and make the management of multiple keys more user-friendly.

What is a master key

The master key of a deterministic wallet, also called recovery key or seed, is unique and allows to generate a number of private keys within the same wallet.

This recovery key of our accounts in a wallet is composed of a series of 12, 18 or 24 words in English that we must write down and keep in a very safe way. Its loss or theft will result in the loss of our accounts and the keys that hold the cryptocurrencies. No one can help us recover this master key if we lose it.

These words that make up the master key, called mnemonic codes, are completely readable for a user and easy to transcribe, export and import. Unlike having to store a hexadecimal string.

Deterministic key generation

If you use a wallet like Metamask as a browser plugin, with it you can create as many accounts as you want.

If you download the Metamask Android or IOS app and restore your wallet with the master key, a funny thing happens. You will find that the wallet only has one account and you will have to generate the others again.

You will notice that the accounts it generates are exactly the same as the ones you have in the browser. As its generation is deterministic, the order of creation of the accounts is always the same.

I invite you to create a wallet in Metamask or in your wallet of choice and use it on multiple devices and learn more about account creation.

There is also a more advanced version of deterministic wallets called HD Wallet or Hierarchical Deterministic Wallets. These allow secondary keys to be generated hierarchically and kept secure.

Safekeeping of private keys

It is your responsibility to keep the private key or the recovery words of your wallet in a safe way in order not to lose your money and to avoid theft.

It is not advisable to save this information in a digital format such as a password manager like BitWarden or a simple text file in Drive.

It is advisable to store this information offline, in analog format. For this you can investigate services or products such as:

• Paper wallets: allow you to print on paper your passwords and store them in a safe or a secure place that only you know, as if it were cash. Services like BitAddress or Bitcoin.com.
• Cryptosteels: allow you to store your recovery words in stainless steel products that are resistant to fire, acid, water and the passage of time.

If you are going to store value and large sums of money in cryptocurrencies, look for the best way to safeguard your private keys. It is your financial responsibility to do so and to have your money insured. A traditional bank could help us recover our password. In the decentralized world, no one will help us and we may lose our savings.

Conclusion

The user experience of wallets for storing private keys has been evolving and there are better and better ways to keep this information not only secure, but also portable and readable.

Today, non-deterministic wallets are used only by professionals or those who have been around the Blockchain world for many years. As new users, our wallets will most likely be deterministic.

Also, take responsibility for your private keys and be aware of the importance of storing this information correctly. We are human, we forget things and it is best to be cautious about what we do with our money.

Contribution created by: Kevin Fiorentino (Platzi Contributor).