You now know Bitcoin enables you live out the notion that you can 'be your own bank', subsequently security becomes the most important factor for protecting your digital Bitcoin assets. The way a bank uses a vault with a key or entry code to store reserves of physical money, your recovery words act as a key or entry code to the vault holding your digital money. Your recovery words are provided to you when setting up your Bitcoin wallet, now let's explain more about what they actually represent.
What do recovery words do?
Your recovery words (also known as seed words, seed recovery or seed key), take the form of a mnemonic phrase. The phrase you are given uses 12 random, human-readable words from the English dictionary. BIP39, is the improvement proposal that implemented the use of a 2,048 word list, from which your recovery words are randomly chosen, and the odds of guessing those words is pretty astronomical. Now that you understand what the recovery words represent, and that they're very secure, you will need to understand the importance of keeping those words stored safely, securely and out of range for potential harm.
I have my recovery words, now what?
An important thing to remember when storing your recovery words safely is to NEVER keep them stored digitally. This means, do not keep these words on any digital device like a computer or mobile device. While mobile devices are less prone to malware attacks than computers, malware is out there and can be used to locate recovery words stored on a device, that goes for screenshots, too! So, we recommend writing these words down, in the correct numbered order, on a piece of paper. If you are not confident enough in the durability of paper, fire-proof and more permanent methods of storing your recovery words. Once you have your words down safely (and maybe consider making more than one copy), you're going to need to find a safe place to store them. Some have chosen to keep them in a personal safe or even safety deposit box at a bank (ironic, isn't it?), but your best place will need to be determined at your discretion.
What do these recovery words do for me?
A great feature of securing your wallet with recovery words is that you can restore your wallet on any supported device using these words. Say for instance, you damage your mobile phone beyond repair. On this phone you had a Bitcoin wallet containing your Bitcoin. Once you've replaced the phone, you'll be able to download your wallet again, and then RECOVER your wallet by entering these recovery words in the correct order. Now, all the Bitcoin you owned in that wallet are still safe and ready for you to use in your new wallet. These words represent the private key to your wallet, and that key is unique to your wallet. You can also use these recovery words to access your Bitcoin with devices like Trezor (a cold-storage hardware wallet), or any wallet that supports BIP32 (Bitcoin Improvement Proposal); these types of wallets are often referred to as HD wallets. With these HD wallets, you can use your recovery words, even if provided to you by a different wallet, and you'll be able to access the Bitcoin represented by those recovery words.
- Write down your recovery words on paper or store them in a Cryptosteel-type device.
- Never put your recovery words on your computer or mobile device.
- Double check that they are correct
- Store them in a permanent safe place that you will remember.
- Don't share the location of your recovery words unless you absolutely need to, these word provide access to ALL BITCOIN in that particular wallet.