As you know, a seed phrase (not your private key) gives you the possibility to restore your cryptocurrency wallet. In that way, your seed phrase is already a backup of your wallet.
Your private key is what links you uniquely to your blockchain address, while your seed phrase is a fingerprint of all your blockchain assets that you can use as a back-up if you lose your crypto wallet.
This also means that if someone other than yourself gets their hands on your seed phrase, they can restore your wallet and access your funds from wherever they are.
It’s something you have to keep safe in order to protect your funds.
Risks of not having a seed phrase backup
So what exactly are the risks if you don’t take care of your seed phrase? What can happen if you’re not having a backup of your seed phrase and you lose it or it gets stolen?
And most importantly, what’s the safest way to make a backup of your seed phrase?
You can lose or forget your seed phrase
Some people make it a sport to remember a large number of decimals of the number pi. There are many tricks to train your memory. So it is possible to memorize your seed phrase, if you want to.
That way no one else knows it. Your seed phrase is, at least temporarily, safely stored in your head. And this without backup on a computer, which has the potential to break or being hacked.
But, no matter how good your memory is, there are always risks involved in keeping the seed phrase only “in your head”.
For example, you may temporarily lose your memory or forget some things over the years. An accident and a concussion can make you forget things that you knew perfectly well before.
Once you forget your seed phrase, it’s over. If you have no backup when that happens, you no longer have the ability to restore access to your wallet and funds.
There’s no way to reset your seed phrase
Everyone forgets a password once in a while. Fortunately, every account or website then has the option to recover your password. You simply enter your username or email address and a new password is promptly sent to you.
Easy, but never 100% secure since it’s centralized.
In crypto, passwords (private keys and seed phrases) are different. You can’t just request a new private key or seed phrase. It’s unchangeable and will be the same forever.
This is another risk of not having a backup of your seed phrase: once lost, you’re not able to reset it, ever.
Self-sovereignty = freedom, but more responsibility and risk
Crypto works with the principle of self-sovereignty.
When you send or receive crypto, transactions are collectively recorded on the blockchain. This has the great advantage that there are fewer intermediaries such as bankers or lawyers. Everything is stored on a public ledger, available for everyone to see.
This is by the way why banks hate crypto, it largely undermines their business model and they’re afraid of losing powers and control.
That said, the freedom of self-sovereignty also puts all responsibility over your digital assets in your own hands. There is no banker to advise or help you. There’s no one helping to keep your seed phrases safe, or make a backup for you.
Keeping your funds safe in crypto is completely up to yourself. If you don’t take care of a proper backup of your seed phrase, then there is a risk that you’ll lose access to your cryptocurrency one day.
No seed phrase backup = disaster waiting to happen.
So, what’s the conclusion? As long as you know your seed phrase, you can call yourself the proud owner of your wallet and funds.
But once your computer breaks down, you lose your memory, or the paper where your seed phrase is written gets lost, you’re unable to restore your wallet and your funds will be inaccessible forever.
There is literally no valid reason not to make a secure and decentralized backup of your seed phrase.
How to create a safe backup of your seed phrase?
That’s where Safe Haven’s flagship product Inheriti® comes in.
It’s the only safe and 100% decentralized solution to securely backup your seed phrase. And we have multiple patents in different jurisdictions around the world.Back to wiki