Seed phrase (a crypto wallet’s recovery or mnemonic phrase)

A seed phrase (also called a recovery phrase or mnemonic phrase) is a list of words (12 to 24 under the BIP-39 standard) that encodes the secret from which a wallet derives its private keys: whoever has it can rebuild the wallet on another device and move its funds. That is why it works as a master backup and is never shared with anyone. The reference standard is BIP-39, "Mnemonic code for generating deterministic keys," with "Deployed" status in the official repository of Bitcoin Improvement Proposals (BIPs).

How it is generated under BIP-39.

• Random entropy of 128 to 256 bits, in multiples of 32, is generated, and a checksum taken from its SHA-256 hash is appended.
• The result is split into 11-bit groups; each group is the index of a word in a list of 2,048. That produces phrases of 12, 15, 18, 21 or 24 words.
• The phrase, with an optional passphrase, runs through the PBKDF2 function with HMAC-SHA512 and 2,048 iterations, producing a 512-bit seed.
• The keys are derived from that seed using the BIP-32 standard (hierarchical deterministic wallets) or similar methods.

Any passphrase generates a valid wallet, but only the right one opens the intended wallet: forgetting it means losing access. The BIP-39 repository includes a Spanish word list, although BIP-39 itself strongly discourages using lists other than the English one, because the vast majority of compatible wallets only support that one.

How it relates to the keys. The seed phrase is not the private key but its source: the wallet's private and public keys come from it. A cold wallet protects the keys while the device works; the phrase lets you recover them if the device is lost, broken or stolen.

Good practices.

• Never share it. The SEC puts it this way in its investor bulletin of December 12, 2025 (educational material, not a rule): store it in a secure place and do not share it with anyone. Anyone who asks for it, even claiming to be tech support, can empty the wallet.
• Write it down offline, on paper or metal, and do not type it into websites, chats or forms.
• Keep copies in separate, protected physical locations, so that a single incident does not destroy them all.
• Store the optional passphrase separately, if you use one.
• If someone may have seen it, move the funds to a new wallet with a new phrase.

Seed phrases and custody. In self-custody, the phrase is the holder's sole responsibility: if it is lost, no one can replace it. When a provider holds assets on behalf of clients, it controls the means of access to their crypto-assets, "where applicable in the form of private cryptographic keys" (Art. 3(1)(17) of MiCA), and its custody policy must minimize the risk of losing them through fraud, cyber threats or negligence (Art. 75(3)). In companies, instead of a single phrase in one person's hands, multisig or MPC schemes with a defined recovery procedure are used, like the ones we design in wallet and custody development.

Official sources: BIP-39 (official BIP repository); BIP-39 word lists; BIP-32, hierarchical deterministic wallets; SEC, Crypto Asset Custody Basics for Retail Investors (Dec. 12, 2025); Regulation (EU) 2023/1114, MiCA (EUR-Lex).

Framework verified as of October 13, 2026. At Unknown Gravity we design wallets and signing and recovery processes for companies. Talk to us.