Is a passphrase more secure for your seedphrase?

Team Cypherock
Team Cypherock
November 21, 2023 5 min read
Is a passphrase more secure for your seedphrase?

Introduction

When it comes to cryptocurrency, our primary concern is safeguarding our funds. The one thing that must be protected at all costs is the seed phrase. Without your seed phrase, you would permanently lose access to your funds and assets.

Sure, it is crucial to protect your seed phrase, and a cold wallet provides an excellent solution for this purpose. However, is there anything else that can be employed to add an extra layer of security and protection to your seed phrase?

The answer is yes. A passphrase can be used to add an additional layer of security to protect your seed phrase. As is often the case, features come with both benefits and drawbacks. While passphrases offer various advantages, they also entail certain risks. In this article, we will explore how passphrases enhance the security of seed phrases, thereby safeguarding your funds, and discuss why you should consider using them, as well as the associated risks. This blog will serve as an added extension to our seed phrase vs passphrase blog.

How does passphrase improve security for seed phrases?

A passphrase is a user-chosen phrase or word that adds extra security to your seed phrase. It is case-sensitive, and spaces are significant. For instance, consider examples like “cypherock,” “cypher rock,” and “cypher-Rock”; each of these creates distinct wallets. Only you know your passphrase, and it’s not stored or generated by your wallet. Think of it as the extra puzzle piece required to complete the full picture. This “25th word” works in conjunction with your 24-word seed phrase to derive your wallet’s private keys, public keys, and addresses. By default, wallets use a blank passphrase. Read this blog post to learn more about seed phrases and passphrases in depth.

In simple terms, passphrases in crypto wallets are similar to PINs for your bank account or passwords for your mobile apps. They grant access to your valuable assets. However, it’s important to note that, technically, a passphrase is not a password for your wallet, it is an additional component of the seed phrase used to derive private keys and more.

Looming Vulnerability

Now how does this passphrase improve the security of your seed phrase? Most of the hardware wallets store your seed phrase within their device. Unfortunately, these wallets can be inherently vulnerable to physical attacks like Electromagnetic Fault Injection (EMFI), Laser Fault Injection (LFI), and Side Channel Analysis (SCA), making it possible for skilled attackers to extract your seed phrase.

When you use a passphrase alongside your seed phrase, it serves as a critical layer of security. Even if an attacker gains access to your seed phrase through hacking or accidental exposure, they won’t be able to access your cryptocurrency funds because they lack the 25th word, which is the final piece needed to unlock your wallet. Therefore, by safeguarding your passphrase, you possess a powerful means of protecting your assets.

If you ever lose your wallet or accidentally expose your seed phrase, you can promptly use your passphrase and seed phrase backup to transfer your funds to another wallet. Even if an attacker attempts to brute force your passphrase (which is unlikely if it’s long and unique), you can still move your funds quickly. Conversely, without the passphrase, your recovery words or seed phrases become useless.

You have the option to use multiple distinct passphrases with a single seed phrase, enabling you to create numerous unique wallets. Each passphrase alters the private key, ensuring that each wallet is different. This feature offers several benefits, including the ability to derive and store multiple wallets from a single seed phrase within a single hardware wallet. This is advantageous in scenarios where someone gains unauthorized access to your wallet, as they won’t be able to access your funds since the wallets containing your coins remain hidden without the passphrase. Furthermore, passphrases allow users to create low-balance dummy or decoy wallets, which serve as a valuable defense against potential attacks, such as the “$5 wrench attack.

Balancing Risks and Rewards

The adage “there is no good without bad” holds true for passphrases. While they offer substantial benefits, they also introduce risks and potential dangers. Each passphrase creates a new and unique wallet, necessitating a precise understanding of which passphrase corresponds to each wallet and grants access to your funds. Setting up a passphrase demands extra care, as any typos during entry on the wallet or when writing it on paper can lead to a permanent loss of access to your funds. It’s important to note that once your passphrase is established, it cannot be changed or recovered.

Passphrases carry the additional responsibility of secure backup, much like how you safeguard your seed phrases. It’s crucial never to store the seed phrase and the passphrase together in the same location. Regardless of how meticulous you are with your cryptocurrency security, losing your passphrase represents a single point of failure. Losing access to your passphrase renders your seed phrase useless, introducing complexity and additional risks to the equation. In essence, if someone gains access to both your seed phrase and passphrase, your funds become vulnerable. Forgetting or losing your passphrase makes the funds associated with the corresponding wallet inaccessible, and lost passphrases cannot be recovered.

While hardware wallets provide strong protection, adding a passphrase can significantly enhance the security of your seed phrase and offer various benefits. However, it’s essential to recognize that this addition introduces complexity to the process of safeguarding your access to your cryptocurrency funds. Careful management and secure backup are essential, as losing access to a passphrase renders your seed phrase useless. By employing this additional layer of security, users can safeguard their digital assets effectively.

In contrast to other wallets, Cypherock X1 completely decentralizes your seed phrase into five different parts. This approach ensures that the seed is never entirely stored on the device. Even if it is stolen by an attacker, they will never be able to extract the seed phrase.

Looming Vulnerability

Moreover, Cypherock X1 allows you to set passphrases for your seed phrases. Since we recommend using passphrases primarily for advanced users, you would need to enable the passphrase option from the settings. The passphrase can only be set up when creating a new wallet or importing existing wallets from seed phrases. Cypherock X1 supports 64 characters, including upper and lower case letters, numbers, and spaces.

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