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Safety & rules · 2 min read

What is a recovery phrase?

By Oliver James Whitmore · Updated 20 October 2026

In one sentence

A recovery phrase, also called a seed phrase, is a list of 12 to 24 ordinary words that encodes the master secret from which a wallet derives all of its private keys.

From randomness to keys: BIP-39 turns random bits into words, BIP-32 derives a tree of keys.Random bits128–256+ checksumsplit by 11 bits12–24 wordsfrom 2,048Seedkey 1key 2key …Same words, same order → the same keys in any compatible software
From randomness to keys: BIP-39 turns random bits into words, BIP-32 derives a tree of keys.

How it works

Most wallet software follows two Bitcoin Improvement Proposals that other networks have also adopted. BIP-39, from 2013, turns a random number into words. The software generates between 128 and 256 bits of randomness, adds a few checksum bits, and splits the result into groups of 11 bits. Each group picks one word from a fixed list of 2,048 words. Twelve words carry 128 bits of randomness plus a 4-bit checksum; twenty-four words carry 256 bits plus 8.

The words are then stretched into a binary seed with a key-derivation function, and BIP-32 takes over: from one master key it derives a whole tree of private keys and addresses, always in the same way. That is why the same phrase, entered into any compatible software, produces exactly the same keys and addresses.

Three details matter. The words are chosen by the software at random, not by the user. Their order matters. And an optional extra passphrase, if one was set, leads to an entirely different set of keys.

The consequence is simple: the phrase is the wallet. Whoever has it can recreate every key, from anywhere, without needing the original device.

A simple example

Someone's phone is lost. On a new device, they install compatible wallet software and enter their twelve words in the right order. The same addresses reappear, because the keys are derived from the phrase, not stored on the phone. The flip side: a stranger who had photographed those twelve words could do exactly the same thing.

Common misconception

Misconception: The recovery phrase is a password that a company can reset if I lose it.

In fact: With self-custody, no company holds or can reset the phrase. If it is lost and no device still holds the keys, access is gone for good. And no genuine support desk, app or website will ever ask you to type it in.

Where you meet it

  • The setup screen of wallet software, which shows the words once.
  • Phishing attempts, which very often aim at exactly these words — see the card on phishing.
  • Our page on safety basics.

Sources

This card explains a technical concept for general education. It is not a recommendation to acquire, sell or hold any crypto-asset, and it is not financial advice.