Cold Storage Best Practices
The Best Way to Store Your Seed Phrase
Oct
Bitcoin gives you financial freedom. But with freedom comes responsibility. Lose your seed phrase, and your Bitcoin is gone. No banks, no customer support, no recovery email. This article teaches you how to protect your seed phrase like your financial life depends on it, because it does. But don’t worry, this stuff is actually really simple in practice, and after reading this, you will agree!
What Is a Seed Phrase?
Some people call it a seed phrase, some a secret recovery phrase, and some a mnemonic phrase, but seed phrase is the most common and the most descriptive term for it.
Your seed phrase is a list of 12, 20, or 24 random words picked from the BIP39 word list, which contains a total of 2048 words. It works as a master key to your Bitcoin wallet. And don’t worry, there are almost as many possible combinations as there are atoms in the known universe, so no one is going to guess your word combo. But to be sure of that, don’t try to pick out the words yourself, let a hardware wallet do that for you, as it generates randomness better than humans ever can, since we’re not really that random after all.
Your seed phrase is also hardware wallets backup. With it, you can recover your wallet on any compatible hardware wallet, since the seed phrase follows a universal Bitcoin standard (BIP39). That means your Bitcoin isn’t tied to any specific device or brand and as long as you have your seed phrase, you can always restore access to your funds anywhere in the world.
Those so-called seed words create every private key and every Bitcoin address you own, hence the name “seed phrase”. If anyone else gets them, they own your Bitcoin. The simple rule is: whoever controls the seed controls the coins. Think of the seed phrase as the most important thing when storing your Bitcoin, because that’s exactly what it is.
Never Store Your Seed Phrase Digitally
Don’t photograph it. Don’t type it. Don’t upload it. Don’t save it in cloud storage, password managers, or email drafts. Anything connected to the internet is a risk. Malware, hackers, or automatic cloud backups can expose your seed. Keep it offline, always and forever.
Basically, the whole point of storing your own seed phrase is that it’s offline and hard to find for anybody except you (and those you trust enough to know about it). If you store it online or on something directly connected to the internet, you’ve just made it really easy for hackers to find and already lost a huge amount of your Bitcoin security.
The only right way is to generate the seed phrase offline with a hardware wallet and write it down on something physical. Never expose it to online devices, cameras, or say it out loud.
Remember that the hardware wallet is only the medium of use, it’s the tool you use to interact with Bitcoin safely. But your seed phrase is the most crucial part here. Lose the device, and you can just restore your wallet with your seed phrase. Lose the seed, and you don’t have a method to restore your wallet anymore if something happens to it and your Bitcoin could be gone forever.
The ultimate way to store your Bitcoin savings overall is to keep them offline on your seed phrase, somewhere as safe as possible, because even hardware wallets will eventually degrade. They won’t survive a house fire or even much less destructive catastrophes, so you can’t hide them as well as a metal seed storage. That is actually the ultimate Bitcoin savings wallet, hardware wallets are for creating the seed phrase and moving funds when needed.
Choose the Right Storage Material
Paper – For Beginners Only
Paper is fine to start with, but it burns, fades, and falls apart. If you use paper, upgrade soon.
Metal – For Serious Bitcoiners
Metal doesn’t burn, rot, or dissolve. Etched or punched steel plates are the go-to for serious Bitcoiners. You can go the DIY route and build it yourself, there are plenty of tutorials online, and there’s nothing wrong with doing that. But there are also high-quality, stress-tested steel seed phrase storages like Yokis by Xellox, designed for exactly that: real-world durability with precision manufacturing.
This isn’t something you want to save a couple bucks on and get the wrong metal from the hardware store, only to realize that it wasn’t as corrosion-resistant as you thought, or that it actually melts at temperatures lower than a typical house fire (around 850°C or ~1560°F).
Hide Your Seed Phrase
Keep your metal backup somewhere safe. There are almost unlimited options when it comes to hiding a seed phrase plate or plates, and only your imagination is the limit. But you should keep in mind a few things when choosing the best place: can outsiders find it? What physical stress could the hiding place cause to your seed plate? How easily do you need to access it? And most importantly, how likely are you to forget where you placed it?
I don’t want to give too much advice here, so everyone’s seed phrases don’t end up in the same spots. Just keep the above in mind and find the balance that suits you best. You can also store duplicates in different locations to protect against theft or disaster and avoid obvious hiding spots like drawers or books. Think long-term, make it fun, and be smart with it, but remember not to hide it from yourself either, unless that’s your goal!
Preferably Diversify
It’s not bad to have a couple of full backups in different locations if both are secure and follow all the other best practices. You can also split your seed phrase just by for example engraving 12 words on one plate and 12 words on another, together they form one 24-word seed phrase.
But if you want to split it even more securely, use Shamir’s Secret Sharing (More about Shamir here) It works by splitting your seed into parts, typically three and only two out of the three are needed to recover the whole seed. One plate alone isn’t enough. This opens up more storage options, and most hardware wallets support it. This gets a bit more advanced, but just having your seed phrase offline, engraved on metal, and in a good hiding place is already very good when it comes to protecting your Bitcoin.
Plan for the Future
Check your backups once or twice a year. Make sure they’re safe and readable. You may also document recovery steps (without revealing the seed or making it easy to understand if someone malicious stumbles upon your recovery steps).
For family or inheritance, plan how trusted people can recover your Bitcoin without exposing it to theft. You’ll often hear that you shouldn’t reveal the location of your seed phrase to anyone, but if something unfortunate happens to you (and eventually, to all of us), and you want to leave your Bitcoin wealth to your heirs, you’ll need to reveal your setup to someone trustworthy. Otherwise, if you’ve done an excellent job hiding your seed phrase, no one will ever inherit your Bitcoin, at least not for a very long time, maybe never.
Keep It Simple
Complexity kills security. Stick to the basics: metal backups, secure safes, geographic separation, and quiet discipline.
Even though there are many possible layers of Bitcoin security (some mentioned here), keep in mind that you don’t want to make it too complicated for yourself. The most common way people lose their seed phrases in the real world isn’t theft, it’s forgetting where they hid them.
Final Word
Bitcoin doesn’t forgive carelessness, but keeping one set of words engraved on stainless steel safe is really not that hard either. Just spend a little bit of time thinking about how you want to handle it, hide it, and what suits your situation.
Revisit your setup once in a while in your thoughts too to stay up to date, and that’s it you are now securely self-custodying your Bitcoin by storing your own seed phrase safely.
If you take your long-term Bitcoin security seriously, protect your seed phrase with something built to last. Yokis by Xellox is a stainless steel backup engineered to survive the elements, disasters, and time itself, the kind of protection your Bitcoin deserves. It has the easiest setup of any seed storage solution and includes three plates, while most offer only one, leaving you with no option to diversify your seed even if you wanted to.
About Xellox
Xellox builds self-custody tools for Bitcoiners, people who understand that holding the keys means holding the power. Our products are built to keep your Bitcoin safe, no matter what the world throws at you.
Xellox: Tools for the sovereign Bitcoiner.
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