Private Key vs Seed Phrase: What’s The Difference?

Your wallet seed phrase and your private key are not the same, but both are vital for controlling your wallet. So what’s the difference?

Well, the TLDR of it all is this:

A private key gives you access to just one address (account), while a seed phrase gives you access to the whole wallet, which can hold multiple addresses and private keys.

If you lose your private key, you can recover it by downloading your wallet software and using your seed phrase (recovery phrase) to regain access to your wallet.

If you lose your seed phrase on the other hand, there’s no way to recover your private keys and therefore your wallet - meaning your crypto is lost forever.

Seed phrase, recovery phrase, wallet secret, secret phrase.

These are all names given to a mnemonic phrase - a random string of 12 to 24 memorable words which can be used to recover your crypto wallet and therefore your private keys.

A seed phrase looks something like this:
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A private key gives you control over all of the funds linked to the corresponding wallet.

You might have heard people speak of approving or signing transactions - a private key is used to create the signatures that are required to spend the crypto associated with its corresponding wallet address. Ownership of a private key is used to prove to the blockchain that you have the right to control assets associated with it.

Fundamentally, private keys are just an alphanumeric string like such:
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Afdfd9c3d2095ef6f...d697e2a7521b1578140422a4f890

The process of creating a seed phrase starts with generating a random number.

For most wallets this random number comes from your device's entropy. The entropy is run through a hashing function, in this case SHA 256, which generates a checksum - the checksum is used to detect errors. Part of that checksum is then appended to the random data. After this, the output is broken up into chunks of 11 bits, and each 11-bit chunk maps to a single word on the BIP39 word list.

BIP39 is a specific list of 2048 words created for this function. It stands for Bitcoin Improvement Proposal and recommends the use of a group of easy to remember words which serve as a means to recover your accounts.

Creating an Ethereum private key involves picking a number between 1 and 2²⁵⁶. In order for a seed phrase to be able to recover your wallet, your private key has to be generated from your seed phrase.

Here's how it works:

Each word in the secret recovery phrase has a number associated with it. So your random set of words maps to a random number. This number forms a seed integer, which is then used to create a set of public/private keys using a one-way hash function. In the case of hierarchical deterministic wallets each new key pair can be hashed to create a child key pair, meaning you can create multiple wallet addresses linked to a single seed phrase.

It’s important to know that not all wallets use seed phrases. They’re used as a recovery method for wallets because they don’t require the user to expose their identity. But you can achieve the same result by using email as a recovery method, provided the email address is anonymous.

The reality is that not all users care about self-sovereignty and anonymity. And there are wallets that you can set up with your email address which will be used as a recovery method if you ever lose access to your wallet.

Furthermore, if you’re comfortable with setting up a wallet that’s linked to your public identity then you don’t need to use a wallet that requires a seed phrase, because if you ever do lose your wallet, you’ll be able to prove that you are who you say you are and use that to recover your private keys.

A 12-word seed phrase has a possible combination of 2048¹². That’s 5.4445179e+39 possible combinations. In other words, a really really really big number. And don’t even get me started on 24-word seed phrases.

So the answer is, seed phrases are incredibly secure. Given the size of the number of possible combinations we can comfortably say that it’s impossible to guess or brute force a person’s seed phrase.

However, a seed phrase is all or nothing. If you lose your seed phrase, you can never recover your wallet. And if someone else gets hold of your seed phrase, they can steal your crypto. So in that respect, seed phrases aren’t practical.

The main alternative to seed phrases is email, but social recovery is another option. Social recovery involves using trusted third parties, which act as guardians. If you lose your wallet key, you can initiate a special transaction to generate a new key. Your guardians will need to approve this transaction before the new key is issued to you.

Wallets like Krayon use email, mobile and other measures as recovery mechanisms. This spares you the hassle of having to worry about seed phrases. As far as security is concerned, Krayon wallets are MPC-based - making them vastly more secure than a hot wallet that stores your private key on your device and relies on seed phrases.

Seed phrases aren’t appropriate for companies. And let’s face it, the wallets that use them aren’t all that secure.

Krayon uses multi-party computation (MPC), amongst other additional security features, to keep your digital assets secure. Your crypto assets are tied to your corporate wallet which is linked to your organisation, so there’s no need for seed phrases, but you’ll still always be able to recover your wallet.