There are a large number of crypto coins available today with different values and market shares. Bitcoin is the first cryptocurrency that has the highest value and holds the largest market share. In the initial stages of digital currencies, the storage of them was a tedious task. The users need to memorize or store long strings of private keys for ensuring security.
Mnemonic Phrase And Mnemonic Passphrase
Due to the advancement in technology and the increased value of currencies, new ways were discovered for securely storing the coins. One of the technologies is an HD wallet or Hierarchical Deterministic wallet. These types of wallets use Mnemonic Phrases and Mnemonic Passphrases for securely storing coins.
What is the Mnemonic Phrase?
A mnemonic phrase, mnemonic recovery phrase, or mnemonic seed is a string of words used in HD wallets in-order to recover coins. In the initial set of a wallet, the wallet prompts the user to note down a phrase consisting of 12, 18, or 24 words. This phrase is used by the wallet to recover the coins if something wrong happens to the device or the wallet which caused the loss of data.
Working of HD wallets
The mnemonic phrases are random words taken from a dictionary by the wallet. These words are converted to numbers that are used as seeds for the recovering of data. Mnemonic phrases use the English language word list in BIP39 standards which has 2048 words. So a 12-word phrase has a possible combination of 2048^12 which is 2^132 and the phrase have 132-bit security. Due to the non-randomness of some of the words, a 12-word phrase has the security of 128 bits, which is the same security of a bitcoin private key.
What is Mnemonic Passphrase?
The mnemonic passphrase is like second level security to the mnemonic phrase. Due to the large value of the wallet backup by the mnemonic phrase, most of the wallet allows the users to create a password for an additional layer of protection. This password is called a mnemonic passphrase. A data of a lost wallet can only be recovered if the person knows the wallet generated mnemonic phrase and the user-defined mnemonic passphrase.
The user should be careful to select mnemonic passphrase as a group of words that are very hard to guess. The mnemonic passphrase is also called the seed extension or mnemonic extension. The same BIP39 standard is used for the processing of passphrase. If no password is provided by the user, an empty string is used for processing.
Thus securely storing digital currencies are a very challenging deal. The mnemonic phrase and passphrase provide the user with a very convenient way of recovering their coins. But the phrases should be kept safely and forgetting it will cause permanent loss of coins and money.