Article by LiveFast | Edited by Hiro Kennelly and trewkat | Cover Art by ab_colours
How confident are you that you wrote down your seed phrase correctly? Are you positive that nobody could have accessed it? You didn’t happen to type it in a Google document, or email yourself a copy…did you? Could your seed phrase survive if your home suddenly went up in flames?
Taking custody of your crypto can be a daunting prospect. It is possible to do it securely, but many people fail to properly set up their wallets and then fall victim to the pitfalls of this lack of preparedness.
The first thing to understand is that having a hardware wallet is by far one of the most secure ways to take custody of your crypto. Unlike a hot wallet, you have to be in possession of the physical hardware wallet for you to transact with it. However, there is one crucial security factor to keep in mind: hardware wallets, like nearly all wallets, are set up using a seed phrase, which is a randomized collection of 12 or 24 words that control access to your cryptocurrency wallet. That means anyone who has your seed phrase will also have the ability to transact from your cryptocurrency wallet.
Do Your Future Self A Favor
The person you must be most concerned about when it comes to handling your seed phrase is yourself. It is more likely that you, the user, will mishandle your own seed phrase and lose it or accidentally provide access to it. Sure, there’s always some chance of an “Act of God” incident to occur that could lead to the destruction of your seed phrase, and we’ll talk about that too. But generally, seed phrase vulnerability arises because of user error.
Our propensity for user error is why we must take precautions to ensure that we set ourselves up for success when implementing our crypto wallets for the first time. The following is a guide that will help those new to self custody — or even crypto veterans — to understand what they are doing, why they are doing it, and where their crypto is actually stored.
I’ll use the following tools to demonstrate the process:
Ledger Nano S and recovery sheet provided.
BlackSeed Ink Crypto Seed Wallet
16GB USB thumb drive *Optional*
Copy of Ubuntu Linux *Optional*
A working pen and an ultra-fine tip Sharpie
For this guide, I’m using the Black Seed Ink seed phrase metal plates to engrave the sample seed phrase on. This seed phrase protector is made from 304-grade stainless steel. Why is this important? Because it can withstand temperatures between 1400°C-1450°C (~2552°F- 2642°F), which is hotter than the average house fire, which burns at 537°C-1093°C (~1000°F-2000°F). Additionally, the Black Seed Ink seed phrase protector was given an overall grade of A by Jameson Lopp, who tested various metal seed phrase storage devices, including applying a 1093°C (2000°F) flame from a large propane torch to the device for 10 minutes (or until failure was observed), submerging the storage device in a bucket of 16% muriatic acid for 12 hours or until bubbling ceases, and applying a 20-ton hydraulic press to the storage device and checking for readability. These are impressive tests, but for me, the choice was simple because the cost was $27 and it came with an engraving pen — much cheaper than its equally high-rated competitors.
Optional Prep for Securing Your Seed-Phrase
The following optional steps are for users who are unsure whether there is malware on their PC, or are using a public PC, or lean a bit more paranoid about their crypto. However, it is not necessary for everyone to do this; it is perfectly acceptable to start at Step 1. These optional steps cannot be performed on an Apple computer.
Optional Step A: Create a bootable Ubuntu Linux USB Stick using the 16GB USB thumb drive
Optional Step B: Unplug/remove/disable any WiFi card and/or Ethernet plugs to ensure the computer is not connected to the internet.
Optional Step C: Boot from the Ubuntu Linux USB stick (DO NOT INSTALL UBUNTU).
Optional Step D: Connect your Ledger to the PC in order to power on the device.
Optional Step E: Follow the instructions for setting up your Ledger Nano S, Ledger Nano S Plus, or Ledger Nano X.
When writing down your seed phrase, I recommend not speaking aloud each word or writing them down with a webcam present. DO NOT TYPE THEM ON YOUR COMPUTER, IN A NOTE APP ON YOUR PHONE, OR EMAIL THESE WORDS TO YOURSELF! THIS SHOULD ONLY BE WRITTEN DOWN VIA PEN AND PAPER.
Optional Step F: Connect the PC to the internet and install Ledger Live according to the instructions provided by Ledger and then proceed with the set-up process.
If you completed the optional process above, please proceed to Step 3 below.
Step-By-Step Guide to Securing Your Seed Phrase
Step 1: Install Ledger Live based on your current operating system.
Step 2: Follow the instructions to set up your Ledger.
I’ll say it again:
When writing down your seed phrase, I recommend not speaking aloud each word or writing them down with a webcam present. DO NOT TYPE THEM ON YOUR COMPUTER, IN A NOTE APP ON YOUR PHONE, OR EMAIL THESE WORDS TO YOURSELF! THIS SHOULD ONLY BE WRITTEN DOWN VIA PEN AND PAPER.
Step 3: After properly setting up your Ledger, install either the Bitcoin App or Ethereum App and create a wallet address using the interface within Ledger Live.
Step 4: Create a test transaction and transfer a tiny amount of BTC or ETH (depending on what you chose in Step 3) to your new wallet address.
Step 5: Erase your Ledger by unplugging the device, plugging it back in, and inputting the wrong password 3 times. This will force restore the Ledger to the factory setting, erasing the seed phrase. Finally, remove the cryptocurrency wallet address from Ledger Live by deleting the account within the app.
This step may seem counterintuitive but it is incredibly useful as it helps establish and teach the user two important things: (1) your crypto is not stored on your Ledger device (or any hardware wallet) ever, and (2) it checks to see if your handwritten recovery phrase is legible and correctly written.
Step 6: Recover your crypto via the seed phrase that was written down following step 2 above.
Step 7: Re-install the BTC or ETH app (whichever one you chose in Step 3) and create a new account in Ledger Live. You will see the same address available for import. This will verify if your Ledger has access to the wallets with the small amount of cryptocurrency.
Step 8: Once you have verified that your cryptocurrency is present in the wallet, transcribe the seed phrase from the Ledger Recovery Sheet onto the Black Seed Ink sheet.
I recommend first writing each word with a Sharpie and then tracing over it with the engraving pen. Black Seed Ink recommends using a lead pencil.
Step 9: Once again, factory reset your Ledger by unplugging the device, plugging it back in, and inputting the wrong password 3 times. Then remove the account containing the wallet address from the Ledger Live app.
Step 10: Once again, recover your crypto using the seed phrase engraved on the Black Seed Ink plates.
Step 11: Install the BTC or ETH app (whichever one you chose in Step 3) and add the wallet in Ledger Live. This will once again verify if your Ledger has access to the wallet with the small amount of cryptocurrency.
Step 12: Once verified, you now know that the seed phrase written on the Black Seed Ink sheet is correct. There is no longer a need to have the Ledger recovery sheet.
I recommend setting it on fire to properly dispose of this.
Ain’t Nobody Gonna Steel This Phrase Away
Once the information is safely transferred to the stainless steel plate, you’ll still need to take steps to ensure that it is stored somewhere secure; the Black Seed Ink site suggests “a secret hiding place or home safe”.
Between the optional and mandatory seed phrase security steps, I hope that you learned how to be safe and secure with your most important asset: your seed phrase. Please take the time to review this article and make the necessary adjustments to ensure that your seed phrase will be available for you to access that generational wealth you’re building. Crypto security is hard, but with patience, the steps to securing your seed phrase should be both actionable and motivating. Stay SAFU frens!!
Author Bio
LiveFast9986 is a DAOpunk and trying to make web3 a better and more approachable place.
Editor Bios
trewkat is a writer, editor, and designer at BanklessDAO. She’s interested in learning about web3, with a particular focus on how best to communicate this knowledge to others.
Hiro Kennelly is a writer, editor, and coordinator at BanklessDAO, an Associate at Bankless Consulting, and is now and forever a DAOpunk.
Designer Bio
ab_colours is a versatile designer with over seven years of experience. He specializes in doing product design, UX design and brand identity. He has been DAOing for the past eight months and has been able to amass quite a lot of knowledge about the fascinating blockchain space.
BanklessDAO is an education and media engine dedicated to helping individuals achieve financial independence.
This post does not contain financial advice, only educational information. By reading this article, you agree and affirm the above, as well as that you are not being solicited to make a financial decision, and that you in no way are receiving any fiduciary projection, promise, or tacit inference of your ability to achieve financial gains.
Bankless Publishing is always open to submissions for publication. We’d love to read your work, so please submit your article here!
More Like This
What To Do if Your Web3 Wallet Is Hacked by trewkat
Cryptocurrency Wallets 101 by ijeblowrider
Web3 Can Solve the Data Hack Crisis by Chris Were
