Everything you need to know about the 12-word recovery phrase

You often hear people in the cryptocurrency ecosystem use terms like '12-word seed', '12 words recovery', '12 words backup', '24 words backup', 'mnemonic phrase' etc. If you have ever wanted to learn more about these magical words, we have you covered!

We will cover the most basic aspects of these magical words which can make or break your dreams of being rich one day!

What are these 12 words?
The 12 words are the master private key generated for your wallet. If you have already read our article about private keys, you will understand that each wallet's receive address has a private key which is used make transactions and prove ownership of the funds in the address. All these private keys are generated from and tied to this master private key that is the 12-word or mnemonic phrase.

These words help you recover your funds in case your computer crashes or anything else happens which prevents you from accessing your wallet at the computer it is installed on.

Anybody else who discovers the phrase can steal the funds, so it must be kept safe like your other valuables. It must not be stored in any electronic form, but more information about the security of your seed phrase is provided later in this article.

How is a Seed Phrase generated?
A simple explanation of how seed phrases work is that the wallet has a list of words taken from a dictionary, with each word assigned to a number. The seed phrase can be converted to a number which is used as the seed integer to a deterministic wallet that generates all the key pairs used in the wallet.

Exodus uses the English-language wordlist of the BIP39 standard which has 2048 words - https://github.com/bitcoin/bips/blob/master/bip-0039/english.txt, so if the phrase contained only 12 random words, the number of possible combinations would be 2048^12 = 2^132, meaning 2 to the power of 132, and the phrase would have 132 bits of security. However, some of the data in a BIP39 phrase is not random, so the actual security of a 12-word BIP39 seed phrase is only 128 bits. This is approximately the same strength as all Bitcoin private keys, so most experts consider it to be sufficiently secure. If this doesn't mean much to you, let's say that the combinations a way too many! If you want to know how many, you can have a look here: http://bugcharmer.blogspot.com/2012/06/how-big-is-2128.html

How to store your Exodus 12-word Phrase?
You might have heard this already - anything that is online is hackable! The same holds true for your 12-word seed phrase too. Write down the seed phrase on a piece of paper or print them out using a secure network printer. It is always advised to have multiple copies of your seed phrase and store it in multiple locations to prevent loss from calamities like floods, earthquake, fire, etc. 

Ensure that you write down the seed phrase in the correct order without any spelling mistakes! Exodus tags each word of your seed phrase with the order in which it needs to be written down, so make sure you follow the order. Entering the seed phrase incorrectly (wrong order or spelling) will result in you not being able to access your wallet.

Where does Exodus store the 12-word seed phrase?
Your 12-word seed phrase is stored in an encrypted manner on the computer you install Exodus on. We do not store your 12-word seed phrase on our servers, nor do we have any access to it. This is done in the true spirit of cryptocurrency that gives full control of the funds to the owner of the Private Keys. As Andreas Antonopoulos' famous quote goes: "Your keys, your Bicoins. Not your keys, not your Bitcoins".

Also, by doing this, we protect you in the event of a hack on our servers. The hacker wouldn't find any information that gives access to your wallet and funds.

However, this means that you are solely responsible to ensure the safety and security of these words; if you ever forget your password and lose these 12-words, your funds are irretrievable! We cannot help you by recreating your seed phrase or reseting your password as we do not store anything on our end.

Securing your 12-word seed phrase.
As mentioned previously, you must never store your seed phrase on a device that connects to the internet. Following are some of the most common places where your seed phrase must not be stored: the notepad of your computer, as images on your laptop/mobile/tablet etc., file sharing services like Dropbox, MegaBox, OneDrive, Google Drive, iCloud etc., e-mail drafts, word/excel/ppt files, password protected files, USB drives, etc.

The threats are digital and online, so the best way to protect them is by keeping them in analog and offline storage: good, old-fashioned paper.

Using the 12-word phrase.
The average user would never need to access the 12-word phrase, unless their computer gives up and hence the wallet requires restoration on another computer. These days, there are hundreds forks/airdrops of every token out there - more often than not these forked/airdropped tokens are worthless but do require the user to enter their 12-words or private keys on another wallet to claim them. Doing this is a security risk as your 12-words are may be compromised as soon as you expose them anywhere online - you never know who is lurking around, even an insecure internet router/WiFi password can cause loss of all your digital funds stored inside Exodus.

If you have to absolutely access the forked/airdropped tokens it is recommended to create an additional wallet where your funds can be stored until the fork/airdrop date. This way you can move your funds back to the original wallet while being able to use the new (temporary) wallet's 12-word seed phrase or private keys to access the airdropped/forked tokens.

Security of your wallet.
This article will not go into the security details, however, you must read this article for more details about of security: https://support.exodus.io/article/767-how-do-i-keep-my-money-safe

Questions? Need more assistance? Article too technical? Speak to us by writing to support@exodus.io, we promise quick human help.