You’ve heard this before, Not Your Keys, Not Your Coins. When it comes to your digital assets, security takes the front seat. Whether you’re a seasoned investor or just getting started, understanding how to properly store your wallet backup (also known as recovery seed) is essential for safeguarding your digital assets.

A compromised or lost wallet backup can lead to the permanent loss of your funds, so taking the necessary precautions is critical.

This guide will explore the best practices for securing your crypto wallet backup, highlight common mistakes to avoid, and suggest ways you can keep it safe.

What Is a Wallet Backup and Why Is It Important?

A wallet backup (also known as a backup, recovery seed, seed, seed phrase, BIP-39 seed phrase, mnemonic, recovery phrase) is an ordered list of English words that contain all information necessary for recovering your wallet (i.e., accessing bitcoin or other cryptocurrency funds on-chain). A wallet backup provides full access to the associated wallet (the private key is mathematically derived from the wallet backup) — this is why you must keep it safe.

Think of it as the password to your crypto holdings — it enables you to access, transfer, and manage your funds. Without it, your assets are permanently lost.

You’re given a wallet backup when you set up a hardware wallet like Trezor. This unique phrase is generated during the wallet initialization process.

Losing or exposing your wallet backup means:

• You lose access to your funds forever.
• No third party, not even Trezor, can help you recover it.

Hence, properly storing your wallet backup is one of the most critical aspects of cryptocurrency security.

Important to know: Your wallet backup is a ‘plain English’ representation of a random number, from which all of your keys and addresses are mathematically derived.

It is an ordered sequence of 12 or 24 words for wallets using the BIP39 protocol, chosen from this list of 2048 words. In the case of the newer SLIP39 protocol, it is a sequence of 20 words chosen from this list of 1024 words

When you write down your wallet backup, the words must be copied down in the same order they appear

You must keep your wallet backup private and safe so that your cryptocurrency is never at risk. Having a safe wallet backup means you can recover your Bitcoin or other digital assets in case of hardware failure or the loss of your device

Common Mistakes to Avoid When Storing Your Wallet Backup

To keep your crypto assets secure, avoid these common mistakes:

1. Relying on Digital Devices

Storing your wallet backup on a computer, phone, or cloud service is highly risky. If your device gets hacked or compromised, attackers can easily steal your wallet backup, and gain access to your cryptocurrencies.

Rule of thumb: Do not keep digital copies of your wallet backup (this includes screenshots, photographs, emails, Dropbox wallet backup, etc).

2. Sharing Your Wallet Backup

Be careful who you share your wallet backup with. Sharing your wallet backup is equivalent to handing over your crypto assets to someone else.

3. Using Unsecure Physical Locations

While writing your wallet backup down on paper is a common practice, understand the risks that come with it. It is paper, after all! Storing it carelessly exposes it to risks like theft, fire, or water damage.

The Best Ways to Store Your Wallet Backup Safely

Here are some of the most effective solutions for securely storing your wallet backup:

1. Pen and Paper Method

• Write your wallet backup down on paper in clear, legible handwriting. We recommend using capital letters. Your Trezor hardware wallet ships with a pair of wallet backup cards that you should use for writing down the words when you backup your device — this is a strongly recommended step when setting up your Trezor.
• Keep your wallet backup cards safe from theft and damage
• Consider making multiple copies and storing them in separate secure locations.

Drawback: Paper is vulnerable to fire, water, and physical damage over time.

2. Metal Backup Tools

We recommend this strongly. Metal backup tools, such as Trezor Keep Metal, are designed to protect your wallet backup from:

• Fire
• Water
• Pressure and corrosion

These are ideal for long-term storage.

Get the Trezor Keep Metal for as low as $79 here.

3. Using a home-safe

Storing your wallet backup in a hidden safe at your house is a great way to control access to it. However, the knowledge of a safe alone is enough to raise the interest of a potential thief, so if you choose to use this storage method, you should keep it in a discreet location, away from the eyes of guests, housemates, or anyone that might spend time inside your home.

Some may consider a safety deposit box at a bank. However, be mindful of bank policies that may allow access to your box under certain conditions.

Here’s a video to learn more,

4. Multi-share Backup

Trezor offers a unique feature called Multi-share Backup. This, essentially, allows you to split your wallet backup into multiple parts and store them separately.

For example, in a 3-of-5 Multi-share Backup scheme, the total number of shares is equal to 5, and the threshold is 3. This means any three of these shares can be used to recover your wallet. This is beneficial as even if one or two of your shares are somehow compromised, the entire wallet backup (recovery seed) is not exposed. This redundancy means you no longer have a single point of failure, as with the regular BIP39 backup standard (i.e., the 12-word recovery seeds used by default on most hardware wallets).

Even if one part is lost or compromised, you can still recover your wallet using the remaining parts. This greatly reduces the risk of losing all backup copies at once.

Learn more here,

5. Multisignature (Multisig) Wallets

For advanced users, multisignature wallets add an extra layer of security. A multisig wallet requires multiple keys to authorize transactions, reducing reliance on a single wallet backup.

Multisig is a method of securing a wallet by requiring approval from multiple private keys stored on separate devices when sending transactions. While Trezor recommends SLIP39 wallets as a simpler yet equally robust alternative in terms of backups, Trezor devices are fully compatible with multisig setups, allowing you to choose the option that best fits your needs.

Here’s more on this,

Trezor’s Role in Wallet Backup Security

We founded the hardware wallet industry. Our founders, Marek Palatinus and Pavol Rusnak, were part of a team that introduced Bitcoin Improvement Proposal 39, or BIP39. This is a protocol that was introduced as a means to generate deterministic wallets. It’s a method for creating a human-readable mnemonic sentence — easy to read and write — from random data that serves as a backup to recover your wallet. In summary, the wallet backup (aka recovery seed).

This is now widely adopted in the cryptocurrency industry. Learn more here.

Trezor wallets began with employing BIP39 for the wallet backup (recovery seed phrases). When you initialize your Trezor device, it generates a unique 12, 18, or 24-word wallet backup (recovery seed). This seed is a representation of your private keys and is essential for restoring your wallet’s information in case your device is lost, stolen, or damaged. BIP39 has become a crucial part of Trezor’s security protocol, and it is used alongside other BIPs like BIP32 (Hierarchical Deterministic Wallets) and BIP44 (Multi-Account Hierarchy for Deterministic Wallets) to provide an optimal security model for cryptocurrency users.

Our recently introduced enhanced 20-word backup standard (SLIP39) ensures a more robust process for backing up and recovering your wallet compared to the legacy standard. With an upgraded, user-friendly wordlist and seamless transition to Multi-share Backup, SLIP39 offers superior security with no single point of failure.

Best Practices for Long-Term Wallet Backup Protection

Once your wallet backup is securely stored, it’s essential to protect it over time. What we do recommend is taking a moment to assess the most probable threats you face. It is important to understand that everyone has a different threat model, and this can change over time. Consider environmental risks, physical attacks, and remote attacks, while doing more. 

As such,

1. Regularly check for wear and tear or damage. For an example, if the wallet backup is is stored on paper, periodically check for fading or physical damage.

2. Protect against natural disasters. A case in point is ensuring your wallet backup is safeguarded from house fires, floods, or leaks.

3. Plan for inheritance. If you intend to pass down your crypto holdings, ensure you have a secure and private inheritance plan in place. Use a trusted legal advisor or ensure your heirs understand how to access your wallet backup securely.

What NOT to Do With Your Wallet Backup

Avoid these risky practices to protect your wallet backup:

• Do not share your wallet backup with anyone else.
• Do not keep digital copies of your wallet backup (this includes screenshots, photographs, emails, Dropbox wallet backup, etc).
• Never enter your wallet backup anywhere unless prompted by your Trezor device.

Also, remember, no Trezor employee will ever ask you to tell them your wallet backup, even if you’re speaking with one of our customer support agents.

Comparing Wallet Backup Storage Solutions

• Paper Backup

Pros: Simple, inexpensive

Cons: Vulnerable to fire, water, and damage

• Metal Backup

Pros: Durable, disaster-resistant

Cons: Comes at a cost (even if it’s only $79)

• Home Safe

Pros: High physical security, limits access

Cons: Needs proper storage

• Safe Deposit Box

Pros: High physical security

Cons: Relies on bank access

• Multishare Backup

Pros: Reduces single-point failure risk

Cons: More complex to set up

• Multisig Wallets

Pros: Advanced security

Cons: Requires technical expertise

How Trezor Stands Out in Crypto Security

Trezor combines ease of use with robust security features, making it a top choice for protecting your wallet backup:

Here’s what sets Trezor apart from other wallets,

• Trezor has been audited by independent security researchers and verified by its track record throughout its years on the market.
• Our software and hardware are open-source and public. By doing so, everyone benefits from the community-tested design of their wallet, providing robust protection against real-world threats.
• Trezor devices and the tailor-made software interface Trezor Suite are easy to use, making them suitable both for beginners and advanced users of cryptocurrencies.

Conclusion

Securing your wallet backup (recovery seed) is crucial for protecting your digital assets. By following the best practices outlined in this guide, you can safeguard your digital assets from loss, theft, or damage.

Trezor’s hardware wallets, and metal backup solutions, combined with advanced practices like multi-share backup, come together to offer a reliable and user-friendly way to secure your wallet backup. Don’t leave your crypto to chance — take control of your security today.

Frequently Asked Questions (FAQ)

1. What is the best way to store wallet backups?

We recommend the use of a metal backup like Trezor Keep Metal. We definitely recommend avoiding storing the wallet backup digitally.

2. Where should I hide my wallet backup?

This depends on several factors. It is important to define your threat model. Choose a secure, hidden location that accounts for these risks. This video can help.

3. What happens if I forget my wallet backup?

You lose access to your funds permanently. There is no recovery mechanism for lost wallet backups.

4. Can I store my wallet backup online?

No, storing wallet backups online exposes them to hacking risks. Always store them offline.

5. Can someone steal my crypto if they have my wallet backup?

Yes. Anyone with your wallet backup can access and steal your funds. Keep it private and secure.

6. Can Trezor help me recover my wallet backup?

No. Trezor does not store your wallet backup. You are fully responsible for its storage and security.