Citing the ‘seed phrase‘ as being “imperfect for security” and “bad for on-boarding,” Karl Kreder, cofounder of GridPlus, says he has a better way.
Seed phrases commonly must be written down, saved on a jump drive, or worse, on the computer, making them vulnerable to attackers, being lost, or stolen.
Karl Kreder suggests you could bypass this susceptibility by using a card to sign blockchain transactions. This idea is very appealing, especially to new crypto users.
In his address to the Ethereal Summit on “Killing the Seed Phrase: Crypto’s Biggest UX Challenge,” Dr. Karl Kreder’s point was made by the previous speaker:
Itamar Lesuisse, CEO of the Ethereum Wallet Argent, said, “for years people have been told to write down their passwords for security reasons, and now crypto companies are telling people to write down their seed phrases— a combination of random words and phrases that can be used to recover access to funds.”
Kreder, co-founder and VP of Hardware Engineering at GridPlus, agreed with Lesuisse, saying indeed that’s “kind of bonkers.”
GridPlus initially started as a blockchain-based electric company that aimed to cut customers’ costs by doing away with intermediaries. They currently have around 3000 customers in Texas and needed a way to bypass the bank once the customers’ onboarding is complete.
Writing down Seed phrases don’t always work and for several reasons.
Since digital commerce already uses the familiar debit card, credit card, or gift card, why not try innovatively using one of these?
Kreder says a seed phrase is prone to what he calls a ‘sock drawer attack.’ Meaning, even if a user has the BEST hardware security available, hackers could still get in to find the seed phrase in the sock drawer. More likely, on the computer’s desk!
Kreider’s solution? A SafeCard, which is like a debit card, and it can sign blockchain transactions. SafeCard can enable two layers of security.
- A PIN – which users are familiar with using, and they generally can remember without writing down.
- A PUF – An element that GridPlus builds into the SafeCard is called PUF. PUF is an unclonable function described as an “electronic snowflake,” unique to each card.
This card, however, has to be paired with a smartphone and a GridPlus server. This presents a problem on the mobile wallets which Argent is creating, although Lesuisse has workarounds.
Quite naturally, Karl Kreder promotes his option as the best to replace the seed phrase but is this a good idea?
SafeCard is just one option for storing seed phrases. Let’s look at others:
Metal Blockplate Seed Phrase storage advantages:
- Fast, Easy, and Efficient – No stamping. No tiny pieces. No hand engraving.
- Expert Manufacturing Quality – Precision laser cut. Laser engraved. Workhorse finish. By a US manufacturer.
- Two  Plate Pack – Each plate stores up to 12 words (6 words on each side). Each double pack includes 2 plates for a total of 24 words.
- Thick, 12 Gauge 304 Stainless Steel – Tough against physical abuse and abrasion.
- Fire and Heat Protection (Up to 2100 °F) – Withstand well beyond an average house fire (~1100 °F)
- Water and Corrosion Resistance -For protection against the most extreme conditions
- BIP39 Mnemonic Phrase Support – Only the first four letters are required for BIP39
Why do I only need the first 4 letters for each word in a mnemonic seed phrase?
Bitcoin Improvement Proposal (BIP 39)
- Your 12-24 recovery seed phrase most likely comes from the Bitcoin improvement Proposal: 39 (BIP39)
- BIP 39 uses a mnemonic phrase — a group of easy to remember words — to serve as your back up recovery should your wallet become compromised.
- These words are pulled from a specific list of 2048 words. In this list, the first 4 letters are unique to each word. (including the words that only have 3 letters — think of a “blank” as a letter)
In other words, there are no two words in this list with the same first 4 letters. This means if you have the first 4 letters, you know the rest of the word by looking for those first 4 letters in the BIP39 list. Some wallets will even fill in the rest of the word once the first 4 letters are entered.
Lighting Network (AEZeed)
Lightning Network uses a different seed scheme known as Aezeed. But, it uses the same word list as BIP 39. Thus, the same feature: unique first four letters for each word applies.
Electrum Wallets also use a unique But, it also the same word list. Due to the usage of the same list, the first four letters are unique for each word.
Satoshi Labs Improvement Proposal (SLIP 39)
If you use a Trezor’s parent company, Satoshi Labs, unique seed standard of Shamir Secret Shares, Slip 39, the word list is different. But, this word list also has the same design in which the first four letters are the same.
Steel Backups for Wallet Seed Storage.
Writing your seed phrase can be a risky business since it is much the same and no more secure than a paper wallet.
Most Steel Wallets are resistant to any physical thread – even natural disasters.
Examples of hazards that steel wallets protect your seed phrase from include:
- EMP (Electro-Magnetic Pulse) – Shocks
Steel wallets almost indestructible.
The 4 Best Cryptocurrency Steel Wallets.
Billfodl is made from stainless steel (grade 316), making it a very tough wallet that is particularly resistant to corrosion. At $89, it is a great choice for the “hodler” who wants value for money without compromising on quality.
- The easy and simple setup process
- Compatible with all crypto wallets
- Scientifically tested at a Dept. of Defense testing facility
- Very strong and competitively priced
- No special characters ($, #, *) in the tileset means you cannot use the Billfodl for standard password backup.
CryptoSteel is made from stainless steel (grade 304). A bit pricey at $144, so it is quite a bit more expensive than the alternatives.
- The very simple design is easy to understand.
- Durable and robust to last a long time.
- Open Source Designed.
- Tiles are not consistent, which makes them difficult to insert
- The price point is higher than for other steel wallets
- Support no good help.
CRYPTOTAG is a titanium wallet. It differs from Billfodl and CryptoSteel. The user must hammer or engrave using a pen to stamp his words into a metal plate.
- Allows for up to 48 words to be added.
- Has an extremely high melting point.
- Includes all necessary tools needed for set up.
- Unit is tamper-resistant
- Requires hammer and stamping kit to record seed phrases
- Not re-usable
- Risk of Injury during set-up
ColdTi is a titanium wallet making it one of the most durable wallets on our list and surprisingly low cost.
- Unit is Tamper-resistant
- it has an extremely high melting point
- Competitively priced
- The unit requires a hammer and stamping kit to record seed phrases
- Not re-usable
- Risk of Injury during set-up
What are the Cons of a Steel Backup?
Remember, anyone who finds your steel backup has access to your coins. Because the steel wallet’s whole point is to back-up your recovery seed and is used to get your coins back should you lose your wallet or it is destroyed.
Therefore, you need to ensure your steel wallet is always kept where no one else would find it. At the very least, limit only people you trust to see it. Instructing your spouse or significant other on its use is wise so that they could access your funds in an emergency.
Keep in mind steel wallets are generally only meant to protect your seed phrases from fire and water damage.
Which one will you choose?
Steel wallets serve an important function when it comes to protecting your Bitcoins.
- You can lose the ability to access your hardware wallets.
- Seed phrases can help you recover your coins.
- Steel wallets help protect your seed phrases.
- You can get a steel wallet starting at $19.99 each.
Hopefully, you’ll find a steel wallet that fits your requirements and budget needs.
(tips from coolwallet.io)
Now, let’s go over this again!:
☠ Rule 1: NEVER Reveal your Private Keys to Anyone
☠ Rule 2: Never Reveal your Recovery Seed Phrase to Anyone!
☠ Rule 3: Don’t Lose Your Hardware Wallet Seed
By now, you should know never to reveal your recovery seed or a private key to third parties under any circumstances. However, even more important is to make sure that the physical paper wallet seed is CORRECT and KEPT SAFE.
Don’t try only to memorize it, or keep different sections of it in different locations. Accidents can happen. Keep it in a secure and dry place, perhaps a safe or a steel wallet.
5 Tips to Protect Your Recovery Seed
1. Generate your hardware wallet seed in private
That means doing it alone. IN Private. Don’t ask that techy in your office, your brother in law or even customer support to help you set up your wallet. Don’t trust anyone with your security!
2. WRITE DOWN your recovery seed on a paper wallet
Always write down the seed backup from your hardware wallet’s screen, never type it.
3. Double-check that you’ve written it correctly, and in the right order.
Basically, these words are from the dictionary, and there are up to 2^32 different combinations based on each seed set’s order. So, take a couple of minutes and go over once more, or you may spend a lifetime of regret.
4. Never print, take a photo or store a digital copy of your recovery seed anywhere!
Photographing, printing, or saving a copy of your private key or recovery wallet is taking the lazy way out. You create a digital copy that can be exposed.
5. Never type your hardware wallet’s recovery seed
Your device may not be secure and Key-loggers could steal your seed.
Though it is extremely unlikely, it IS possible that a private key can be extracted from a cold wallet. A hacker could do so by gaining physical access to both your device and connected phone/ computer at the same time.
Some Hardware wallets can be broken into by installing physical components into the USB device or intercepting and decoding the transmission signals.
No matter what we choose, we MUST take steps to keep our seed phrases secure and locked away in a safe place because none of us can afford to lose the assets in our accounts!