The passphrase consists of a set of characters, words, or numbers which, added to the seed phrase, allow the generation of a new wallet.
To enhance the security level of a wallet, the BIP-39 standard has introduced the option of adding a passphrase to the mnemonic seed phrase. This is a sequence of characters or numbers chosen by the user that, when added to the seed phrase, generates an entirely new wallet.
By adding a passphrase to a seed phrase, a new seed is generated. The reconstruction of such a wallet requires not only the mnemonic seed phrase but also the passphrase.
For example, by adding the passphrase ‘Atlas21’ to the following seed phrase, the seed changes completely:
Entropy: 063a41053edb3db44e256fd17a368a4b
Mnemonic seed phrase: alert spirit donor laundry record surface decade pupil sphere spider penalty nuclear
Seed: c9893d2905f1eae93a4c157f638c5a02d2fb16ab1e289531dbbe21913571e74428ff15593804a6b8f1bb297a949d7734800fcc51a562539ceda2b7a5eeb24693
Passphrase: Atlas21
Seed after adding the passphrase: c2e0f66d4757f78c92f79a493d292bb58d3c2e3b3eb960a8eed8edbc3a2e76fb133cdc0aae427908ea644b7edb44cf2497ea09daef9e057904821e8e15c77f28
It is crucial to understand that there are no incorrect passphrases. If an error is made in entering the passphrase during the opening or regeneration of the wallet, a new wallet would be generated, which would be empty.
Plausible deniability
The use of a passphrase can prove to be an effective option to enhance the security of one’s funds. Compared to a more complex solution like a multi-sig wallet, adding a passphrase provides a balance between security and risk.
If a copy of the seed phrase were to be stolen, anyone attempting to recreate the wallet without the correct passphrase would end up with an almost empty wallet. However, it is essential to consider the risks of this configuration: adding a passphrase requires protecting it in the same way as the seed phrase. The wallet reconstruction can only be performed using both. In the event of the loss of the seed phrase or passphrase, it would not be possible to recover the wallet.
Another approach to consider is distributing funds across multiple wallets with different passphrases. By creating multiple hidden wallets, an external attacker would not be able to determine how many wallets the victim owns. In this case, too, it will be necessary to save and store all the passphrases used to recover the funds.
How to use the passphrase
Most hardware wallets and software wallets allow the addition of a passphrase to the seed phrase. It is important to note that the passphrase is not saved by either the device or the software, and it must be entered every time you want to use that wallet.
The responsibility for saving and safeguarding it lies solely with the user. Storing it in the same place as the seed phrase would be an unwise move.
