The concept of "self-sovereignty" is one of the fundamental tenets of cryptocurrencies. You should be able to access your bitcoin without having to provide identification, and you shouldn't be dependent on a bank or other organization to keep it secure. The blockchain is the technology that enables cryptocurrencies such as Bitcoin and Ether to do this. It saves and secures your cryptocurrency via a peer-to-peer system of computers positioned all over the world.
How can the blockchain identify your cryptocurrency? It makes use of algorithmically created password-like codes that are exclusively accessible to the owner. A short string of words is generated when you initially set up a cryptocurrency wallet; this is your recovery phrase, also known as a seed phrase. Additionally, the wallet utilizes the recovery phrase to algorithmically generate private keys that let you transfer or use your cryptocurrency. Consider the seed phrase as the master password and the wallet as a type of cryptocurrency password manager. Seed phrases, which typically consist of 12 to 24 short words (such as "soldiers," "electricity," "garment," "fortunate," "mozart," "stereo," "rubbish," or "null"), are used in place of numeric passwords because they are easier for people to remember and type correctly than long strings of numbers. For example, try typing in a wifi password that is too long. When you enter your seed phrase, your wallet and all of the private keys for the cryptocurrency it contains are unlocked.
A collection of 2,048 easy terms is used to choose each seed sentence. After the 2013 Bitcoin Improvement Proposal 39, which created a standard for a "deterministic wallet" which most wallets are currently in which one seed phrase would govern all of the private keys contained in the wallet, the seed phrase concept gained widespread acceptance. The standard also makes popular wallets interoperable with one another; if you want to switch wallets, all you have to do is input your recovery phrase and your cryptocurrency will be available in the new wallet. Even with just your recovery phrase, you can reconstruct a wallet if it is lost or deleted.
It is imperative that you protect your recovery phrase from hackers, phishing scams, and even plain accidental loss. You lose access to your cryptocurrency if you unintentionally throw away the piece of paper with your seed phrase inscribed on it, lose the book you stored it in, or pass away without leaving it to a successor. Additionally, even if your seed phrase is stolen, your crypto will still be safely stored on the blockchain without any way for you to access it. So be sure to safeguard your recovery phrase! You cannot access your crypto if you lose your recovery phrase.
People often get confused with private key and seed phrase. Private keys, which are generated algorithmically from the lengthy number sequence represented by your seed phrase, allow you to transmit or spend your cryptocurrencies, such as Bitcoin, Ethereum, or any other alt coin. You can get to your wallet and all of its private keys using your seed phrase. You may think of a crypto wallet as being similar to a password manager for your crypto; as long as you know your master password (the seed phrase), you have access to all of the linked coins.