BIP 39 (J22)

that cryptocurrencies are not stored in wallets?

If crypto wallets aren't storage spaces, then what are they?

A crypto wallet is just an application that stores your private and public keys so that you can be able to access your crypto tokens in the blockchain.

The private key is secret, and that is why we're always asked not to reveal our private keys. They are, in fact, PRIVATE, literally.

They're the gateway to our funds. Public keys are literally, PUBLIC.

They are your wallet addresses, so someone that wants to send funds to you will need your public keys…in other words, your wallet address.

If you have a bank account, the public key is like your account number.

When someone gets your account number, they can't use it to access your account.

On the other hand, your password or pin to access your account, and in most banks for making transactions, is likened to your private key in the crypto space.

Of course, you don't want to share that with anyone because you know that with that they can access your account and siphon your hard-earned money.

Many cases have occurred where individuals lost access to their crypto due to losing private keys (the secret string of characters).

This is a bad omen.

And that is what BIP 39 has come to solve, helping us generate a seed phrase, which is easier to store and recover.

Actually, the discourse of BIP 39 will require us to look at two different types of wallets:

Deterministic and Non-deterministic wallets

Deterministic wallets:

As the name suggests, these wallets allow the creation of multiple crypto accounts using a single mnemonic phrase.

This means that, by restoring the wallet with the same phrase on any device, all accounts linked to that phrase will be accessible.

Think of it as rooms in a house, but they all have the same key.

Reiterating, if you use BIP 39 to create a wallet on your computer today, and you switch to a phone next year, as long as you enter the same seed phrase, your accounts (like account 1, 2, 3…) will appear in the same order.

Non-deterministic wallets:

These wallets generate private keys for each account without using seed phrases, making it harder to back up.

One will need to store each of the keys differently, and this can become cumbersome.

Think of it like trying to memorize different passwords for each building in your house.

First off, it starts by generating a random set of numbers called Entropy.

The number of bits in the entropy (128, 160, 192, 224, or 256) dictates how many words will be in the seed phrase (12, 15, 18, 21, or 24 words). Then, the entropy is converted to binary ones and zeros which the computer can understand.

Using a predefined set of 2048 words, where words are carefully selected to avoid confusion (e.g., "there" and "their" won’t both appear on the list), each group of binary digits corresponds to a word.

For example, converting "011011" to "apple," "110010" to "banana," and so on.

The random binary string is then turned into a list of easy-to-remember words (the seed phrase).

The last word in the seed phrase acts as a Checksum, like an inbuilt security feature.

It ensures that the seed phrase hasn’t been mistyped and helps verify its integrity, meaning that the last word can’t be randomly chosen by you—it’s generated by the computer for accuracy.

Once you have the seed phrase, the wallet can reconvert it back into the private keys for your crypto accounts whenever it is necessary.You can recover the same wallet on any device using this seed phrase.

Mnemonic phrases are so important because writing down long strings of numbers and/or letters can lead to mistakes; however, using words can make it easier to store and remember.

For instance, it is easier to remember “banana, apple, car, goat” than to remember “64523649844524.”

BIP 39 is highly secure because no matter what device or software you use, you always get the same wallet setup if you input the same seed phrase, hence, it's deterministic.

It's a one-way process, such that once the private keys are created from the seed phrase, there’s no way to reverse the process and figure out the original seed phrase.

It is highly improbable that any two individuals can accidentally generate the same seed phrases, hence, it is collision-resistant.

Despite these security features of BIP 39, vulnerabilities can arise from human errors where someone might accidentally type their seed phrase into a phishing website or store it in a place that others can access.

This begs the need to keep your private keys offline and private.

Brute force attacks can actually be used to guess someone's seed phrase. But... it is also very unlikely.

Brute force refers to trying different combinations of words, and for a 12-word seed phrase, there are 5.44 by (10 to the power of 39) different possibilities.

Even with the fastest computers available, it would take billions of years to guess a 12-word seed phrase by brute force.

Overall, because BIP 39 simplifies the creation and securing of crypto wallets, it has become a widely adopted standard.

One just needs to keep a list of words safe instead of managing complex cryptographic keys, making crypto more accessible and user-friendly for newbies and OGs alike.

PS:

The height of it all is to keep 'em keys safe and secure. Write it down somewhere, keep those potatoes safe, and never share the chips with ANYONE—or you could send yours to my DM 😂.

Dyor