A passphrase is often sold as a simple upgrade. It is really a trade: less risk of theft for more risk of loss. This guide helps you decide. It is part of our guide to the BIP39 passphrase. If this is new, read what the 25th word is.
The trade-off
| Benefit | Cost |
|---|---|
| A found phrase is not enough | A forgotten passphrase loses your funds |
| A stolen device is safer | There is one more thing to back up |
| You can keep a decoy wallet | Setup and use are harder |
| You can store your phrase more freely | Family recovery is harder |
Who it suits
A passphrase suits you if all of these are true:
- You already have a tested backup.
- You hold enough that a found sheet of paper would be a serious loss.
- You can store your phrase and passphrase in separate places.
- You keep good records and handle details carefully.
- Your family plan covers it.
Who should skip it
- Beginners who are still learning.
- People with small holdings.
- Anyone who plans to keep it only in their head.
- Anyone who has no safe second location.
- People whose heirs would have no way of finding it.
Situations where it shines
- Your words are at a bank or with family. A passphrase protects you if they are read.
- A hardware wallet without a secure element. A passphrase protects you if someone extracts the seed.
- Physical threats. A small decoy wallet may help in some situations. See physical threats.
Situations where it fails
- Typing it into a fake site along with your phrase.
- Choosing a weak one that can be cracked once your words are found.
- Forgetting it after years of not using it.
- Leaving it next to your phrase.
Alternatives
| Goal | Option |
|---|---|
| Remove the single point of failure | Multisig |
| Split a backup safely | Shamir |
| Protect against fire | Metal backup |
See multisig vs passphrase for a direct comparison.
If you decide to go ahead
- Choose a strong passphrase.
- Back it up separately.
- Test the full recovery with a small amount.
- Review it every year.