Glossary SeedProtector

The world of Bitcoin and cryptocurrencies is full of technical terms — from seed phrase and BIP39 to hardware wallet. To help you stay oriented at all times, we’ve put together this glossary for you. Here you’ll find clear, practical explanations of the most important terms related to Bitcoin security, wallet backups, and the proper storage of seed phrases.

KeyCode - encrypting the seed phrase with SeedPro

What is a KeyCode?

What is a KeyCode at Seedprotector?

The KeyCode is an additional security element in the SeedProtector/SeedPro process. The KeyCode is the modular way to store a wallet seed phrase without writing down the words directly. Instead of plain text words, position codes from the BIP39 wordlist are used. While the seed phrase is not stored directly, but as a SeedCode (positions in the BIP39 wordlist), the KeyCode is added as a second factor. It can be stored, for example, on an NFC card, a USB token, or as a QR code. The KeyCode alone is worthless, as it only allows access in combination with the SeedList. This separation creates a modular security concept: even if one part (SeedList or KeyCode) falls into the wrong hands, the crypto assets remain protected.

Example of a KeyCode: Instead of "legal winner thank...", alphanumeric combinations like A137, O24 are stored. The SeedCode alone is not a cryptographic key – it only becomes usable together with the KeyCode (and possibly a PIN). This allows the seed phrase to be stored legally compliant and securely, e.g., by banks, notaries, or family offices. This process allows multi-layered access controls, such as time-delayed access or multi-person approvals.

Seedphrase – The Key to Your Bitcoin Wallet

What is a Seed Phrase?

What is a Seedphrase?

A seed phrase or mnemonic phrase is a list of 12 to 24 words that serves as the master key for your Bitcoin wallet. Anyone who knows the seed phrase can access all coins; anyone who loses it will irrecoverably lose their Bitcoin. Typical risks: paper can be damaged, digital copies can be hacked. SeedProtector offers a modular solution: the seed phrase is securely stored in the form of codes, combined with KeyCode and an optional PIN. This virtually eliminates loss or theft.

Seed lists – all words at once

What is a seed list in SeedProtector?

What is a seed list?

A SeedList is the structured compilation of all words from which a wallet seed phrase can be formed. It consists of a coated metal plate in DIN A4 format (approx. 200x300mm) with 2042 easy-to-remember English terms that can be used to generate the PrivateKey. Each SeedList can be individually produced by thermal printing and uniquely identified by a serial number. It is robust and, due to its size, suitable for filing. Function: The SeedList serves as a backup for wallet access without the words being available in plain text. It can be stored modularly, e.g., with trustees, banks, or trusted persons, without them gaining access to the complete wallet.

Advantage Security: SeedLists do not contain complete cryptographic keys. Recoverable: Wallets can be reconstituted via KeyCode if required. Flexible: Storage over several years or as a subscription is possible.

BIP39 Protocol– Bitcoin Improvement Proposal 39

What is the BIP39 Protocol?

What is a BIP 39 protocol?

The BIP39 protocol is an international standard used by almost all modern crypto wallets. It specifies how a seed phrase (a list of 12-24 simple words) is generated, which can be used to restore your wallet at any time.The words come from a fixed list of 2048 terms and are chosen to be easy to remember but at the same time unambiguous. From this word list, a cryptographic "master key" is generated in the background, from which all private wallet keys are derived.👉 Important: The seed phrase is synonymous with owning your coins.Anyone who knows the words can restore the wallet – regardless of the software or device. That's why it must be stored absolutely securely and offline.

Private Key – the key to your crypto assets

What is a Private Key?

What is the Private Key?

The private key is the most important secret in the world of cryptocurrencies. It is a long, randomly generated number that functions like a digital password. With the private key you can:- Sign transactions and thus send coins- Prove access to your wallet- Prove that you are the rightful owner of certain blockchain addresses👉 Important: Anyone who knows your private key can control your coins without restriction. The private key must never be shared or stored online. Modern wallets (e.g. with BIP39) hide the private key behind a seed phrase so that you don't have to write it down directly.

what is the private key used for?

A private key is like a secret access code to your cryptocurrencies. It allows you to authorize transactions and access the coins in your wallet. Each private key is unique and must be kept absolutely secret – whoever knows it can dispose of your coins. Modern wallets generate a private key automatically, usually according to the BIP39 standard. A seed phrase is generated from the private key – an easy-to-remember list of 12, 18, or 24 words. The seed phrase is a readable representation of the private key. The private key can be fully restored with the seed phrase if the device is lost or the wallet is changed.

🔎 An example of private Bitcoin keys

Assumed Private Key (simplified, hexadecimal): 3f1a7b9c5e6d2f0a9b8c7d6e5f4a3b2c1d0e9f8a7b6c5d4e3f2a1b0c9d8e7f6

Corresponding 12-word seed phrase (simplified example): apple banana rocket train lamp tiger moon star river cloud stone book. If you enter this seed phrase into a compatible wallet, exactly the same Private Key will be restored.

Wallet (Hot Wallet vs. Cold Wallet) – the Key to Your Crypto Assets

What is a Wallet?

A wallet is a digital purse that allows you to receive, store, and send cryptocurrencies like Bitcoin. Technically, a wallet does not store the coins themselves, but rather the private keys that enable access to the coins on the blockchain. There are two main types of wallets:Hot Wallet: is connected to the internet (e.g., mobile app, browser wallet, exchange account). Convenient for quick payments and trading, but also more vulnerable to hacker attacks and malware.Cold Wallet: is offline and not directly connected to the internet (e.g., hardware wallet, paper wallet, air-gapped device). Offers maximum security, as attacks via the network are not possible. Less convenient for daily use.👉 Recommendation: For small amounts in everyday use, a hot wallet is sufficient. For long-term, larger holdings, a cold wallet is the secure choice.

Compliance through a modular security concept

What makes SeedPro legally compliant?

The SeedPro process is designed to be legally compliant because its modular security concept does not directly store the seed phrase as a cryptographic key. No key in the legal sense: SeedPro only stores SeedCodes (position specifications from the BIP39 word list) separately from the KeyCode and optional PIN. No BaFin license requirement: Since SeedPro itself does not constitute a cryptographic key, it is not subject to BaFin's license requirement for key custody under the KWG.Secure external storage possible: SeedPro can be legally stored with banks, notaries, trustees, or family offices without requiring a special license.

Modular custody

what does modular storage allow at SeedProtector?

what does modular storage allow?

Modular custody allows secure sharing of wallet access while maintaining control over the seed phrase – for private or institutional use. It is a central security principle of SeedProtector/SeedPro. The components required for accessing a wallet – SeedCode, KeyCode, and optional PIN – are stored separately.Separation of components: SeedList: Position-based representation of the seed phraseKeyCode: External security module (e.g., NFC, QR code, USB)PIN: Optional access controlExternal custody possible: Banks, notaries, trustees, or trusted individuals can store individual components without gaining full control over the wallet. The wallet can only be used when all necessary components are brought together.Advantages: Maximum security through multi-layer protection. Flexible access for emergencies or planned releases.Legal compliance: No BaFin license required, as no single component represents the cryptographic key.

Trustee / Backup Service

What is the Trustee / BackUp Service at SeedProtector?

What is the trustee or backup service?

The trustee or backup service is an optional offering from SeedProtector/SeedPro, which allows individual SeedLists to be stored securely and long-term. It enables anonymous, secure, and flexible recovery of SeedLists without losing full control over the wallet – ideal for long-term custody or emergency scenarios.

Storage with serial number: Each SeedList receives a unique serial number, allowing for anonymous but unambiguous assignment.Anonymous recovery process: The SeedList can later be restored without direct identification of the owner.Subscription model: Users can choose how long the SeedList should be kept – e.g., 1, 2, or 3 years.

USPE – Unique Seed Proposition Encoding

What is the USPE procedure at SeedProtector?

The USPE procedure describes the method by which a savable KeyCode is generated from a seed phrase. It converts the seed phrase into a secure, savable KeyCode, thus enabling the modular, legally compliant storage of wallet access. How it works: The original seed phrase is not stored directly. Instead, it is converted into a KeyCode using a standardized procedure, which can be stored compactly and securely.

Advantages: The KeyCode is not a complete cryptographic key, but a modular security component. It can be stored separately from the seed phrase, e.g., on NFC, USB, or QR code.Access to the wallet is only possible together with the SeedCode (position codes from the BIP39 word list) and, if applicable, a PIN.

NFC storage

What are NFC memories for SeedPro?

NFC storage refers to small, contactless storage devices that can transfer data via Near Field Communication (NFC). They are a practical, secure, and contactless medium for storing KeyCodes or other security information and using them in combination with SeedCode and PIN for wallet access.

How it works: Data such as a KeyCode or other security information is stored on an NFC tag. Reading or writing is done contactlessly via compatible smartphones or NFC readers. Advantages: Convenient and mobile: No cable connection required. Secure: Stored data can be encrypted so that it cannot be used without the appropriate app or PIN. Integration into SeedProtector/SeedPro: NFC tags can serve as KeyCode carriers, enabling modular storage of wallet access.

Blockchain (Bitcoin)

What is the Bitcoin blockchain?

The blockchain is the digital ledger where all Bitcoin transactions are stored transparently, permanently, and unchangeably. It is the fundamental backbone of Bitcoin, ensuring security, traceability, and decentralization.Structure: It consists of a chain of blocks, each bundling several transactions. Each block is cryptographically linked to the previous block, making manipulation virtually impossible.Function: It ensures that each Bitcoin can only be spent once. Participants in the network (miners/nodes) verify and confirm transactions without the need for a central authority.Properties: Decentralized: No single institution controls the blockchain. Transparent: Every transaction can be publicly viewed. Immutable: Once confirmed, transactions cannot be deleted or changed.

Bitcoin (BTC)

What is Bitcoin?

Bitcoin is the first and most well-known digital cryptocurrency, introduced in 2009 by a person or group under the pseudonym Satoshi Nakamoto. It is digital money that operates independently of banks, can be securely stored, and is used worldwide. How it works: Bitcoin is based on blockchain technology, a decentralized, public ledger. Transactions are verified by a network of participants without the need for a central bank. Features: Decentralized: No central control, anyone can participate. Limited: The total supply is capped at 21 million Bitcoin. Digital and transferable: Bitcoin can be sent quickly and affordably worldwide. Secure: Cryptographic methods protect wallets and transactions.Usage: Bitcoin can be used as a store of value ("digital gold") or for payments. Owners control their coins via private keys and seed phrases.

double spending ‒ Problem

What is the double spending problem in digital currencies like Bitcoin?

What is the double-spending problem with digital currencies like Bitcoin?

The double-spending problem describes the risk that the same digital coins could be spent multiple times. It is the core conflict of digital currencies, which Bitcoin reliably solves through blockchain and mining. Problem: Digital currencies can theoretically be copied, unlike physical money. Without suitable security, a user could send the same coins to multiple recipients simultaneously.

Solution through Bitcoin: Bitcoin uses the blockchain and the mining process to store each transaction uniquely and verifiably. Miners confirm transactions in blocks that are cryptographically linked together. Once a transaction has been included in a block, it is considered final – double-spending is practically impossible. Advantages: Security: Prevents fraud and loss of coins. Decentralization: No central intermediary is needed; the network itself ensures consistency.

Mining (Proof of Work)

how does Bitcoin mining work?

What is Mining?

Mining is the process by which many cryptocurrencies, such as Bitcoin, generate new coins and confirm transactions. For this, so-called miners use their computer processing power to solve difficult tasks. Whoever completes the task first is allowed to append a new block with transactions to the blockchain – a kind of public ledger of all payments. Such a block contains the data of all transactions not yet included in the blockchain (max. 1 MB, approx. 1,300 – 2,100 transactions). The chain of blocks thus contains all transactions that have taken place in the past.As a reward, the miner receives new Bitcoins as well as the transaction fees from the block. Since individual computers are usually too weak, many miners join mining pools to increase their chances and share the reward. Proof of Work makes the blockchain secure: attacks or manipulations would be extremely expensive because enormous computing power would be required. At the same time, mining is very energy-intensive, which is why alternative methods such as Proof of Stake have been developed.

🔎 How the task works:

A hash is a long string of numbers and letters (e.g., 000af35bd9...).Miners must find a number (nonce) by trial and error, which, together with the block data, results in a hash that starts with a certain number of leading zeros.Attempt 1 → Hash = 1f3ab9... → ❌ no matchAttempt 2 → Hash = 00c5fa... → ❌ too few zerosAttempt 3 → Hash = 0009d2... → ✅ enough zeros – valid hash!The more zeros required, the more difficult the task becomes. This measure is called Difficulty. The Difficulty is adjusted regularly so that a new Bitcoin block is found approximately every 10 minutes.🧩 What does a hash look like? The result is 256 bits long, represented as 64 characters in hexadecimal. Hexadecimal uses the digits 0–9 and the letters a–f. Example of a hash:0000000000000000000abf4c7d5f3e29c1d02eab7c8f9a0b34d81c47f3a5d9ef

Mining (Proof of Stake)

How does mining with Proof of Stake work?

What is Mining with Proof of Stake (PoS)?

In addition to mining through computing power (Proof of Work), there is an alternative method called Proof of Stake. Here, computing power does not determine who can append the next block to the blockchain, but rather the stake of one's own coins.In Proof of Stake, a participant ("validator") locks their coins for a certain period – this process is called staking. By doing so, they show the network that they have an honest interest in securing the blockchain. Among all participants, a weighted random principle then selects who may validate the next block. The probability increases the more coins someone stakes or the longer they participate. If a validator makes mistakes or tries to cheat, the staked coins can be partially or fully confiscated (so-called slashing).Compared to Proof of Work, Proof of Stake requires significantly less energy because no complex computational puzzles need to be solved. Therefore, many newer blockchains (e.g., Ethereum since 2022, Cardano, Solana) rely on this method.

🔎 Differences Proof of Work (PoW) vs. Proof of Stake (PoS)

Proof of Work: Whoever shovels the most finds the treasure. Proof of Stake: Whoever holds more shares is more likely to be elected treasurer

Block generation:(PoW) by solving complex computational tasks(PoS) by selection based on staked coins

Required resource:(PoW) computing power & electricity(PoS) by selection based on staked coins

Security:(PoW) manipulation expensive due to high hashrate(PoS) manipulation expensive due to slashing risk

Energy consumption:(PoW) very high(PoS) significantly lower

Examples:(PoW) Bitcoin, Litecoin(PoS) Ethereum, Cardano, Solana