What's the difference between my wallet's password and my Secret Recovery Phrase?

Wallet Password Functionality

1. The wallet password is a local authentication mechanism used to unlock the interface of your cryptocurrency wallet application.

2. It does not interact with the blockchain and has no role in signing transactions or accessing funds on-chain.

3. This password is stored only on the device where the wallet is installed and is never transmitted over the internet.

4. If forgotten, most non-custodial wallets offer no recovery path—users must rely solely on their Secret Recovery Phrase to restore access.

5. Some wallets allow password reset by re-importing the wallet using the Secret Recovery Phrase, but the original password itself cannot be retrieved.

Secret Recovery Phrase Composition

1. A Secret Recovery Phrase consists of 12, 18, or 24 English words generated from the BIP-39 standard.

2. These words encode a 128-bit to 256-bit entropy value that serves as the root seed for all cryptographic keys in the wallet.

3. Every private key—and therefore every address and associated balance—is mathematically derived from this phrase using hierarchical deterministic (HD) derivation paths.

4. The phrase is case-insensitive and order-sensitive; altering word sequence or substituting synonyms invalidates the entire keychain.

5. It is intended to be written down physically and kept offline, never entered into web forms or cloud services.

Security Boundary Separation

1. The wallet password operates at the application layer, acting as a gatekeeper to the UI and encrypted local storage.

2. The Secret Recovery Phrase resides at the cryptographic layer—it is the sole source of truth for key generation and asset control.

3. Compromising the password alone grants no ability to move funds unless the attacker also gains access to decrypted private keys or the phrase itself.

4. Conversely, possession of the phrase—even without the password—enables full wallet restoration on any compatible software, including devices with no prior installation history.

5. Hardware wallets often omit password prompts entirely, relying exclusively on physical button confirmation and the integrity of the recovery phrase.

Recovery Workflow Dependencies

1. When restoring a wallet on new hardware or software, only the Secret Recovery Phrase is required—no password input appears during setup.

2. After successful restoration, the user is prompted to set a new wallet password, independent of any previous credential.

3. Some wallets encrypt the locally stored private key file using both the password and the phrase-derived seed, adding an extra decryption step during startup.

4. In such implementations, losing the password may delay access but does not prevent eventual recovery—as long as the phrase remains intact and correctly recorded.

5. Backup files exported from certain desktop wallets may be encrypted with the password, making them unreadable without both the file and the correct passphrase.

Frequently Asked Questions

Q: Can I change my Secret Recovery Phrase after creating a wallet?A: No. The phrase is deterministically generated during wallet initialization and cannot be altered. Creating a new phrase requires generating an entirely new wallet with new addresses and keys.

Q: Does entering my Secret Recovery Phrase into a phishing site compromise my funds?A: Yes. Any exposure of the phrase—even once—allows immediate theft of all assets across all derived addresses. Never type it anywhere except within verified, air-gapped wallet software.

Q: Is the wallet password the same as the PIN used on mobile wallets?A: Not always. Some mobile wallets use biometric data or system-level PINs for app launch, while the wallet password protects deeper functions like transaction signing or settings access.

Q: If I store my Secret Recovery Phrase in a password manager, is that safe?A: It is strongly discouraged. Password managers are online targets. Physical storage—engraved metal backups, handwritten notes in secure locations—remains the industry-recommended standard for phrase preservation.