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When an individual first joins the cryptocurrency economy and obtains their first bitcoins, at times the process can be daunting. Most veterans will often tell newcomers that they need to secure their coin’s private keys in order to enjoy sovereign ownership. However, most people are not taught how to keep their 12-24 word seed phrase in another useful way by utilizing a method called “Shamir’s Secret.”

Learning Shamir’s Secret

Most people within the cryptocurrency community will emphasize that securing your own private keys is the best way to hold cryptocurrencies. The reason for this is because when any funds are kept with a third party such as an exchange or a custodial wallet, the keys are not in the owner’s control. This means that if the exchange or wallet provider gets hacked and funds are stolen, the coins you hold on an exchange can be stolen from you and some exchange hack victims never get restitution. However, cryptocurrency owners who secure their own private keys by maintaining a specific computer file or use a 12-24 word mnemonic phrase still open themselves up to physical vectors. There are lots of people who create a new crypto wallet every single day and they typically write down the 12-24 word phrase on a piece of paper and hide it. But this means anyone with knowledge of the exact location of someone’s mnemonic phrase tied to their digital assets could theoretically steal the funds.

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