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Recovery Sheet Meaning

A recovery sheet (or seed phrase backup) is a physical document used to record the "Seed Phrase"-the 12 to 24-word mnemonic that serves as the master key to a cryptocurrency wallet. Because crypto is self-custodial, there is no "Forgot Password" button.

If a user loses their hardware wallet or forgets their PIN, the recovery sheet is the only way to restore their funds on a new device.The phrase is a human-readable version of a very large number (the entropy) used to generate the wallet’s private keys, standardized under the BIP-39 protocol. Security experts recommend that these sheets be kept "Offline" and "Analog"-writing them on paper or etching them into steel-to ensure they cannot be hacked by malware.

If an unauthorized person gains access to this sheet, they have full and permanent control over the funds.The "Single Point of Failure" nature of the recovery sheet is a major barrier to the mass adoption of crypto. Many users are uncomfortable with the idea that a single lost piece of paper could mean the loss of their life savings.

This has led to the development of "Social Recovery" and "Multi-Party Computation" (MPC) wallets, which split the recovery key into several pieces held by trusted friends or professional services, eliminating the need for a single, vulnerable physical sheet.

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