What is BIP39?

Bitcoin Improvement Proposal #39 or BIP 39 is a system created to generate a mnemonic phrase that can be used to access the private key of crypto wallets. These phrases comprise simple 12-24 easy-to-remember words without which the crypto assets cannot be accessed.1

Significance of BIP39

Remembering the private key can be challenging, so the BIP39 standard was established. While one may not remember the 12- or 24-word phrase, it is comparatively more convenient to have passwords in such a form.

The process of conversion starts with splitting the actual key into sub-parts. Each of these parts is converted into a word. The process is complex and random, and one cannot determine the actual private key from the phrase generated. Each wallet has its own code generator, and the longer the mnemonic, the safer it generally is.

Each word in the phrase is essential to access the crypto available in the wallet. This means that users have direct access to the cryptos and can put these assets to use in other applications including in the decentralized finance domain. Loss of the mnemonic could eventually lead to  loss of crypto assets, since these codes cannot be regenerated once lost. It is advisable to split the phrase into multiple sections and store these words in different locations for better security.

Example

Many online wallets provide users with mnemonic phrases so that the users can access the cryptos directly. Bitcoin.com has non-custodial wallets with these features that charge lesser fees for transactions.2

References

1 Understanding BIP39 and Your Mnemonic Phrase Privacy Pros.

2 What's a non-custodial wallet? Bitcoin.com.

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