What is a passphrase? The special feature in Trezor hardware wallets

When a PIN and a recovery seed may no longer be enough to secure the crypto assets held on a hardware wallet, considering a passphrase has become an option more and more investors are taking up.

A passphrase is another tool that raises the level of cyber security for anyone holding crypto. It is an interesting feature on Trezor devices, a hardware wallet extremely popular at present, which stands out for its security, its convenience in use, and the range of crypto-related financial activity it can carry out. A passphrase protects a user's digital assets by another layer, beyond the PIN and the recovery seed.

When a passphrase is in use, the Trezor asks the user to enter a secret phrase — a group of words the user has set themselves — every time, in addition to the numeric PIN, when connecting to the Trezor.

What is a passphrase, and how does it work?

When a user chooses to use a passphrase, the device asks the user to create a passphrase and enter it into the Trezor. The system then combines the recovery seed the system generated at random, which the user already has, with the code the user chose themselves, and creates a new wallet.

This means that every time the user creates a passphrase, a new wallet comes into being with it — and this new wallet is tied to the user's existing recovery seed permanently, and cannot be changed.

A passphrase can be a word, a phrase, characters or even any sentence of more than 50 characters. If the user does not enter a passphrase, they can only reach the original wallet set up with the recovery seed.

Using a passphrase to add security to a Trezor

If a user chooses the passphrase feature, there are two main benefits. The first is that a passphrase cannot be changed the way a PIN can, which protects the user's hardware wallet from anyone unauthorised getting in. The PIN is stored on the chip, but the passphrase that protects the user's recovery seed is not stored anywhere at all — meaning that even if someone with bad intentions knows the user's recovery seed, they cannot hack the hardware wallet to steal the passphrase and take the digital assets out, unless the user tells them the passphrase themselves.

The second benefit is that a passphrase lets the user create a great many wallets, which helps the user allocate their digital assets however they want.

There is another interesting case, unlikely but not impossible: being threatened in order to extract the PIN so that someone can reach the digital assets on the hardware wallet. If that happens, the user can give only the numeric PIN — which can be changed afterwards — so that the bad actor reaches only the original wallet, where the user may not have kept all their digital assets. A passphrase is therefore like another protective key that users can choose to use or not. It is uncomplicated to use but offers both the convenience of allocating an unlimited number of investment accounts, and protection against an attacker or a thief who comes to demand the hardware wallet's code in order to steal the user's valuable crypto assets. A passphrase counts as another feature crypto holders should give serious thought to using.