5 Reasons Why You Should Use a Passphrase (And 3 Reasons Why You Maybe Shouldn’t)

We don’t talk enough about the passphrase feature, to be honest. It’s one of those things that some people are either always using or never using.

Are you looking for a simple explanation of what it is and how it works? Start with our article “Passphrase-the ultimate protection for your accounts”.

Trezor devices give you the option to create a passphrase, a series of up to 50 ASCII characters. “Why on earth would I want to use that? Isn’t the device secure enough?” I’m glad you asked. Here’s the answer in a handy, digestible format: five reasons why you should use a passphrase, and three reasons to consider against it.

Reason #1: Extra security

When it comes to your crypto (and private data!), you can never be too careful. Using a passphrase creates an extra layer of security for your accounts. Even if someone steals your recovery seed, they still wouldn’t be able to steal your crypto if you use a passphrase. (We even have a handy guide to figuring out if your passphrase is strong enough to stop someone from breaking in to your accounts.)

Reason #2: Hidden wallets

You can actually have an unlimited number of passphrases attached to one device. Each passphrase is going to take you to a completely different wallet. You could have three passphrases and it would look like this:

  1. “Daily driver dough” — this passphrase takes you to your “petty cash” wallet.
  2. “Saint cube plantation opening fare” — this passphrase takes to a wallet you dedicated to business purposes.
  3. “fame photo congress rebel differ obvious feature” — this passphrase takes you to your “savings account” wallet.

Reason #3: Unlimited wallets

This is sort of reason 2.5, but it’s a pretty big advantage. Since each new passphrase creates a new, empty wallet, you can use this to organize your accounts. One passphrase can be for business accounts, another can be for personal accounts. You can even use the same Trezor device for one household or company, but each person can have their own private wallet by using different passphrases.

Reason #4: Plausible deniability

This one is tricky. If you are subjected to a demanding search by the border security or encounter a random robber who noticed and recognized your Trezor at a pub, the idea is that you can give up one passphrase leading the thief to a wallet that has only a little crypto, while your real wallet is safe behind a different passphrase. Alternatively, you could give up your PIN leading to an empty wallet and argue you use the device as a password manager.
There is practically no way to prove the existence of any hidden wallets.

In reality, the outcomes of these situations vary depending on your previous behavior and mistakes. If you publicly flaunt your crypto-riches and make yourself a target, you will find it hard convincing the attacker with decoy wallets.

The best way to use plausible deniability is in low- or no-stress situations, like showing your fake account to your new business partner because you don’t trust them yet.

Reason #5: Physical attacks (on your device)

There are ways to hack certain hardware wallets if the attacker has the actual device in their hand. One attack against Trezor can result in the attacker pulling out the recovery seed. The best and simplest protection against this is to have a passphrase. (Don’t forget, we have this handy guide…) If you have a strong enough passphrase, your accounts will be safe.

Reason #1: Mistakes happen

But if you make any mistakes at all when you set up your passphrase for the first time, you will lose access to your accounts forever. For a strong enough passphrase, brute forcing it is simply impossible for now. If you want to use the passphrase “fluffernutter” but you accidentally type “flufernutter”, you would have to figure out what mistake you made in order to recreate the incorrect passphrase and get back into your account. You can see how difficult this could be if your passphrase was something like “f58⁹b%*h6F!” instead.

(This mistake is simple to avoid though; the best method for setting up your passphrase is to first set it up for an empty wallet, then test it by sending a small amount of crypto to the passphrase protected account.)

Reason #2: Think of the kids

Here’s a surprising reason not to use passphrase. Not to be morbid or anything, but you might not want to use a passphrase if you plan to leave your crypto to heirs. If your heirs don’t know your passphrase, then they won’t be able to inherit your wallet.

(The way around this one is to store your passphrase in a backup solution like the Cryptosteel Capsule, in a safe place.)

Reason #3: Read the manual

This is last on the list, but it’s the most important reason. If you don’t know anything about the passphrase feature, then you should not use it. Period. It’s not that using or setting up a passphrase is complicated or advanced. You don’t have to know how to code or something. But if you haven’t educated yourself, then you shouldn’t use it. That’s a pretty good rule of thumb for tech in general, but it goes double for you when cryptocurrency and private data are involved.

We have a few resources for you to read so you can learn everything you need before using a passphrase.

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