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Ask CryptoVantage: What is a Brainwallet?
Cryptocurrencies have revolutionized how we store value. Given that the security of a cryptocurrency wallet comes down to the safe storage of that wallet’s private key, you can use anything from a hardware wallet to a paper wallet to store the details of your private key.
Brainwallets however take this idea to the extreme as they are a form of cryptocurrency wallet that stores the entire private key in your memory. Think of a Brainwallet like a purse in your head where the only way to gain access to the wallet is to unlock it by using your memory.
The idea behind Brainwallets is that if you can generate a passphrase for your wallet’s private keys and memorize that passphrase, you can access your wallet and spend your wealth as long as you have internet access.
How Are Brainwallets Created?
The process behind creating a Brainwallet is quite simple. You start by generating a key pair based on a cryptographic hash function such as SHA-256, RIPEMD-160, etc.
This key pair will be the encrypted version of your private and public keys respectively. However, it is quite difficult to memorize the entire encrypted private key, as they often come with a large number of characters.
Instead you’ll just be memorizing the seed recovery pass phrase, which is 12 or 24 words. Of course that’s still a lot of information for the average person to commit to memory.
Once you’ve memorized your seed recovery phrase you theoretically don’t need a physical copy of your seed, which is nice because if anyone nabs your seed phrase then they can completely drain your crypto wallet.
You might already realize there are some serious risks involved with using a Brainwallet, however…
Brainwallets Are Very Risky
There is one main reason why Brainwallets are risky but it’s a huge one: You might forget your passphrase.
The human mind is a bad source of entropy and memorizing a 12 to 24-word phrase in the right order is no easy feat.
In addition if you were to become incapacitated your crypto would be lost. Your family would not benefit from your crypto holdings because your Brainwallet is locked away in your own head.
Consider people have lost millions of dollars worth of Bitcoin by losing physical wallets and you might come to the realization that user error is actually the biggest crypto thief of all.
Therefore Brainwallets are not recommended for average crypto users.
Some Viable and Secure Alternatives
Given the above risks, it’s best that we not use Brainwallets and instead store our cryptocurrencies using hardware wallets such as Trezor, Ledger Nano S, etc. These types of wallets are very secure, and they’re backed by reputable teams with a long history of reliability in the crypto-space.
In addition to keeping your private keys safe while using hardware wallets, you can also add extra layers of protection in the way of a 2-Factor Authentication process with apps such as Google Authenticator or Authy.
There are plenty of different ways to secure your crypto and some people use completely-offline computers to deal with their crypto or one of the popular mobile apps. You could even use a third-party custodian if you don’t feel you have the ability to properly secure your crypto.
If you are dead set on using a Brainwallet, we’d suggest a physical copy of your recovery seed just in case. If you find you don’t need it after a few years, your mind is apparently still functioning well, you could potentially destroy the physical copy and rely solely on your mind. Again, not recommended!
